Ex-works valuation principle: transit insurance alone does not shift the place of removal or justify adding freight to assessable value.

An ex-works sale remained valued at the factory gate because delivery was made before despatch, payment was received in advance and risk passed to the buyer when goods were handed to the carrier. Section 4 of the Central Excise Act fixes assessable value by reference to the place of removal, and on these facts the factory premises, not the buyer's premises, was that place. The seller's arrangement of transit insurance at the buyer's request did not by itself show retention of title, since insurance of another's interest is legally possible. Freight and transit insurance were therefore not includible in assessable value, and the duty demand and penalty could not be sustained.

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Issues: Whether, on an ex-works sale where the seller arranged transit insurance at the buyer's request and recovered the charges separately, the place of removal shifted from the factory gate to the buyer's premises so as to include freight and transit insurance in the assessable value.

Analysis: The sale terms showed delivery ex-works at the factory gate, payment before despatch, and risk passing to the buyer on handing over the goods to the carrier. Section 4 of the Central Excise Act, 1944 fixes valuation with reference to the normal price at the time and place of removal, and the place of removal in the facts was the factory premises. Section 39 of the Sale of Goods Act, 1930 supports the position that delivery to a carrier for transmission to the buyer is prima facie delivery to the buyer. The mere fact that the manufacturer arranged transit insurance did not establish retention of ownership, because insurance of another's interest is legally possible and does not by itself determine passing of property.

Conclusion: The duty demand and penalty could not be sustained on the footing that transit insurance showed retention of title or that the buyer's premises was the place of removal. The addition of freight and transit insurance to the assessable value was unjustified, and the assessee succeeded.

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