FOR contract freight includible in assessable value when delivery occurs at buyer's premises and risk stays with the consignor.

Freight charged for transport from the factory gate to the buyer's premises was treated as part of assessable value where the supply moved under FOR terms, with delivery completed only at the buyer's premises and the goods travelling at the consignor's risk on a freight-paid basis. On that footing, the buyer's premises was regarded as the relevant place of valuation and outward freight became includible. Non-disclosure of the contract terms and risk allocation to the Department was treated as suppression of material facts, supporting invocation of the extended period of limitation for the earliest demand. The duty demands were therefore upheld, with interest and penalty also sustained.

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Issues: (i) Whether freight incurred for transportation of goods from the factory gate to the buyer's premises formed part of the assessable value where the supply was under FOR contract terms. (ii) Whether the extended period of limitation was invocable for the earliest demand.

Issue (i): Whether freight incurred for transportation of goods from the factory gate to the buyer's premises formed part of the assessable value where the supply was under FOR contract terms.

Analysis: During the relevant period, the place of removal under Section 4(3)(c) of the Central Excise Act, 1944 was confined to the factory or other specified premises, and Rule 7 of the Central Excise Valuation Rules, 2004 governed valuation where sale took place from premises other than the factory. The contract terms showed that the goods were dispatched at the consignor's risk on freight-paid basis and delivery was to be completed only at the buyer's premises. On that footing, the sale was treated as taking place at the buyer's premises, making the outward freight an element of value.

Conclusion: Freight from the factory gate to the buyer's premises was includible in the assessable value and the duty demand was sustainable.

Issue (ii): Whether the extended period of limitation was invocable for the earliest demand.

Analysis: The details of the supply contracts and the risk allocation were not disclosed to the Department. In those circumstances, suppression of relevant facts justified invocation of the extended period for the earliest show cause notice.

Conclusion: The extended period of limitation was validly invoked.

Final Conclusion: The impugned order dropping the demands was set aside, the duty demands were confirmed, interest became payable, and penalty was sustained.

Ratio Decidendi: Where contractual terms show that goods are delivered at the buyer's premises at the consignor's risk on freight-paid basis, the buyer's premises becomes the relevant place for valuation and outward freight is includible in assessable value; nondisclosure of such contract terms can justify the extended period of limitation.

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