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Issues: Whether freight and transportation charges incurred for delivery of goods to the buyer's site store are includible in the transaction value for central excise duty when the sale is completed only after receipt and certification at that site.
Analysis: The governing framework was Section 4 of the Central Excise Act, 1944 read with the Valuation Rules, 2000 and the Sale of Goods Act, 1930. The decisive enquiry was when the sale was completed and when property in the goods passed to the buyer, because transaction value includes amounts paid by the buyer on behalf of the assessee only up to the point of sale. On the facts, the purchase orders showed that price, freight, delivery to site stores, insurance, and certification by the buyer's engineer were all part of an arrangement under which acceptance and payment occurred only after the goods reached the buyer's site store. The site store therefore functioned as the place of removal for the purpose of valuation, and the transportation charges were paid before the sale was complete.
Conclusion: Freight and transportation charges were includible in the assessable value, and the assessee was not entitled to exclusion of those charges from transaction value.
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