Outward freight and transit insurance are excluded from assessable value where non-FOR sales pass risk at the factory gate.

In non-FOR sales where goods were despatched at the buyer's risk, outward freight and transit insurance were not includible in assessable value under section 4 of the Central Excise Act, 1944. The invoices showed that the seller did not accept liability for loss, breakage or shortage after clearance from the factory, and the mere fact that transit insurance was taken in the seller's name did not establish that ownership or risk remained with the seller. Applying sections 23 and 39 of the Sale of Goods Act, 1930, delivery at the factory gate was treated as delivery to the buyer, so the demand failed.

---

---

Issues: Whether, in non-FOR sales where the goods were despatched at the buyer's risk and transit insurance was taken by the assessee in its own name, freight and transit insurance charges were includible in the assessable value under section 4 of the Central Excise Act, 1944.

Analysis: For the disputed non-FOR sales, the invoices recorded that the goods were despatched at the buyer's risk and that the assessee did not accept responsibility for loss, breakage or shortage after the goods left the factory. The fact that the assessee arranged transit insurance and later recovered the compensation from the insurer for onward passing to the buyers did not, by itself, establish that ownership remained with the assessee during transit. The relevant test was whether the property in the goods passed at the factory gate or at the buyer's premises. Applying sections 23 and 39 of the Sale of Goods Act, 1930, and following the principle that mere arrangement of transit insurance does not mean retention of title, the carriage to the transporter amounted to delivery to the buyer.

Conclusion: Freight and transit insurance were not includible in the assessable value for the non-FOR sales, and the demand could not be sustained.

Ratio Decidendi: For determining the place of removal and includibility of outward freight and transit insurance, the decisive factor is whether the seller retained ownership and risk during transit; mere procurement of transit insurance in the seller's name does not establish retention of title.

---