Post-clearance freight excluded from excise value where sale completed at factory gate and transport was separately arranged.

Transportation charges collected separately after clearance of goods from the factory gate are not includable in the assessable value for excise duty where the sale is completed on ex-works terms at removal and the buyer later requests transportation under a separate commercial bill. Because ownership has already transferred before the freight arrangement, post-clearance expenses do not form part of the value of the manufactured goods under Section 4 of the Central Excise Act. On that basis, the duty demand founded on undervaluation was unsustainable.

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Issues: Whether transportation charges collected separately after clearance of goods from the factory gate are includable in the assessable value for excise duty.

Analysis: The goods were sold at the factory gate on ex-works terms and excise invoices were raised at the time of removal. The buyer thereafter requested transportation, for which a separate commercial bill was raised. In such a situation, the sale stood completed before the post-clearance transportation arrangement, so the later freight did not form part of the value of the manufactured goods for purposes of valuation under Section 4 of the Central Excise Act. The principle applied was that charges incurred after transfer of ownership cannot be added to the assessable value.

Conclusion: The transportation charges were not includable in the assessable value and the duty demand based on undervaluation was unsustainable, in favour of the assessee.

Ratio Decidendi: Post-clearance expenses incurred after the transfer of property in goods at the factory gate are not includable in the assessable value for excise duty valuation.

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