Section 280ZC — Tax credit certificate in relation to exports
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: OMITTED by the Finance Act, 1990, w.e.f. 1-4-1990 (originally inserted by the Finance Act, 1965, w.e.f. 1-4-1965).
Finance Act, 2026: Makes no change. The Finance Act, 2026 does not touch any section of Chapter XXII-B; the chapter remained omitted before, and remains omitted after, the 2026 amendments.
Mechanism: Export-incentive provision — tax credit certificate to a person who exports goods out of India and receives the sale proceeds in India in foreign exchange; operated through the Tax Credit Certificate (Exports) Scheme, 1965.
Litigation profile: One of the two genuinely litigated sections of the chapter; the lead authority is a Supreme Court decision on the identity of the 'real exporter'. Subject to the production-bar of 31-3-1991.
A. COMMENTARY
1. The export incentive and its conditions
Section 280ZC was the chapter's export-promotion measure. In substance it entitled a person who exported goods or merchandise out of India (after 28 February 1965) and received the sale proceeds in India in foreign exchange, in accordance with the Foreign Exchange Regulation Act, to a tax credit certificate computed at a rate fixed by the Scheme (not exceeding a statutory ceiling) on the value of such sale proceeds. The certificate was set off against income-tax and otherwise refundable. The operative detail lived in the Tax Credit Certificate (Exports) Scheme, 1965, framed under ss. 280ZC and 280ZE.
2. The central controversy — who is the 'exporter'?
In the canalised-trade era, exports of many commodities were routed through State trading agencies and export houses. This produced the recurring dispute the section is remembered for: when goods are physically exported through a canalising agency but the manufacturer earns and repatriates the foreign exchange, who is entitled to the certificate? The Supreme Court in MMTC v. R.C. Mishra answered that entitlement follows substance — the person who in truth exports and receives the sale proceeds in India in foreign exchange — so the manufacturer (Ferro Alloys), not the canalising agency (MMTC, which took a 2% commission), was the exporter for s. 280ZC. The twin statutory keys are 'export out of India' and 'receipt of sale proceeds in India under FERA'; an intermediary that satisfies neither in substance does not capture the incentive.
3. The transitional production-bar
On omission in 1990 the legislature barred production of any s. 280ZC certificate before the Assessing Officer after 31 March 1991 for the purposes of sub-section (4) of s. 280ZC (mirroring the bar on s. 280Z certificates). After that date an unutilised export certificate could no longer be encashed against tax. Whether any claim still pending at omission survives is governed by the omission-effect jurisprudence.
Finance Act, 2026 — position
Chapter XXII-B is wholly omitted and the Finance Act, 2026 leaves it untouched. The references to 'section 280...' in the Finance Act, 2026 relate to Chapter XXII (Offences and Prosecutions) — e.g. ss. 276B-276D, 277, 278, 280 — and to the corresponding provisions of the Income-tax Act, 2025; they have no bearing on the tax-credit-certificate sections 280Y-280ZE. No revival, re-enactment or saving of this chapter is proposed.
B. STATUTORY TEXT (verbatim from the bare Act)
The section stands omitted. The current bare Act (as amended up to the Finance Act, 2025) prints only the side-heading and the editorial omission note reproduced below; the original 1965-1990 text is not carried in the bare Act. Reproduced verbatim:
Tax credit certificate in relation to exports.
280ZC. [Omitted by the Finance Act, 1990, w.e.f. 1-4-1990.]
Chapter-level editorial note (verbatim):
[Chapter XXII-B, consisting of sections 280Y, 280Z, 280ZA, 280ZB, 280ZC, 280ZD and 280ZE, omitted by the Finance Act, 1990, w.e.f. 1-4-1990. No tax credit certificate granted under section 280Z or section 280ZC shall be produced before the Assessing Officer after the 31st day of March, 1991 for the purposes of sub-section (6) of section 280Z or, as the case may be, sub-section (4) of section 280ZC. Earlier Chapter XXII-B was inserted by the Finance Act, 1965, w.e.f. 1-4-1965.]
C. AUTHORITIES
The section is anchored by a Supreme Court decision on the identity of the exporter, read with the Scheme-construction and omission clusters.
