Factory-gate sales and separately shown freight charges exclude transport costs from assessable value, even on an equalised basis.

Freight charges were held not to form part of the assessable value where excisable goods were sold at the factory gate and the invoices separately disclosed freight and insurance. The fact that freight was recovered on an equalised basis did not alter the valuation result, because transport charges remain excludible when the sale is complete at the factory gate and the charges are separately identified. The later contrary view was displaced by the subsequent Supreme Court position, confirming that such freight is not includible in assessable value.

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Issues: Whether freight charged on an equalised basis and shown separately in the invoices could be included in the assessable value when the goods were sold at the factory gate and not on FOR destination basis.

Analysis: The sales were at the factory gate and the freight and insurance were separately disclosed in the invoices. In such a situation, freight does not form part of the assessable value merely because it is recovered on an equalised basis. The exclusion of freight is consistent with the settled valuation principle that transport charges are not includible where the sale is complete at the factory gate and the charges are separately identified. Reliance on the later contrary view was displaced by the subsequent Supreme Court position.

Conclusion: Freight charged on an equalised basis and separately shown in the invoices was not includible in the assessable value. The finding was in favour of the assessee.

Ratio Decidendi: Where excisable goods are sold at the factory gate and freight is separately indicated in the invoices, freight is not includible in the assessable value even if recovered on an equalised basis.

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