Factory gate valuation prevails where genuine ex-factory sales exist, defeating depot-price demand and penalty.

Genuine ex-factory sales to unrelated buyers were treated as the normal price for valuation under Section 4(1)(a) where the documentary record showed such sales across the relevant period for all disputed products. The proportion of factory gate sales was irrelevant once genuineness was established, and the Revenue produced no material to disprove the factory gate prices or show that the buyers were only special classes. On that basis, depot prices could not replace the normal price for valuation, so the demand based on depot pricing was not sustainable and the penalty also failed.

---

---

Issues: Whether the Appellant was entitled to adopt the genuine factory gate sale price under Section 4(1)(a) for valuation of goods cleared to depots, and whether the demand and penalty based on depot prices could be sustained.

Analysis: The documentary evidence showed genuine ex-factory sales to a large number of unrelated buyers across the relevant period for all the products in dispute. The earlier decision on the same valuation issue had already held that once a genuine factory gate price exists, that price is the normal price for valuation and the proportion of such sales is irrelevant. The Revenue did not produce material to disprove the genuineness of the factory gate prices or to show that the buyers formed only special classes. On that basis, the price adopted for depot clearances could not displace the normal price under Section 4(1)(a), and the demand founded on depot pricing was not sustainable. The penalty also could not survive once the valuation basis failed.

Conclusion: The valuation adopted by the Appellant was upheld, and the demand and penalty were set aside.

---