Cluster — Identity of the exporter / receipt of sale proceeds (the operative controversy)
Mineral and Metal Trading Corporation (MMTC) v. R.C. Mishra, AIR 1994 SC 1523; (1993) Supp (3) SCC 29 (SC)
Facts: Ferro Alloys Corporation, a manufacturer-exporter of ferro-manganese and chrome concentrates, contracted with foreign buyers but routed the export through MMTC to fit the Government's private-barter/canalisation system. A dispute arose over who was entitled to the s. 280ZC certificate.
Held: The 'real exporter' was Ferro Alloys, which earned and received the foreign exchange; MMTC received only its 2% commission and was not the exporter. The certificate followed the person who in substance exported and brought in the sale proceeds in India in foreign exchange.
Ratio: Section 280ZC entitlement is determined by substance — export of goods out of India plus receipt of the sale proceeds in India under FERA — not by the formal routing of documents through a canalising agency.
National Company Ltd. v. Deputy Director of Tax Credit (Exports) (1977)
Subject: Claim to a tax credit certificate under s. 280ZC read with the Tax Credit Certificate (Exports) Scheme, 1965, turning on whether the claimant qualified as the exporter and on the receipt of sale proceeds in India.
Use: An earlier illustration of the same export-entitlement controversy that the Supreme Court later settled in MMTC; cited for the proposition that the s. 280ZC benefit attaches to genuine export with repatriation of proceeds, and that the Scheme machinery (appeal to the Government under the Scheme) had to be exhausted. To be read with the full report before reliance, the controversy having been authoritatively resolved by MMTC.
Cluster — Construction of the Tax Credit Certificate Schemes (machinery framed under s. 280ZE)
The charging sections (280ZC export, 280ZD increased production) operated only through Schemes notified under s. 280ZE. The leading decisions therefore turn on the Scheme clauses as much as on the section.
Mineral and Metal Trading Corporation (MMTC) v. R.C. Mishra, AIR 1994 SC 1523; (1993) Supp (3) SCC 29 (SC)
Scheme: Tax Credit Certificate (Exports) Scheme, 1965, framed under ss. 280ZC and 280ZE.
Holding: Where a manufacturer (Ferro Alloys Corporation) routed its exports of ferro-manganese/chrome concentrates through MMTC under the canalised/private-barter arrangement but earned and received the foreign exchange itself, the 'real exporter' entitled to the tax credit certificate under s. 280ZC was the manufacturer who received the sale proceeds, not the canalising agency which took only its 2% commission. The Court looked to the substance of who exported and received the sale proceeds in India in foreign exchange.
Principle: Entitlement under s. 280ZC follows the person who in substance exports and brings in the sale proceeds; intermediation for channelisation does not transfer the incentive.
Titaghur Paper Mills Co. Ltd. v. Union of India (Calcutta High Court, 6 June 1973)
Scheme: Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 1965, framed under ss. 280ZD and 280ZE.
Holding: The benefit under s. 280ZD is computed class-of-goods-wise, not by lumping together all varieties: each distinct variety/quality of paper (item 17, First Schedule, Central Excises and Salt Act, 1944) that comes to the market as a separate article is a separate 'class of goods' for the excess-clearance computation. However, for any given class of goods, where the same class is made in more than one factory of the assessee, the excess of the relevant-year clearance over the base-year clearance is to be worked out on the aggregate of all such factories, not factory-by-factory — as the Scheme's Forms A, B and C and cl. 5 (with its proviso requiring a Form-B declaration per factory) demonstrate.
Principle: Twin construction of s. 280ZD/Scheme — 'goods' is read class-wise; 'quantum cleared' is read assessee-wise (all factories making that class) and not unit-wise.
Cluster — Legal effect of the omission of the chapter (General Clauses Act)
Because every section of Chapter XXII-B has been omitted, the practitioner question is no longer how the incentive worked but what survives the omission — accrued tax-credit certificates, pending claims, and pending proceedings. The governing authorities are the following, applied here as cognate authority (none arose on a tax-credit-certificate section, but each settles the principle on which any residual XXII-B claim now turns).
Section: 280Y(d) / 280ZA / 54G read with ss. 6 & 24, General Clauses Act, 1897.
