Factory-gate valuation excludes actual freight recovered by debit note when only transportation cost is charged to buyers.

Freight or transportation charges recovered only to the extent of actual transportation cost through debit notes were excluded from the assessable value where goods were cleared from the factory gate. The factual finding that the assessee collected only actual transportation charges remained unchallenged, and in the absence of contrary evidence from the Revenue, Rule 5 of the Central Excise Valuation Rules, 2000 applied to permit exclusion of the freight element. The place of removal was treated as the factory gate, and Board circulars supporting determination of the point of sale and abatement of actual transport cost were relied on. The Revenue appeal was rejected and the assessee's valuation was upheld.

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Issues: Whether freight or transportation charges collected through debit notes were includible in the assessable value when the goods were cleared from the factory gate and the actual transportation cost alone was recovered from buyers.

Analysis: The factual finding recorded in appeal was that the respondent had collected only the actual transportation charges from customers through debit notes. In the absence of any contrary evidence from the Revenue, that finding remained unshaken. The valuation was held to be governed by Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, under which the freight element could be excluded where the charges represented actual transportation cost. The place of removal was treated as the factory gate, and the Board circulars relied upon supported determination of the point of sale and abatement of actual cost charged from buyers.

Conclusion: Freight charges actually recovered through debit notes were not liable to be included in the assessable value. The Revenue appeal was rejected and the order in favour of the assessee was upheld.

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