Transaction value excludes post-clearance freight; cash discount needs documentary proof of actual passing on before deduction.

Under the post-01.07.2000 transaction value regime, freight incurred for transportation of goods after clearance from the factory gate does not form part of assessable value under central excise law, and the demand on that component was unsustainable. Cash discount is deductible only where documents show that it was actually passed on and not realised; because that factual verification was incomplete, the matter on cash discount was remanded to the Original Authority for fresh examination and findings on admissibility. The result was partial relief on freight and remand on the discount claim.

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Issues: (i) Whether freight incurred for transportation of goods beyond the factory gate was includible in the transaction value for central excise valuation; (ii) Whether the claim for deduction of cash discount required verification on the basis of documents showing that the discount was actually passed on.

Issue (i): Whether freight incurred for transportation of goods beyond the factory gate was includible in the transaction value for central excise valuation.

Analysis: For the relevant period, valuation under Section 4 of the Central Excise Act, 1944 was based on transaction value. The definition covered the price actually paid or payable and certain allied charges connected with sale, but did not extend to transportation costs incurred after clearance from the factory gate. Freight for movement from the factory gate to depot or delivery point therefore remained outside the assessable value.

Conclusion: The deduction for transportation cost beyond the factory gate was allowable and the demand on that account was not sustainable.

Issue (ii): Whether the claim for deduction of cash discount required verification on the basis of documents showing that the discount was actually passed on.

Analysis: Cash discount would not form part of transaction value if it was established that the discount was actually passed on and not realised. The matter required examination of the supporting invoices and documents to verify the factual claim.

Conclusion: The issue of cash discount was remanded to the Original Authority for fresh verification and findings on admissibility.

Final Conclusion: The valuation was held to exclude freight beyond the factory gate, while the claim for cash discount was left for reconsideration on documentary proof, resulting in partial relief with remand for a limited purpose.

Ratio Decidendi: Under the post-01.07.2000 valuation regime, transportation charges incurred after removal from the factory gate do not form part of transaction value, and cash discount is deductible only if it is shown to have been actually passed on and not realised.

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