Holding: The omission of s. 280ZA (and the consequential redundancy of s. 280Y(d), which only defined 'urban area' for s. 280ZA) and its re-enactment with modification as s. 54G was treated as a 'repeal' for the purposes of the General Clauses Act. The Court held that the expression 'repeal' in ss. 6 and 24 takes in an omission — even an implied repeal — so long as a provision is obliterated; accordingly the 1967 notification declaring Thane an urban area, issued under s. 280Y(d), continued to enure for s. 54G by virtue of s. 24.
Why it matters here: This is the leading modern pronouncement that directly construes Chapter XXII-B. It establishes that the dismantling of the chapter is a 'repeal', so saved rights and subordinate legislation made under the chapter do not automatically perish. It expressly disapproved the contrary reading that 'omission' is something wholly outside 'repeal'.
Read with: CIT v. Venkateswara Hatcheries (P) Ltd., (1999) 3 SCC 632 and State of Punjab v. Harnek Singh, (2002) 3 SCC 481 (both referred); and the omission/repeal debate noted below.
General Finance Co. v. ACIT, (2002) 257 ITR 338 (SC)
Section: s. 6, General Clauses Act, applied to an omitted penal provision (s. 276DD).
Holding: An 'omission' of a provision is distinct from a 'repeal'; s. 6 of the General Clauses Act, in terms, saves only the consequences of a 'repeal' and does not, of its own force, save proceedings under a provision that is merely omitted. A prosecution under the omitted s. 276DD could therefore not be launched or continued by invoking s. 6 after the omission. The Court, following Rayala Corporation and Kolhapur Canesugar, declined to treat omission as repeal for s. 6.
Why it matters here: The point of tension with Fibre Boards. For pending penal or recovery action keyed to an omitted XXII-B section, General Finance supplies the assessee's argument that nothing survives; Fibre Boards supplies the Revenue's. The two are reconciled on the footing that what is omitted-and-simultaneously-re-enacted (280ZA to 54G) is a 'repeal', whereas a bare omission with nothing put in its place (the penal context) is not saved by s. 6.
Rayala Corporation (P) Ltd. v. Director of Enforcement, (1969) 2 SCC 412 (SC)
Holding: A rule that is simply omitted (there, r. 132A of the Defence of India Rules) is not 'repealed' within s. 6 of the General Clauses Act, so proceedings cannot be commenced after the omission in the absence of an express saving.
Why it matters here: Foundational authority for the 'omission is not repeal' line relied on in General Finance and considered in Fibre Boards; bears directly on whether residual XXII-B claims/notices survive 1-4-1990.
Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536 (SC, Constitution Bench)
Holding: Where a rule is deleted/omitted and no contrary intention or saving appears, s. 6 of the General Clauses Act is not attracted; whether pending proceedings continue depends on the language of the repealing/omitting provision and any saving clause.
Why it matters here: Confirms that the survival of accrued XXII-B rights and pending claims must be located in the omitting Finance Acts and the transitional bar (production of 280Z/280ZC certificates barred after 31-3-1991), not in any general presumption of continuance.
State of Orissa v. M.A. Tulloch & Co., AIR 1964 SC 1284 (SC, Constitution Bench)
Holding: Repeal may be express or implied; the form is immaterial so long as the earlier law is displaced. An implied repeal is as much a 'repeal' as an express one.
Why it matters here: Relied on in Fibre Boards to hold that the omission/replacement of XXII-B provisions is a 'repeal' attracting the saving in s. 24 of the General Clauses Act.
Shree Bhagwati Steel Rolling Mills v. CCE, 2015 (326) ELT 209 (SC)
Holding: Reiterating the approach in Fibre Boards, the Court held that 'repeal' in s. 6 of the General Clauses Act covers the obliteration of a provision howsoever effected; when s. 6 speaks of repeal of 'any enactment' it includes any provision of an Act, whether repealed or omitted.
Why it matters here: The most recent Supreme Court reinforcement of the Fibre Boards view, useful where the Revenue contends that an accrued XXII-B liability or right is preserved notwithstanding omission.
