Factory-gate sale excludes post-removal freight charges and defeats suppression-based extended limitation when charges were disclosed.

Where goods were sold at the factory gate and handed over to the transporter on an ex-factory basis, freight, transportation and transit insurance charges incurred after removal were not part of the assessable value because the sale was complete at the place of removal. The assessee's disclosure of these charges in price lists and declarations also meant that suppression was not established, so the extended limitation period could not be invoked and penalty could not be sustained.

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Issues: (i) Whether freight, transportation and transit insurance charges collected after clearance of goods from the factory were includible in the assessable value when the sale was effected at the factory gate. (ii) Whether the extended period of limitation could be invoked and penalty sustained on the allegation of suppression of facts.

Issue (i): Whether freight, transportation and transit insurance charges collected after clearance of goods from the factory were includible in the assessable value when the sale was effected at the factory gate.

Analysis: The determining factor was the place of removal and the point at which the sale was completed. On the documentary record, including invoices, lorry receipts and transport documents, the goods were handed over to the transporter at the factory gate and the ex-factory price was ascertainable. The subsequent arrangement of transportation to the buyer's premises did not alter the character of the sale. The statutory distinction between the factory as the place of removal and a depot or other place from where goods are sold supported exclusion of post-removal charges. The sale was treated as complete on delivery to the carrier, and the later collection of transport charges from customers could not enlarge the assessable value.

Conclusion: Freight, transportation and transit insurance charges after factory-gate clearance were not includible in the assessable value, and this issue was decided in favour of the assessee.

Issue (ii): Whether the extended period of limitation could be invoked and penalty sustained on the allegation of suppression of facts.

Analysis: The assessee had disclosed the fact of collection of transportation and freight charges in its price lists and declarations, and the departmental record did not establish concealment of material facts. Since the factual basis for the demand was already disclosed, suppression was not made out. In the absence of suppression, the longer limitation period could not be invoked, and the foundation for penalty also failed.

Conclusion: The extended period of limitation was not invocable, and the penalty could not be sustained; this issue was decided in favour of the assessee.

Final Conclusion: The demand was unsustainable because post-removal freight and transportation charges were not part of the assessable value and the allegation of suppression was not established.

Ratio Decidendi: Where sale is completed at the factory gate and goods are handed over to the carrier without reservation of disposal, charges incurred for transportation or delivery after removal do not form part of the assessable value; disclosure of such charges in statutory records negates suppression for invoking the extended period.

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