Assessable value under transaction value excludes empty tanker return freight when freight is separately invoiced and Section 4 applies.

Where excisable goods were sold at the factory gate on a transaction value basis and freight was shown separately in the invoices, assessable value had to be determined under Section 4(1)(a) of the Central Excise Act, 1944. Recourse to valuation rules was not warranted unless value could not be determined under the principal provision. The special requirement of empty return movement of tankers did not justify adding return freight to the assessable value, and mechanical reliance on a Board circular without independent application of mind was improper. Return fare for empty tankers was therefore not includible, and valuation under Rule 5 was unwarranted.

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Issues: Whether the return fare or freight for empty specially designed tankers used to transport the goods was includible in the assessable value of the excisable goods, and whether valuation had to be made under Rule 5 instead of Section 4(1)(a) of the Central Excise Act, 1944.

Analysis: The goods were sold at the factory gate on a transaction value basis, with freight shown separately in the invoices. In such a case, the assessable value is to be determined under Section 4(1)(a) of the Central Excise Act, 1944, and recourse to the valuation rules is not warranted unless value cannot be determined under the principal valuation provision. The special nature of transportation requiring empty return of tankers did not justify adding the return freight to the assessable value. Mechanical reliance on the Board circular, without independent application of mind to the facts and governing law, was improper.

Conclusion: Return fare for empty tankers was not includible in the assessable value, and valuation under Rule 5 was unwarranted. The issue was decided in favour of the assessee.

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