Freight exclusion from assessable value: separately recovered freight on factory gate sales is not includable, relieving related fiscal demands.

Issue addressed whether freight separately charged to buyers is includable in the assessable value for valuation of excisable goods. The author concludes that where goods are sold at the factory gate and freight is separately recovered from the buyer, such freight does not form part of the assessable value under valuation law; demands for duty, interest and penalty based on including that freight are unsustainable. The legal point emphasised is that factory gate sales with separate freight recovery exclude freight from valuation, entitling the seller to relief against consequential fiscal liabilities.

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Issues: Whether freight charges collected separately from buyers and shown separately in invoice are includable in the assessable value of excisable goods for valuation under Section 4 of the Central Excise Act, 1944.

Analysis: The Tribunal considered the nature of the sale and the invoicing practice. The Tribunal relied on the reasoning in a prior decision of the Tribunal in the appellant's own case and examined whether the goods were sold at the factory gate such that freight recovered from the buyer would fall outside the assessable value. The authorities below had treated freight collected as part of the assessable value and imposed duty, interest and equal penalty under the Central Excise Act, 1944.

Conclusion: Freight charges collected from the buyer where goods are sold at the factory gate and freight is recovered separately are not includable in the assessable value under Section 4 of the Central Excise Act, 1944. The demand of duty, interest and penalty on such freight is unsustainable; appeal is allowed with consequential relief, if any.

Ratio Decidendi: Where goods are sold at the factory gate, separately recovered freight charged to the buyer does not form part of the assessable value of excisable goods for valuation under Section 4 of the Central Excise Act, 1944.

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