Property passes on appropriation and carrier delivery; freight and transit insurance were excluded from assessable value.

Goods identified at the factory, inspected and marked for the buyer, and then handed to the carrier under contracts showing the seller as consignor and the buyer as consignee were treated as appropriated to the contract at dispatch. On that basis, property passed on delivery to the carrier, and deferred approval or payment clauses did not convert the transaction into a sale on approval or postpone transfer of title. Because the place of removal remained the factory gate, freight and transit insurance were not includible in the assessable value. The text states that the assessee's position was accepted on both issues.

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Issues: (i) Whether freight and transit insurance were includible in the assessable value on the footing that the place of removal was the buyer's premises and not the factory gate; (ii) whether the contract terms, including inspection, marking, delivery to carrier, insurance, and deferred approval/payment, showed a sale on approval or otherwise postponed passing of property to the buyer.

Issue (i): Whether freight and transit insurance were includible in the assessable value on the footing that the place of removal was the buyer's premises and not the factory gate.

Analysis: The legal position turns on the point at which property and possession pass from seller to buyer, because the place where the goods are sold or appropriated may constitute the place of removal under the valuation provision. The goods in question were identified at the factory, inspected by the buyer's representative, marked with the buyer's name, and then handed over to the transporter under contracts showing the seller as consignor and the buyer as consignee. In the relevant transactions, the seller did not retain control over dispatch in the manner found in earlier cases relied on by the Revenue.

Conclusion: The place of removal was the factory gate and freight and transit insurance were not includible in the assessable value. The finding is in favour of the assessee.

Issue (ii): Whether the contract terms, including inspection, marking, delivery to carrier, insurance, and deferred approval/payment, showed a sale on approval or otherwise postponed passing of property to the buyer.

Analysis: Under the Sale of Goods Act, intention of the parties governs passing of property, and unconditional appropriation occurs when specific goods are identified and delivered to a carrier for transmission to the buyer without reservation of disposal. Delivery to the carrier in pursuance of the contract operates as delivery to the buyer. The insurance arrangement, instead of negativing transfer of title, supported the conclusion that the seller bore transit risk under contract while title had already passed. The clause permitting balance payment after approval at destination was treated as a condition subsequent and not as a sale on approval or sale or return.

Conclusion: Property in the goods passed on appropriation and delivery to the carrier, and the deferred approval clause did not defer transfer of title. The finding is in favour of the assessee.

Final Conclusion: The appeals succeeded, the impugned orders were set aside, and the goods were held assessable on the factory-gate value without inclusion of freight and transit insurance.

Ratio Decidendi: Where goods are identified, appropriated to the contract, and delivered to a carrier for transmission to the buyer without reservation of disposal, property passes at that stage and later inspection or approval clauses do not, by themselves, make the sale one on approval or shift the place of removal to the buyer's premises.

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