CHAPTER XXII-B — TAX CREDIT CERTIFICATES (HISTORIC)
Section 280ZC — Tax credit certificate in relation to exports
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: OMITTED by the Finance Act, 1990, w.e.f. 1-4-1990 (originally inserted by the Finance Act, 1965, w.e.f. 1-4-1965).
Finance Act, 2026: Makes no change. The Finance Act, 2026 does not touch any section of Chapter XXII-B; the chapter remained omitted before, and remains omitted after, the 2026 amendments.
Mechanism: Export-incentive provision — tax credit certificate to a person who exports goods out of India and receives the sale proceeds in India in foreign exchange; operated through the Tax Credit Certificate (Exports) Scheme, 1965.
Litigation profile: One of the two genuinely litigated sections of the chapter; the lead authority is a Supreme Court decision on the identity of the 'real exporter'. Subject to the production-bar of 31-3-1991.
A. COMMENTARY
1. The export incentive and its conditions
Section 280ZC was the chapter's export-promotion measure. In substance it entitled a person who exported goods or merchandise out of India (after 28 February 1965) and received the sale proceeds in India in foreign exchange, in accordance with the Foreign Exchange Regulation Act, to a tax credit certificate computed at a rate fixed by the Scheme (not exceeding a statutory ceiling) on the value of such sale proceeds. The certificate was set off against income-tax and otherwise refundable. The operative detail lived in the Tax Credit Certificate (Exports) Scheme, 1965, framed under ss. 280ZC and 280ZE.
2. The central controversy — who is the 'exporter'?
In the canalised-trade era, exports of many commodities were routed through State trading agencies and export houses. This produced the recurring dispute the section is remembered for: when goods are physically exported through a canalising agency but the manufacturer earns and repatriates the foreign exchange, who is entitled to the certificate? The Supreme Court in MMTC v. R.C. Mishra answered that entitlement follows substance — the person who in truth exports and receives the sale proceeds in India in foreign exchange — so the manufacturer (Ferro Alloys), not the canalising agency (MMTC, which took a 2% commission), was the exporter for s. 280ZC. The twin statutory keys are 'export out of India' and 'receipt of sale proceeds in India under FERA'; an intermediary that satisfies neither in substance does not capture the incentive.
3. The transitional production-bar
On omission in 1990 the legislature barred production of any s. 280ZC certificate before the Assessing Officer after 31 March 1991 for the purposes of sub-section (4) of s. 280ZC (mirroring the bar on s. 280Z certificates). After that date an unutilised export certificate could no longer be encashed against tax. Whether any claim still pending at omission survives is governed by the omission-effect jurisprudence.
Finance Act, 2026 — position
Chapter XXII-B is wholly omitted and the Finance Act, 2026 leaves it untouched. The references to 'section 280...' in the Finance Act, 2026 relate to Chapter XXII (Offences and Prosecutions) — e.g. ss. 276B-276D, 277, 278, 280 — and to the corresponding provisions of the Income-tax Act, 2025; they have no bearing on the tax-credit-certificate sections 280Y-280ZE. No revival, re-enactment or saving of this chapter is proposed.
B. STATUTORY TEXT (verbatim from the bare Act)
The section stands omitted. The current bare Act (as amended up to the Finance Act, 2025) prints only the side-heading and the editorial omission note reproduced below; the original 1965-1990 text is not carried in the bare Act. Reproduced verbatim:
Tax credit certificate in relation to exports.
280ZC. [Omitted by the Finance Act, 1990, w.e.f. 1-4-1990.]
Chapter-level editorial note (verbatim):
[Chapter XXII-B, consisting of sections 280Y, 280Z, 280ZA, 280ZB, 280ZC, 280ZD and 280ZE, omitted by the Finance Act, 1990, w.e.f. 1-4-1990. No tax credit certificate granted under section 280Z or section 280ZC shall be produced before the Assessing Officer after the 31st day of March, 1991 for the purposes of sub-section (6) of section 280Z or, as the case may be, sub-section (4) of section 280ZC. Earlier Chapter XXII-B was inserted by the Finance Act, 1965, w.e.f. 1-4-1965.]
C. AUTHORITIES
The section is anchored by a Supreme Court decision on the identity of the exporter, read with the Scheme-construction and omission clusters.
