Factory gate valuation in principal-to-principal sales excludes buyers' repacking and marketing costs from assessable value.

Factory gate sales of bulk detergent powder on a principal-to-principal basis formed the proper basis for valuation where the purchasers were not shown to be related persons, dummy units, or an extended arm of the assessee. The record did not establish undervaluation or show that the transfer was merely a delivery arrangement rather than a sale. Purchasers' repacking and advertising or marketing expenses were their own post-sale costs and were not includible in the assessee's assessable value. The repacking process was also not treated as manufacture during the relevant period, so the assessable value could not be enhanced on that basis.

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Issues: Whether the price charged at the factory gate on sale of bulk detergent powder to purchasers who repacked and marketed the goods could be rejected and the purchasers' repacking and advertisement expenses added to the assessable value under the valuation rules.

Analysis: The sale to the purchasers was on principal to principal basis and the purchasers were not shown to be related persons, dummy units, or the extended arm of the assessee. The record did not support a finding of undervaluation or a finding that the transfer was merely a delivery rather than a sale. The expenses incurred by the purchasers for repacking and marketing were their own expenses and could not be added to the assessee's assessable value. The process of repacking was also not treated as manufacture during the relevant period.

Conclusion: The factory gate sale price was the proper basis for valuation and the purchasers' repacking and marketing expenses were not includible in the assessable value. The assessee succeeded.

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