Penultimate sale exemption under export law depends on an inextricable link with the foreign sale and shipment.

A penultimate sale qualifies for export exemption where the local sale is inseverably and integrally connected with the export transaction and forms an inextricable part of the movement of goods to the foreign buyer. Applying that test, the distinction between rough granite blocks and polished granite slabs did not defeat the claim for exemption under Section 5(3) of the Central Sales Tax Act, 1958. The Revenue's further objection based on the absence of a prior agreement was not considered because it had not been raised before the Tribunal. The assessee was therefore held entitled to the exemption, and the Tribunal's order was set aside.

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Issues: Whether the assessee was entitled to exemption under Section 5(3) of the Central Sales Tax Act, 1958 on sales of rough granite blocks and polished granite slabs as penultimate sales in the course of export.

Analysis: The governing test is whether the local sale or purchase has an inseverable and integral connection with the export, so that the sale is inextricably linked with the movement of goods to a foreign buyer. Applying that principle, the distinction drawn by the Tribunal between rough granite blocks and polished granite slabs did not defeat the exemption claim. The Revenue's additional objection regarding the absence of prior agreement was not available for consideration, as it had not been raised before the Tribunal.

Conclusion: The assessee was entitled to exemption under Section 5(3) of the Central Sales Tax Act, 1958.

Final Conclusion: The Tribunal's order was set aside and the revision was allowed.

Ratio Decidendi: A penultimate sale qualifies for exemption under Section 5(3) of the Central Sales Tax Act, 1958 when the local sale is inseverably and integrally connected with the export so as to form an inextricable part of the export transaction.

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