Ex-works sales and factory acceptance keep freight reimbursement and transit insurance out of assessable value under excise law.

Where goods are sold on an ex-works basis and are inspected and accepted at the factory before dispatch, the place of removal remains the factory gate. Freight charges and transit insurance separately reimbursed by the buyer for transport after such acceptance are not part of the assessable value under excise law. The subsequent movement to the buyer's premises is only for convenience and does not shift the point of sale or removal. Accordingly, freight reimbursement and transit insurance were excluded from assessable value.

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Issues: Whether freight charges and transit insurance paid for transportation of goods to the buyer's premises, but reimbursed by the buyer, were includible in the assessable value, and whether the place of removal shifted from the factory gate to the place of delivery.

Analysis: The goods were required to be inspected and passed at the appellant's factory before dispatch, and the purchase arrangement showed ex-works pricing with freight separately reimbursed. Once inspection was completed at the factory, the subsequent transport to the Railways' stores was only for convenience and did not alter the point of sale or removal. The facts were found distinguishable from a case where the price itself included transportation and delivery took place at the buyer's premises. On these facts, freight reimbursement and transit insurance did not form part of the assessable value.

Conclusion: Freight charges and transit insurance were not includible in the assessable value, and the place of removal remained the factory gate. The issue was decided in favour of the assessee.

Ratio Decidendi: Where goods are sold on an ex-works basis, inspected and accepted at the factory, and transportation charges are separately reimbursed by the buyer, freight and transit insurance do not form part of the assessable value under excise law.

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