Hi Mr Bhatia, I have some information on "Penultimate sale for export."

Export is a specialised business and many small units are unable to export directly. Export is often effected through specialised agencies like Export Houses etc, termed as Merchant Exporters under EXIM Policy. Manufacturers who export the goods themselves are termed as ‘Manufacturer Exporters’ in EXIM Policy. Such indirect exports also need exemption from taxes to make the products competitive. Hence, such penultimate sale, i.e. sale preceding the sale occasioning export is also deemed to be in the course of export under section 5(3) of CST Act and is exempt from tax.

Exemption to penultimate sale is subject to the condition that the penultimate sale (i.e. last but one sale) is (a) for purpose of complying with agreement or order in relation to export and (b) such sale is made after the agreement or order in relation to export and (c) same goods which are sold in penultimate sale should be exported. In other words, the final exporter should be in possession of export order from foreign buyer and should take delivery of goods from the supplier making penultimate sale solely for execution of such export order and export the same goods.

It must be noted that only Penultimate Sale is exempt, but purchases earlier to penultimate sale are not exempt and purchase tax is payable if prescribed.

There must be a pre-existing agreement or order to sell the specified goods to a foreign buyer, last purchase must be after the agreement with foreign buyer and the last purchase must be made for complying with the pre-existing order. Only then the transaction is covered under section 5(3) i.e. it is treated as a Penultimate Sale.

Mr. Rajeev Mehta

(Tradeindia Expert)

Mehta Stores

Managing Director, Mehta Stores
New Delhi, India

Thank you for your valuable information.

Mr. Venu Gopal

Nuchem Limited

Nuchem Limited
Faridabad, India

Free Member, Joined :09/13/2006
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Very Good Reply - Thank You !!

Best wishes
Narayan P singhania

Mr. Narayan P. Singhania

N K Enterprises

C.E.O., N K Enterprises
Jharsuguda, India

Free Member, Joined :02/06/2003
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