Cluster — Identity of the exporter / receipt of sale proceeds (the operative controversy)
Mineral and Metal Trading Corporation (MMTC) v. R.C. Mishra, AIR 1994 SC 1523; (1993) Supp (3) SCC 29 (SC)
Facts: Ferro Alloys Corporation, a manufacturer-exporter of ferro-manganese and chrome concentrates, contracted with foreign buyers but routed the export through MMTC to fit the Government's private-barter/canalisation system. A dispute arose over who was entitled to the s. 280ZC certificate.
Held: The 'real exporter' was Ferro Alloys, which earned and received the foreign exchange; MMTC received only its 2% commission and was not the exporter. The certificate followed the person who in substance exported and brought in the sale proceeds in India in foreign exchange.
Ratio: Section 280ZC entitlement is determined by substance — export of goods out of India plus receipt of the sale proceeds in India under FERA — not by the formal routing of documents through a canalising agency.
National Company Ltd. v. Deputy Director of Tax Credit (Exports) (1977)
Subject: Claim to a tax credit certificate under s. 280ZC read with the Tax Credit Certificate (Exports) Scheme, 1965, turning on whether the claimant qualified as the exporter and on the receipt of sale proceeds in India.
Use: An earlier illustration of the same export-entitlement controversy that the Supreme Court later settled in MMTC; cited for the proposition that the s. 280ZC benefit attaches to genuine export with repatriation of proceeds, and that the Scheme machinery (appeal to the Government under the Scheme) had to be exhausted. To be read with the full report before reliance, the controversy having been authoritatively resolved by MMTC.
Cluster — Construction of the Tax Credit Certificate Schemes (machinery framed under s. 280ZE)
The charging sections (280ZC export, 280ZD increased production) operated only through Schemes notified under s. 280ZE. The leading decisions therefore turn on the Scheme clauses as much as on the section.
Mineral and Metal Trading Corporation (MMTC) v. R.C. Mishra, AIR 1994 SC 1523; (1993) Supp (3) SCC 29 (SC)
Scheme: Tax Credit Certificate (Exports) Scheme, 1965, framed under ss. 280ZC and 280ZE.
Holding: Where a manufacturer (Ferro Alloys Corporation) routed its exports of ferro-manganese/chrome concentrates through MMTC under the canalised/private-barter arrangement but earned and received the foreign exchange itself, the 'real exporter' entitled to the tax credit certificate under s. 280ZC was the manufacturer who received the sale proceeds, not the canalising agency which took only its 2% commission. The Court looked to the substance of who exported and received the sale proceeds in India in foreign exchange.
Principle: Entitlement under s. 280ZC follows the person who in substance exports and brings in the sale proceeds; intermediation for channelisation does not transfer the incentive.
Titaghur Paper Mills Co. Ltd. v. Union of India (Calcutta High Court, 6 June 1973)
Scheme: Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme, 1965, framed under ss. 280ZD and 280ZE.
Holding: The benefit under s. 280ZD is computed class-of-goods-wise, not by lumping together all varieties: each distinct variety/quality of paper (item 17, First Schedule, Central Excises and Salt Act, 1944) that comes to the market as a separate article is a separate 'class of goods' for the excess-clearance computation. However, for any given class of goods, where the same class is made in more than one factory of the assessee, the excess of the relevant-year clearance over the base-year clearance is to be worked out on the aggregate of all such factories, not factory-by-factory — as the Scheme's Forms A, B and C and cl. 5 (with its proviso requiring a Form-B declaration per factory) demonstrate.
Principle: Twin construction of s. 280ZD/Scheme — 'goods' is read class-wise; 'quantum cleared' is read assessee-wise (all factories making that class) and not unit-wise.
Cluster — Legal effect of the omission of the chapter (General Clauses Act)
Because every section of Chapter XXII-B has been omitted, the practitioner question is no longer how the incentive worked but what survives the omission — accrued tax-credit certificates, pending claims, and pending proceedings. The governing authorities are the following, applied here as cognate authority (none arose on a tax-credit-certificate section, but each settles the principle on which any residual XXII-B claim now turns).
