Freight on ex-works sales excluded from assessable value when goods are sold at factory gate and place of removal is unchanged.

Freight recovered from buyers for delivery to their premises was held not includible in the assessable value where the purchase orders showed ex-works terms and the invoices separately reflected freight. The place of removal must be determined on the facts, with the sale terms and passing of property relevant to valuation; insurance or freight borne by the manufacturer does not by itself make the buyer's premises the place of removal. Under the valuation rules and Board circulars, transportation beyond the place of removal is excludible when goods are sold at the factory gate and handed to the transporter without reservation of disposal rights. On those facts, the excise demand could not be sustained.

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Issues: Whether freight charges recovered from buyers for delivery of goods to their premises were includible in the assessable value for central excise duty.

Analysis: The Purchase Order showed an ex-works arrangement, and the invoices separately reflected freight. The place of removal has to be determined on the facts of each case, with the sale transaction and passing of property being relevant under the valuation framework. Insurance or freight borne by the manufacturer does not, by itself, determine the place of removal or establish that the buyer's premises is the place of removal. Under the governing valuation provisions and the Board's circulars, transportation cost beyond the place of removal is excludible where the goods are sold at the factory gate and handed over to the transporter without reservation of disposal rights. The facts also aligned with the earlier decision relied upon by the Tribunal, which held that delivery at the buyer's premises does not by itself make such premises the place of removal when the sale is on ex-works terms.

Conclusion: Freight charges were not includible in the assessable value, and the demand could not be sustained.

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