Ex-factory freight exclusion: separately recovered post-removal transport charges do not enter assessable value under excise valuation rules.

Freight charges separately recovered in an ex-factory sale of excisable goods are excluded from assessable value under the Central Excise valuation framework because transportation occurs after removal from the factory. The buyer's premises cannot be treated as the place of removal merely because freight is shown separately in the invoice or delivery is arranged to that site. Applying the settled valuation principle, the Tribunal held that post-removal freight does not form part of duty valuation, so the demand based on inclusion of such freight was unsustainable and the impugned orders were set aside.

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Issues: Whether freight charges collected separately from customers in an ex-factory sale of excisable goods are includible in the assessable value for the purposes of valuation under Section 4 of the Central Excise Act, 1944, and the valuation rules.

Analysis: The dispute turned on the character of the sale as ex-factory and on whether the buyer's premises could be treated as the place of removal. The governing principle applied was that where goods are sold on ex-factory basis and freight is shown separately in the invoice, transportation charges incurred after removal from the factory do not form part of the assessable value. The decision followed the settled position that the place of removal remains the factory or other legally recognised place of removal, and not the buyer's premises merely because freight is separately recovered or delivery is arranged up to the buyer's site. The valuation provisions and the consistent line of decisions relied upon by the Tribunal supported exclusion of such freight from duty valuation.

Conclusion: Freight charges separately recovered in an ex-factory sale are not includible in the assessable value. The demand raised on that basis was unsustainable.

Final Conclusion: The impugned orders were set aside and the appeals succeeded on the valuation issue.

Ratio Decidendi: In an ex-factory sale, transportation charges recovered separately after removal from the factory are excluded from assessable value, and the buyer's premises cannot be treated as the place of removal merely because freight is separately charged.

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