Separate freight contracts keep excess transportation charges out of excise assessable value when freight is not part of sale price.

Where goods are sold under separate contracts for supply and transportation, and the contract treats delivery to the carrier as delivery to the buyer, freight is not part of the goods' assessable value for central excise merely because the amount collected exceeds the actual freight paid. The stated principle is that a separately contracted transportation charge cannot be loaded into assessable value when freight is not part of the sale price. On that basis, the excess freight was held not includible and the demand was not sustainable; the impugned order was set aside and the appeals were allowed.

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Issues: Whether the excess freight collected over the actual transportation cost was includible in the assessable value for central excise duty.

Analysis: The contracts contained separate clauses for the price of goods and for transportation. The goods were subjected to buyer's inspection and dispatch clearance under the contract, and delivery to the carrier was treated as delivery to the buyer. The factual matrix was held to be on all fours with the principle that where sale and transportation are separately contracted, and freight is not part of the price of goods, the transportation charge cannot be loaded into assessable value merely because the contracted freight differs from actual freight.

Conclusion: The excess freight was not includible in the assessable value and the demand could not be sustained.

Final Conclusion: The impugned order was set aside and the appeals were allowed.

Ratio Decidendi: Where goods are sold under separate contracts for sale and transportation, and delivery to the carrier constitutes delivery to the buyer under the contract, transportation charges are not part of the assessable value for excise merely because the amount collected exceeds the actual freight paid.

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