Ex-factory sale valuation excludes post-removal freight from assessable value, even when customers reimburse transportation charges.

Ex-factory sales place the factory at the centre of the valuation exercise, so transportation beyond the place of removal is excluded from assessable value under Section 4 of the Central Excise Act, 1944 and Rule 5 of the Central Excise Valuation Rules. Where final products are cleared at the factory gate, freight incurred after that point is not part of the assessable value even if customers later reimburse it. On that settled valuation principle, the reimbursed transportation charges were not includible in assessable value, and the appeal succeeded.

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Issues: Whether transportation charges paid for clearance of final products and later reimbursed by customers are includible in the assessable value where the sale is at the factory gate.

Analysis: The dispute turned on the meaning of "place of removal" under Section 4 of the Central Excise Act, 1944 for the relevant period. The goods were sold at factory gate, so the factory was the place of removal. Freight incurred beyond that point was transportation beyond the place of removal and, under Rule 5 of the Central Excise Valuation Rules, could not form part of the assessable value. The Tribunal followed the settled position that in an ex-factory sale, transportation charges are excluded from valuation.

Conclusion: The transportation charges reimbursed by the customers were not includible in the assessable value, and the appeal succeeded.

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