Depot valuation allows separate contract prices for distinct buyer classes when goods are identified at factory gate.

For stock-transferred goods cleared from the factory to depots, valuation was governed by the depot as the place of removal, but Section 4(1)(a) allowed different normal prices for different classes of buyers. Because the invoices identified contract sales at the factory gate with the customer name and contract price, and that same price was carried through to the depot sale, the contract sales constituted a distinct class of buyers. On those facts, the lower contract price was correctly adopted as the assessable value for the relevant clearances, and no differential duty arose on the basis urged by Revenue.

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Issues: Whether, for goods stock-transferred to depots, duty was payable on the higher depot price charged to individual customers only, or whether contract prices charged to a distinct class of buyers could be adopted as the normal price under Section 4.

Analysis: The valuation scheme treated the depot as the place of removal for goods cleared from the factory for stock transfer, so duty was attracted at the time of clearance from the factory with reference to the price at the depot. The dispute arose because the assessee sold at more than one price at the depot on the same date. The proviso to Section 4(1)(a) permits different normal prices where goods are sold to different classes of buyers, and each such price is deemed to be the normal price for that class. The invoices showed that goods meant for contract sales were identified at the factory gate with the customer name and contract price, and the same price was reflected on subsequent depot sale. On those facts, the contract price represented a separate class price and could validly be adopted for valuation.

Conclusion: The lower contract prices were correctly accepted as the assessable value for the relevant clearances, and no differential duty was payable on the footing urged by Revenue.

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