Factory-gate sale principle excludes freight and transit insurance from assessable value when title passes to the carrier.

Where goods were sold at the factory gate and property passed on delivery to the carrier, transportation charges and transit insurance were excluded from assessable value because freight and post-sale insurance do not form part of the value of goods after title has passed to the buyer. The Tribunal noted that the buyer inspected and cleared the goods at the factory, and dispatch documents showed the seller as consignor and the buyer as consignee; arranging transport or insuring transit did not, by itself, delay transfer of ownership. Transportation charges and transit insurance were therefore not includible in assessable value.

---

---

Issues: Whether transportation charges and transit insurance were includible in the assessable value where the goods were sold at the factory gate and handed over to the carrier for delivery to the buyers.

Analysis: The goods were sold pursuant to purchase orders or tenders, the buyer inspected and cleared the goods at the factory, and the goods were then dispatched under documents showing the appellant as consignor and the buyer as consignee. The Tribunal applied the principle that where sale is effected at the factory gate and property in the goods passes on delivery to the carrier, freight and transit insurance do not form part of the assessable value. The Tribunal also noted that arranging transport or insuring the goods in transit does not, by itself, postpone the transfer of title to the buyer.

Conclusion: Transportation charges and transit insurance were not includible in the assessable value, and the issue was decided in favour of the assessee.

---