Assessable value under excise excludes separately recovered freight when title passes at the factory gate on FOR basis.

Where goods are sold on an FOR factory gate basis and title passes at the factory gate, separately recovered outward freight is not includible in the assessable value for central excise. The Tribunal held that the place of removal remained the factory gate, not the buyer's premises, because the factory gate price and freight were separately shown in the purchase orders and invoices and the goods were delivered after clearance from the factory. Since excise is a tax on manufacture and not on transportation charges recovered separately at the buyer's instance, the freight element could not be loaded into the assessable value and the demand was unsustainable.

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Issues: Whether the freight element separately shown in the invoices and incurred for delivery at the buyer's premises formed part of the assessable value for central excise duty.

Analysis: The dispute turned on whether the place of removal was the factory gate or the buyer's premises. The goods were cleared on FOR basis, the factory gate price and freight were separately indicated in the purchase orders and invoices, and the property in the goods passed at the factory gate. On those facts, outward transportation charges could not be loaded into the assessable value. The Tribunal also followed the settled principle that excise is a tax on manufacture and not on profit earned on transportation, and that freight separately recovered at the buyer's instance is not includible where ownership passes at the factory gate.

Conclusion: The freight element was not includible in the assessable value, and the impugned demand could not be sustained.

Ratio Decidendi: Where goods are sold on FOR factory gate basis and title passes at the factory gate, separately recovered outward freight is not part of the assessable value under central excise.

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