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TMI Blog2004 (11) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... fall under the exclusion provided under section 80HHC. (b) The export turnover as defined in Explanation (b) to section 80HHC(4B) means the amount of sale proceeds received in or brought into India in convertible foreign exchange in respect of sale of goods mentioned in section 80HHC(1). The assessee has received the sale proceed of Rs. 2,43,038.25 in convertible foreign exchange through proper banking channels as per the details filed vide our letter dated 24-11-2000. Therefore, the export turnover made by the assessee qualifies for deduction under section 80HHC. (c) The assessee had carried several paintings with her to the exhibition. These were carried as a part of baggage to avoid damage carried by the assessee to the exhibition have already been Tiled vide our letter dated 19-12-2000. These were not sent as cargo to save these from possible damage by rough handling. (d) The assessee has export code number allotted by the RBI. Photocopy of the same is already filed vide our letter dated 22-1-2001. (e) Certificates issued by the bank have already been filed vide our letter dated 24-11-2000. (f) That the letter from the organizing gallery i.e., Foundation for Indian Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established the actual movement of goods for export from India to Amsterdam." 3. Coming to the legal position, the Assessing Officer referred to the provisions of section 50 of Customs Act, 1962 according to which it is mandatory upon any exporter of any goods to make entry thereof by presenting a shipping bill or bill of export to the proper officer of customs department. Therefore, it was opined by him that there could be no export without the customs clearance. As assessee could not produce the customs clearance in support of export of her painting, her claim under section 80HHC could not be allowed. He also referred the provisions of Clause (aa) of the Explanation to section 80HHC, Explanation 2 to section 80HHC(2) and the judgment of Allahabad High Court in the case of Ram Babu Sons v. UOI [1996] 222 ITR 606 in support of the above conclusion. Accordingly, he disallowed the claim of assessee. On appeal, disallowance made by Assessing Officer was confirmed by CIT(A). Aggrieved by the same, the assessee has preferred the second appeal before the Tribunal. 4. The learned counsel for assessee, Mr. Goel, has vehemently assailed the order of CIT(A) by raising various submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods is strictly governed by the provisions of Customs Act and no goods can cross the territory of India without the custom clearance. Hence, claim of assessee under section 80HHC cannot be allowed in the absence of custom clearance. Regarding the provisions of Explanation (aa), it was stated that no doubt such provisions can be applied to counter sale but the intention of Legislature can be inferred from the same that custom clearance is mandatory to prove the factum of export. 9. Rival submissions of the parties have been considered carefully. The question for consideration is whether, on facts and in law, can it be said that assessee had exported her paintings from India to Germany for the purpose of claiming deduction under section 80HHC of the Act. The business of import and export in India is totally governed by the provisions of Customs Act, 1962 as well as Foreign Exchange Regulation Act, 1973 (FERA) and, therefore, no goods for export can leave Indian territory without the custom clearance. In order to appreciate the controversy, it would be appropriate to refer the relevant provisions of the above enactments. The relevant provisions of Customs Act, 1962 are reproduced a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Government may make rules for the purpose of carrying out the provisions of this section and, in particular, such rule may specify- (a) the minimum period for which any article has been used by a passenger or a member of the crew for the purpose of Clause (a) of sub-section (1); (b) the maximum value of any individual article and the maximum total value of all the articles which may be passed free of duty under clause (b) of sub-section (1); (c) the conditions (to be fulfilled before or after clearance) subject to which any baggage may be passed free of duty. (3) Different rules may be made under sub-section (2) for different classes of persons. Section 81: Regulations in respect of baggage.- (a) provided for the manner of declaring the contents of any baggage; (b) providing for the custody, examination, assessment to duty and clearance of baggage; (c) providing for the transit or transhipment of baggage from one customs station to another or to place outside India." Relevant provisions of FERA are reproduced as under: "Section 18(1)(a): The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment; (b) Personal effects of travellers, whether accompanies or unaccompanied; (c) Ships' stores, transhipment cargo and goods shipped under the orders of the Central Government or of such officers as may be appointed by the Central Government in this behalf or of the military, naval or air force authorities in India for military, naval or air force requirements; (d) Goods dispatched by air freight and accompanied by a declaration by the sender that they are not more than ten thousand rupees in value and that their dispatch does not involve any transaction in foreign exchange; (e) Goods dispatched by air freight and covered by a certificate issued by any authorized dealer that their export does not involve any transaction in foreign exchange; (f) Goods the export of which in the opinion of the Reserve Bank do not involve any transaction in foreign exchange, and which the Reserve Bank has, by a general or special order, permitted to be exported without furnishing a declaration as provided for herein. (g) The following goods which are permitted by the Development Commissioner of the Santacruz Electronics Export Processing Zone, the Kandla Free Trade Zone, the Noida Fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volving clearance at any customs station as defined in the Customs Act, 1962 (52 of 1962);" The above clause was inserted by Finance (No. 2) Act, 1991 w.e.f. 1-4-1986. Prior to insertion of this clause, there was a controversy as to whether counter sale effected, in a shop/emporium or any other establishment in India, to a foreign tourist could be considered as export out of India. In order to resolve this controversy, the Legislature inserted the above clause with retrospective effect from 1-4-1986. No doubt, this clause cannot be applied to the facts of the present case. However, reference to this clause is relevant to infer the intentions of the Legislature. This clause, in clear terms, provides that counter sale to a person leaving India cannot be considered as an export sale unless it involves the custom clearance. My finding given in the preceding para is in consonance with such legislative intention. 12. Coming to the facts of the case, I am in complete agreement with the conclusion of the lower authorities that assessee has failed to prove the actual export of paintings from India to Germany. There is no evidence to prove the custom clearance despite the legal obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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