Transit insurance does not the point of sale where factory-gate sales and invoices show direct sale terms.

Transport and transit insurance arranged by an assessee do not, by themselves, fix the point of sale or transfer of ownership where goods are sold against purchase orders from the factory gate and invoices reflect the factory-gate price. Possession and ownership are treated as distinct concepts, and the mere fact that the seller arranges transport and insures the goods during transit does not establish that the sale occurred only at the customer's destination. On that basis, the article states that enhancement of assessable value, duty demand, and penalties were unsustainable.

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Issues: Whether goods sold on a factory-gate basis to customers, with transport and transit insurance arranged by the assessee, could be treated as sold only at the depots so as to enhance the assessable value, confirm duty demand, and sustain penalties.

Analysis: The assessee's case was that the sales were effected directly from the factory against purchase orders, the invoices reflected the factory-gate price, and the arrangement of transport and insurance was only a service to ensure delivery and safe transit. The Department's inference that possession was retained until delivery at the customer's premises was not accepted, as possession and ownership were treated as distinct concepts. The fact that the assessee arranged transport and insured the goods during transit did not by itself establish that the sale took place only at the destination. Reliance was placed on the principle that insurance coverage during transit is not the criterion for determining ownership or the point of sale.

Conclusion: The enhancement of assessable value, the duty demand, and the penalties were held unsustainable, and the appeal succeeded.

Ratio Decidendi: Transit insurance and transport arrangements, by themselves, do not determine the point of sale or ownership when the evidence shows a factory-gate sale against purchase orders.

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