Freight charges separately invoiced for ex-factory sales are excluded from assessable value under central excise valuation rules.

Freight charges separately recovered from buyers and shown separately in the invoice for ex-factory sale of excisable goods are excluded from assessable value under Section 4 of the Central Excise Act, 1944. Rule 5 of the Central Excise Valuation Rules, 2000 treats transportation cost as deductible where it is charged to the buyer in addition to the goods price and is separately reflected in the invoice. On the stated facts, the freight was separately identifiable and therefore did not form part of the assessable value.

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Issues: Whether freight charges separately recovered from customers and shown separately in the invoice, in respect of sale of excisable goods on ex-factory basis, are includable in the assessable value under Section 4 of the Central Excise Act, 1944.

Analysis: The freight element was charged separately in the invoice and the supply was on ex-factory basis. Under Rule 5 of the Central Excise Valuation Rules, 2000, where the cost of transportation is charged to the buyer in addition to the price for the goods and shown separately in the invoice, such transportation cost is excluded from the assessable value. On the facts found, the freight was separately identifiable and therefore did not form part of the assessable value.

Conclusion: Freight charges separately recovered and separately shown in the invoice are not includable in the assessable value.

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