Real exporter test governs entitlement to export tax credit despite routed transaction paperwork and intermediary involvement.

In routed export transactions, the Corporation was treated as a facilitative intermediary rather than the real purchaser because the exporters sourced the goods, negotiated with foreign buyers, bore the commercial risk, financed the transactions and received sale proceeds through their bankers while paying only a commission. The shipping and GR-1 documents were not conclusive where the surrounding conduct showed no substantive sale to the Corporation. On that basis, entitlement to the export incentive under section 280ZC depended on the real exporter in substance, not the ostensible party in the paperwork. The exporters were therefore entitled to the tax credit certificate, and the matter was remitted for reconsideration accordingly.

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Issues: (i) What was the legal relationship between the exporters and the Corporation in the routed export transactions? (ii) Which party was entitled to the tax credit certificate under section 280ZC of the Income-tax Act?

Issue (i): What was the legal relationship between the exporters and the Corporation in the routed export transactions?

Analysis: The export routing under the barter scheme showed that the Corporation was inserted into the outward form of the transactions to facilitate and supervise exports, but the exporters remained the source of the goods, arranged the contracts with foreign buyers, bore the commercial risk, made the investments, realised the sale proceeds through their bankers, and paid only a commission to the Corporation. The shipping documents and GR-1 declarations were not treated as conclusive, because the contemporaneous conduct and the surrounding arrangement showed that the parties did not intend a concluded sale to the Corporation as the real substance of the transaction.

Conclusion: The Corporation was not the true purchaser in a substantive sense and the exporters remained the real parties behind the export transactions.

Issue (ii): Which party was entitled to the tax credit certificate under section 280ZC of the Income-tax Act?

Analysis: The tax credit scheme was held to be an export incentive intended for the real exporter, not merely the ostensible exporter shown in the paperwork. Even if title had technically passed through the Corporation, the exporters would still be entitled because they were the persons who exported the goods in substance and received the sale proceeds in India in accordance with law. A contrary view would defeat the object of the provision, which was to encourage export trade by granting tax credit to the industry actually earning foreign exchange.

Conclusion: The exporters were entitled to the tax credit certificate under section 280ZC, and not the Corporation.

Final Conclusion: The impugned orders were set aside and the competent authority was directed to reconsider the exporters' entitlement to tax credit certificates in accordance with law on the basis that the benefit under the export incentive provision belonged to the real exporter.

Ratio Decidendi: In a routed export transaction, entitlement to an export-linked tax incentive depends on who is the real exporter in substance, and not on the ostensible form of the documents or the presence of a government agency in the export channel.

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