Factory-gate arms' length price governs assessment where genuine sales exist despite a smaller sales volume.

Where genuine arms' length sales exist at the factory gate, their declared price is the proper basis for assessment even if most goods are sold at buyers' premises with separate delivery charges. Factory-gate sales cannot be disregarded merely because they form a smaller portion of total sales, so long as buyers take delivery in their own vehicles and pay the stated price without extra charge. On that basis, the revision application succeeded, the order-in-appeal was set aside, and relief was granted to the assessee.

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Issues: Whether, for assessment purposes, the price realised from sales at the factory gate on arms' length terms was required to form the basis of valuation, notwithstanding that the bulk of the goods was sold at buyers' premises with additional delivery charges.

Analysis: The order accepted that sales at the factory gate were established by purchases made by buyers who took delivery in their own vehicles and paid the declared price without any extra charge. It rejected the view that such sales were merely stray and incapable of being relied upon, holding that factory-gate sales at arms' length could not be ignored merely because they formed a smaller portion of total sales.

Conclusion: The factory gate price from arms' length sales was held to be the proper basis of assessment.

Final Conclusion: The revision application succeeded and the order-in-appeal was set aside, resulting in relief to the assessee.

Ratio Decidendi: Where genuine arms' length sales exist at the factory gate, that price constitutes the basis of assessment even if the quantity of such sales is limited.

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