Fibre Boards (P) Ltd. v. CIT, (2015) 376 ITR 596 (SC)
Section: 280Y(d) / 280ZA / 54G read with ss. 6 & 24, General Clauses Act, 1897.
Holding: The omission of s. 280ZA (and the consequential redundancy of s. 280Y(d), which only defined 'urban area' for s. 280ZA) and its re-enactment with modification as s. 54G was treated as a 'repeal' for the purposes of the General Clauses Act. The Court held that the expression 'repeal' in ss. 6 and 24 takes in an omission — even an implied repeal — so long as a provision is obliterated; accordingly the 1967 notification declaring Thane an urban area, issued under s. 280Y(d), continued to enure for s. 54G by virtue of s. 24.
Why it matters here: This is the leading modern pronouncement that directly construes Chapter XXII-B. It establishes that the dismantling of the chapter is a 'repeal', so saved rights and subordinate legislation made under the chapter do not automatically perish. It expressly disapproved the contrary reading that 'omission' is something wholly outside 'repeal'.
Read with: CIT v. Venkateswara Hatcheries (P) Ltd., (1999) 3 SCC 632 and State of Punjab v. Harnek Singh, (2002) 3 SCC 481 (both referred); and the omission/repeal debate noted below.
General Finance Co. v. ACIT, (2002) 257 ITR 338 (SC)
Section: s. 6, General Clauses Act, applied to an omitted penal provision (s. 276DD).
Holding: An 'omission' of a provision is distinct from a 'repeal'; s. 6 of the General Clauses Act, in terms, saves only the consequences of a 'repeal' and does not, of its own force, save proceedings under a provision that is merely omitted. A prosecution under the omitted s. 276DD could therefore not be launched or continued by invoking s. 6 after the omission. The Court, following Rayala Corporation and Kolhapur Canesugar, declined to treat omission as repeal for s. 6.
Why it matters here: The point of tension with Fibre Boards. For pending penal or recovery action keyed to an omitted XXII-B section, General Finance supplies the assessee's argument that nothing survives; Fibre Boards supplies the Revenue's. The two are reconciled on the footing that what is omitted-and-simultaneously-re-enacted (280ZA to 54G) is a 'repeal', whereas a bare omission with nothing put in its place (the penal context) is not saved by s. 6.
Rayala Corporation (P) Ltd. v. Director of Enforcement, (1969) 2 SCC 412 (SC)
Holding: A rule that is simply omitted (there, r. 132A of the Defence of India Rules) is not 'repealed' within s. 6 of the General Clauses Act, so proceedings cannot be commenced after the omission in the absence of an express saving.
Why it matters here: Foundational authority for the 'omission is not repeal' line relied on in General Finance and considered in Fibre Boards; bears directly on whether residual XXII-B claims/notices survive 1-4-1990.
Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536 (SC, Constitution Bench)
Holding: Where a rule is deleted/omitted and no contrary intention or saving appears, s. 6 of the General Clauses Act is not attracted; whether pending proceedings continue depends on the language of the repealing/omitting provision and any saving clause.
Why it matters here: Confirms that the survival of accrued XXII-B rights and pending claims must be located in the omitting Finance Acts and the transitional bar (production of 280Z/280ZC certificates barred after 31-3-1991), not in any general presumption of continuance.
State of Orissa v. M.A. Tulloch & Co., AIR 1964 SC 1284 (SC, Constitution Bench)
Holding: Repeal may be express or implied; the form is immaterial so long as the earlier law is displaced. An implied repeal is as much a 'repeal' as an express one.
Why it matters here: Relied on in Fibre Boards to hold that the omission/replacement of XXII-B provisions is a 'repeal' attracting the saving in s. 24 of the General Clauses Act.
Shree Bhagwati Steel Rolling Mills v. CCE, 2015 (326) ELT 209 (SC)
Holding: Reiterating the approach in Fibre Boards, the Court held that 'repeal' in s. 6 of the General Clauses Act covers the obliteration of a provision howsoever effected; when s. 6 speaks of repeal of 'any enactment' it includes any provision of an Act, whether repealed or omitted.
Why it matters here: The most recent Supreme Court reinforcement of the Fibre Boards view, useful where the Revenue contends that an accrued XXII-B liability or right is preserved notwithstanding omission.