Post-factory freight and handling charges excluded from transaction value where goods were sold at the factory gate.

Post-factory freight and second stage handling charges are excludible from transaction value where goods are sold on an ex-works or factory-gate basis and title passes at the factory gate. Requisition orders and invoices showing that the sale price did not include such charges supported exclusion of the transportation expense from the assessable value for jute cess. The demand based on their inclusion was therefore not sustainable, and the impugned demand and penalty were set aside with consequential relief.

---

---

Issues: Whether second stage handling charges, being freight or transportation expenses incurred for movement of goods from the factory to the siding, were liable to be included in the transaction value for computation of jute cess on clearances made through DGS&D.

Analysis: The dispute was governed by settled precedent on exclusion of post-factory freight and allied transportation expenses from the assessable value where the sales were on an ex-works or factory-gate basis and the goods had already been sold at the factory gate. The existence of requisition orders and invoices showing that the price did not include such handling charges supported the conclusion that these expenses were not part of the value of the goods for levy purposes.

Conclusion: The second stage handling charges were not includible in the transaction value for calculating jute cess, and the demand based on their inclusion could not be sustained.

Final Conclusion: The impugned demand and penalty were set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Freight and transportation expenses incurred after factory-gate sale are excludible from transaction value when the sale is on an ex-works basis and title passes at the factory gate.

---