Equalised freight not added to assessable value where no nexus with goods is proved

Excess freight recovered over actual freight was not includible in the assessable value under Rule 5 of the Central Excise Valuation Rules, 2002 because there was no material showing that the additional recovery was consideration for the goods or part of the product cost. The principle applied was that equalised freight is not added to assessable value unless the Revenue establishes a nexus with the goods. On that basis, the excess freight was excluded from valuation and the Revenue's appeal was rejected.

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Issues: Whether the excess freight recovered over actual freight incurred was includible in the assessable value of the final product under Rule 5 of the Central Excise Valuation Rules, 2002.

Analysis: The respondent's relief had been granted on the basis that there was no material to show that the excess freight recovery represented additional consideration for the goods. The Revenue also did not point to any evidence establishing that the amount recovered over actual freight formed part of the cost of the final product. In this context, the principle that equalised freight is not to be added to assessable value was applied.

Conclusion: The excess freight was not includible in the assessable value, and the Revenue's appeal was rejected.

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