Export sale claim failed where forged customs certificates and local delivery within the State undermined proof of export outside India.

Sales claimed as export sales to Nepal were not established as sales in the course of export because the customs certificates relied on were found to be forged and there was no reliable proof that the goods had actually left India. The goods were delivered within Uttar Pradesh, and that local delivery, without valid customs evidence, was insufficient to claim export exemption. The Full Bench authority relied on by the dealer was treated as inapplicable on its special facts, as later decisions had distinguished it. The reassessment treating the transactions as local sales was therefore maintained in substance.

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Issues: Whether sales claimed as export sales to Nepal could be treated as sales in the course of export in the absence of a valid customs certificate and where delivery of goods was effected within the State of Uttar Pradesh.

Analysis: The reassessment was initiated after verification showed that the customs certificates relied upon by the dealer were forged and had not been issued by the customs office in Nepal. The assessee did not participate in the reassessment despite repeated adjournments. On the facts found, the goods were delivered within Uttar Pradesh and there was no reliable proof that they had actually been exported outside India. In such circumstances, the sale could not be characterised as an export sale merely on assertion, and the reliance placed on the Full Bench decision was held to be inapplicable because later decisions had distinguished it on its special facts.

Conclusion: The sales were not proved to be export sales, and the reassessment treating them as local sales was upheld in substance.

Ratio Decidendi: A sale cannot be treated as a sale in the course of export unless there is reliable proof of export outside India, and delivery within the State without supporting customs evidence is insufficient to claim export exemption.

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