Ex-factory valuation governs where factory-gate sales are genuine and ascertainable; depot-price based demand fails.

Where ex-factory sales to independent buyers are found genuine and the factory-gate price is ascertainable, that price must govern valuation. The unchallenged finding that the ex-factory price was genuine could not be displaced by treating depot price as the sole basis for assessment with deductions. On that footing, the demand was unsustainable because it rested on a contrary valuation premise. The order confirming duty, penalty and interest was set aside, and the appeal succeeded.

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Issues: Whether the existence and genuineness of ex-factory sales required adoption of the ex-factory price for assessment, and whether duty could still be demanded on the basis of depot prices with deductions.

Analysis: The record showed that sales were made at the factory gate to independent buyers and the price thereof was ascertainable. The adjudicating authority had itself recorded a clear finding that the ex-factory price was genuine and could form the basis of assessment for goods cleared from the depots. Once that factual finding stood unchallenged by the Revenue, the demand could not be sustained on a contrary premise that the ex-factory price was bogus or that depot price alone should govern valuation.

Conclusion: The demand based on depot price was unsustainable and the finding in favour of the genuineness of the ex-factory price operated in favour of the assessee.

Final Conclusion: The impugned order confirming duty, penalty, and interest was set aside, and the appeal succeeded.

Ratio Decidendi: Where ex-factory sales to independent buyers are found to be genuine and the price is ascertainable, that price must govern valuation and a demand premised on treating depot price as the sole normal price cannot be sustained.

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