Import-linked sales deduction fails where goods are independently imported and later assembled into a distinct commercial product.

Sales of lightning discharger tubes and operators' headgear sets qualified for deduction from taxable turnover only if the sales occasioned import or were effected by transfer of documents before the goods crossed customs frontiers. On the stated facts, the tubes were imported on the dealer's own licence and supplied to the railways under the dealer's purchase, not under the buyer's sale contract, so the necessary import-sale nexus was absent. The headgear sets were supplied only after imported components were assembled into complete sets, and the assembling activity created a new commercial product distinct from the imported parts. The claimed deduction was therefore unavailable.

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Issues: Whether the disputed sales of lightning discharger tubes and operators' headgear sets were sales in the course of import so as to qualify for deduction from taxable turnover, and whether the assembling activity carried out by the dealer amounted to manufacture resulting in a different commercial commodity.

Analysis: The exemption under section 5(2) of the Central Sales Tax Act, 1956 and section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941 applies only where the sale occasions the import or is effected by transfer of documents before the goods cross the customs frontiers. On the facts, the lightning discharger tubes were imported on the dealer's own licence and the supply to the railways was pursuant to the dealer's purchase and not pursuant to the sale contract with the purchaser. The headgear sets likewise were supplied only after the imported components were assembled into complete sets. The assembled products were held to be different from the imported components, and the activity of assembling brought into existence a new commercial product. In the absence of the necessary integral link between the sale and the import, the claimed deduction was unavailable.

Conclusion: The disputed sales did not take place in the course of import and were not deductible from taxable turnover. The claim was rightly rejected against the assessee.

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