2026 (3) TMI 905 - AT - Central Excise

Transportation and forwarding charges billed after removal from factory gate are excluded from assessable value for excisable goods.

Transportation and forwarding charges billed separately after goods were removed from the factory gate do not form part of the assessable value for excise ... Demand for duty on account of under-valuation - Transaction value - Transportation/forwarding charges - Inclusion of separately billed transportation charges in the assessable value of excisable goods - place of removal - time of passing of property - ex-works sale. Transportation/forwarding charges - HELD THAT:- The Tribunal applied the principle in Ispat Industries Ltd [2015 (10) TMI 613 - SUPREME COURT] holding that valuation under excise depends on the time at which property in the goods passes to the buyer as understood under the Sale of Goods Act. On the facts the goods were sold at the factory gate and transportation was arranged afterwards at the buyer's request with a separate bill; consequently the transportation charges were not part of the transaction value and were not includable in the assessable value. [Paras 8, 9] Transportation charges billed after factory-gate sale are not includable in assessable value; the duty demand on that account is unsustainable. Final Conclusion: Relying on the Apex Court's reasoning in Ispat Industries Ltd., the Tribunal held that transportation charges billed separately after a factory-gate sale are not includable in assessable value; the impugned order was set aside and the appeal allowed. Issues: Whether transportation/forwarding charges billed separately after goods were removed from the factory gate are includable in the assessable value of excisable goods.Analysis: The Tribunal examined whether the sale occurred at the factory gate or at buyer's premises by reference to the timing of transfer of ownership and the contractual/transactional terms, applying Section 4 read with the Valuation Rules and the principles in Section 19 of the Sale of Goods Act. The Tribunal relied on the Supreme Court's reasoning in Ispat Industries Ltd. that charges incurred after transfer of ownership are not components of assessable value where goods are sold ex-works and ownership passed at factory gate; where transportation was arranged later at buyer's request and billed separately after removal from the factory, those charges are borne by the buyer and are not part of transaction value for excise valuation.Conclusion: Transportation/forwarding charges raised separately after removal from the factory gate are not includable in the assessable value; the demand for duty on account of under-valuation is not sustainable and the impugned order is set aside with the appeal allowed.