Freight valuation under central excise excludes post-removal transport charges when factory-gate sale price is ascertainable.

Under Section 4 of the Central Excise Act, 1944, valuation had to reflect the normal price at the time and place of removal, and transportation cost was excluded where an ex-factory price was ascertainable. Genuine factory-gate sales to independent buyers at an undisputed price established such an ascertainable price, and the Department did not prove that the freight element formed disguised consideration for the goods. Charges collected after clearance were treated as post-removal service charges, not part of assessable value. The differential freight was therefore not includible, and the demand, interest and penalty could not survive.

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Issues: Whether the differential between freight charged on an equalised basis and the actual freight incurred was includible in the assessable value of excisable goods.

Analysis: For the relevant period, valuation under Section 4 of the Central Excise Act, 1944 turned on the normal price at the time and place of removal, with transportation cost to be excluded where the price for delivery at the place of removal was ascertainable. The existence of genuine factory-gate sales to independent buyers at an undisputed price established an ascertainable ex-factory price. The Department did not show that the factory-gate price was depressed or that the freight element was a disguised part of the sale price. Amounts collected for transportation after clearance of the goods were charges for a post-removal service and not additional consideration for the goods. The burden to prove inclusion rested on the Department, which was not discharged.

Conclusion: The differential freight was not includible in the assessable value, and the demand, interest and penalty could not survive.

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