Excess freight excluded from assessable value, so the central excise demand, interest, and penalty could not survive.

Excess freight collected over actual freight was held not to form part of the assessable value for central excise duty because it represented retained freight profit rather than value of the goods. The demand based on that excess freight was therefore unsustainable. As the principal duty demand failed, the connected levy of interest and penalty also could not survive, and consequential relief followed.

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Issues: Whether excess freight collected over the actual freight could be included in the assessable value for levy of central excise duty, and whether the connected demand of interest and penalty could survive.

Analysis: The demand was based on the excess freight collected by the assessee. Excess freight represented an amount retained as profit on freight and did not form part of the assessable value of the goods. The issue was covered by the binding principle that such freight cannot be added to assessable value, and the cited supporting decisions were found applicable.

Conclusion: The duty demand on excess freight was not sustainable. The interest and penalty levied on that demand also could not survive, and the appeal was allowed with consequential relief.

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