Excise valuation excludes differential freight retained over actual transport cost when duty is confined to manufacture.

Valuation under central excise law required determining whether the excess of equalized freight over actual transportation cost formed part of assessable value. Applying the principle that excise duty is a levy on manufacture and not on profit earned on transportation, the Tribunal held that the differential freight could not be added merely because freight recovered exceeded the expenditure incurred. The differential freight was therefore not includible in assessable value, and the demand failed.

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Issues: Whether the differential amount between the equalized freight collected and the actual transportation cost was includible in the assessable value for levy of central excise duty.

Analysis: The dispute turned on valuation under the excise law. The Tribunal noted that the controversy was already settled by the Supreme Court, which had held that excise duty is a tax on manufacture and not a tax on profit earned on transportation. On that principle, the excess amount retained over actual freight could not be added to the assessable value merely because the freight recovered exceeded the expenditure incurred.

Conclusion: The differential freight was not includible in the assessable value and the demand could not be sustained. The appeal was therefore allowed.

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