Excess freight collected beyond actual transporter charges is profit on transportation and excluded from assessable value.

Issue concerns whether amounts charged as equalised or fixed freight exceeding actual freight paid form part of the assessable/transaction value of excisable goods. Applying the principle that excise duty is on the manufacturer and not on dealers' profits, the excess constitutes profit on transportation and therefore is not part of the assessable value under the valuation regime; accordingly the demand and penalties based solely on including such excess freight in value are unsustainable and the appeal is allowed.

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Issues: Whether excess freight collected from customers over and above the actual freight paid to the transporter is includable in the assessable value/transaction value of excisable goods for the purpose of charging excise duty.

Analysis: The issue concerns whether amounts charged to customers as an equalised or fixed freight rate, when in excess of the actual freight paid, form part of the price of the goods (transaction/assessable value) or constitute profit on transportation. The legal framework examined includes Section 4 of the Central Excise Act, 1944 and post-amendment valuation rules, and controlling decisions of higher tribunals and the Hon'ble Supreme Court. The decision in Baroda Electric Meters (Supreme Court) is treated as authoritative on the point that duty of excise is on the manufacturer and not on profits made by dealers on transportation, and that excess freight collected as compared to actual freight paid is profit on transportation and not part of the assessable value. Subsequent tribunal decisions (including the appellant's earlier orders and CESTAT precedents) applying Baroda Electric Meters to post-amendment periods are relied upon to demonstrate consistency of the principle. Conflicting High Court or tribunal orders that were not finally decided by a larger bench are not treated as overturning the Supreme Court rule.

Conclusion: The excess freight collected by the appellant over and above the actual freight paid to the transporter is not includable in the assessable value/transaction value of excisable goods; the impugned demand and penalties on this ground are not sustainable and the appeal is allowed.

Ratio Decidendi: Where freight collected from customers exceeds actual freight paid to transporters, the excess constitutes profit on transportation and does not form part of the assessable value of excisable goods under Section 4 of the Central Excise Act, 1944.

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