Export-linked input tax credit requires proof of a specific export order and direct nexus, not mere earmarking of goods.

Input tax credit on stock transfers claimed as export-linked relief was not available automatically where goods were only earmarked for export or moved to an export godown. The governing test is whether the transfer is occasioned by a specific export order and forms an integral part of a transaction with a fixed foreign destination when movement begins. On the facts, pooled consignments in another State, without proof of a direct nexus to each export order, could not be treated as being in the course of export as a blanket matter. Eligibility may still be established transfer by transfer before the assessing or appellate authority by producing the relevant export documents.

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Issues: Whether input tax credit was admissible on stock transfers of goods manufactured for export and consigned to a godown in another State, on the footing that such transfers were in the course of export.

Analysis: The entitlement to the export-related tax benefit depended on whether the stock transfer itself was inextricably linked with a specific export order and the foreign destination was fixed when the movement from Kerala commenced. The Court applied the settled principle that a sale or purchase is in the course of export only when it occasions the export and forms an integral part of the export transaction. Goods merely manufactured for export, identified by a unique product code, or first moved to an export godown, do not by themselves satisfy that test. On the facts, the assessee's goods were pooled at the Tamil Nadu godown and exported according to foreign buyer orders that could arise before or after the transfer, so a blanket declaration could not be issued that all such consignments were in the course of export. The assessee could, however, establish the position case by case before the assessing authority or appellate forum by producing export orders and supporting documents.

Conclusion: Input tax credit was not automatically available on all such stock transfers, and the clarification granting a blanket benefit was not interfered with only to the extent that each transfer must independently be proved to be in the course of export. The appeal was rejected, leaving the assessee to establish eligibility in individual cases.

Final Conclusion: The decision affirms that export-linked tax relief on inter-State stock transfers requires proof of a specific export order and a direct nexus with the export transaction, and cannot rest merely on intended export or prior earmarking of goods.

Ratio Decidendi: A stock transfer qualifies as being in the course of export only when it is occasioned by a specific export order and is an integral part of a transaction with a fixed foreign destination; mere intention to export or prior identification of goods for export is insufficient.

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