Report No. 30
59. Mysore Spinning case.-The next case which may be referred to is State of Mysore v. Mysore Spinning and Manufacturing Co. Ltd., AIR 1958 SC 1002. Here, the Respondents who are Textile Mills at Bangalore carry on business as manufacturers and sellers of textile goods, such as cotton and yarn. These mills sold to licensed export dealers at Bombay and other ports who exported the goods to foreign buyers. The Mills had no direct contract with any foreign buyer. The licensed exporters at the ports dealt with them (foreign buyers) and the Mills dealt with the exporters.
The procedure in which this business of export was conducted may also be briefly noted. In the first place, the exporters used to obtain a firm offer from a buyer overseas specifying the quality and quantity of cloth or yarn required by the buyer. Thereafter the exporters would enquire from the Mills whether they could sell or manufacture goods of the quality and quantity required by the overseas buyer. If the Mills said, "Yes", the exporter entered into a firm contract with the foreign purchaser and thereafter the exporter entered into a contract with the Mills for the sale of those goods.
The contract had to be marked "tor export only", and the prices fixed had to be higher than the inland prices. The specifications and the details of the goods, had also to be entered. Thereafter the Mills packed the goods and despatched them to the exporter. The goods had to be marked clearly "for export only". Then finally, the exporter took delivery of the goods and shipped them overseas.
Thus, it was clear that from first to last, the Mills had no direct contact with the overseas buyer and that the sales that occasioned the export were not the sales by the Mills to the exporter. But the Mills contended that, nevertheless, these sales were made in the course of export and so protected by Article 286(1)(b).