Transaction value under Section 4 excludes freight-related depot charges from assessable value where factory gate price is available.

Under the substituted Section 4 and the transaction value concept, transportation and freight-related charges shown as depot or handling charges were not includible in the assessable value where factory gate clearance was reflected in the excise records and goods were sold from depots at the prevailing depot price. The Tribunal treated excise as a levy on manufacture and held that the manner in which such charges were described in invoices did not justify adding them to assessable value. On that basis, the demand based on their inclusion was unsustainable and the Revenue appeal was dismissed.

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Issues: Whether transportation charges shown as depot charges or handling charges were includible in the assessable value of excisable goods cleared to depots.

Analysis: The dispute turned on valuation under the substituted Section 4 with effect from 01.07.2000 and the concept of transaction value. The clearance from the factory gate was reflected in the excise records, and the assessee had sold the goods from depots at the prevailing depot price. On the facts, the Tribunal found that the demand proceeded on an incorrect application of the valuation rules where factory gate price was available. It held that excise is a levy on manufacture and that transportation or freight related charges are not to be added to assessable value merely because they were described differently in invoices.

Conclusion: The transportation charges were not includible in the assessable value, and the demand based on their inclusion was unsustainable.

Final Conclusion: The assessee succeeded in resisting the excise demand, and the Revenue appeal was dismissed.

Ratio Decidendi: Where factory gate price is available and the goods are assessed on the basis of transaction value under Section 4, transportation or freight related charges are not includible in the assessable value merely because of the manner in which they are described in the invoices.

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