Assessable value in ex-factory sales excludes post-clearance freight and transit insurance when charged separately and not part of price.

In ex-factory sales, freight and transit insurance incurred after clearance from the factory are not includible in assessable value unless the sale terms show that such post-clearance expenses form part of the price up to the place of removal. Separate recovery of freight and insurance in the invoice, by itself, does not justify inclusion where the buyer's premises is not treated as the place of removal. The valuation principle applied was that transportation and transit insurance after removal do not form part of assessable value on ex-factory supply. Accordingly, freight and insurance charges were excluded and the demand based on their inclusion was unsustainable.

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Issues: Whether freight and insurance charges, shown separately in the invoice in respect of ex-factory sales, are includible in the assessable value of excisable goods.

Analysis: The dispute turned on the correct place of removal and the scope of assessable value under the valuation provisions. The invoices showed ex-factory sale with freight and insurance separately charged. The decision applied the settled principle that transportation and transit insurance after clearance from the factory do not form part of assessable value where the sale is on ex-factory basis and the buyer's premises cannot, by itself, be treated as the place of removal. The conclusion followed the ratio that ownership or risk during transit, and the mere fact that freight or insurance is borne or recovered separately, does not by itself justify inclusion in the assessable value.

Conclusion: Freight and insurance charges were held not includible in the assessable value, and the demand based on such inclusion was unsustainable.

Ratio Decidendi: In an ex-factory sale, freight and transit insurance incurred after clearance from the factory are not includible in assessable value unless the sale terms show that such post-clearance expenses form part of the price up to the place of removal.

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