Separately recovered freight and absence of suppression kept excise valuation and limitation relief in favour of the assessee.

Freight separately recovered from buyers is not part of the assessable value where the sale is at the factory gate and the freight is borne by the buyer, so valuation excludes that element. The note also states that the extended limitation period cannot be invoked without suppression of material facts, particularly where the department already knew the invoicing pattern and relevant facts through audits and disclosed records. On those facts, the demand was treated as time-barred, and consequential relief followed for the assessee.

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Issues: (i) whether freight charges separately recovered from buyers were includible in the assessable value for central excise valuation; (ii) whether the demand was barred by limitation and the extended period under the Act was invocable.

Issue (i): whether freight charges separately recovered from buyers were includible in the assessable value for central excise valuation.

Analysis: The dispute concerned valuation under the Central Excise Valuation Rules, where the assessee showed freight separately and the customers bore that expense. The circular relied upon by the assessee, together with the cited case law, supported the principle that where factory gate price is available and freight is separately borne by the buyer, such freight does not form part of the assessable value. The record also indicated that the transactions were carried out through factory gate sales and depot sales, but the freight element remained separately charged and not borne by the assessee.

Conclusion: The freight charges were not includible in the assessable value, and this issue was decided in favour of the assessee.

Issue (ii): whether the demand was barred by limitation and the extended period under the Act was invocable.

Analysis: The demand arose from an audit objection, and the relevant facts and invoicing pattern were already within the knowledge of the department through prior audits and the disclosed invoices. In those circumstances, suppression of facts was not established so as to justify invocation of the extended period under section 11A of the Central Excise Act, 1944. The limitation defence therefore succeeded on the facts found.

Conclusion: The extended period was not available to the department, and the demand was time-barred, in favour of the assessee.

Final Conclusion: The appeal succeeded on both valuation and limitation, and the assessee was granted consequential relief.

Ratio Decidendi: Where freight is separately recovered from the buyer and borne by the buyer, it does not enter the assessable value, and the extended period of limitation cannot be invoked in the absence of suppression when the department was already aware of the relevant facts.

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