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 when ownership passes at the factory gate. Applying Section 4 with the Valuation Rules and Sale of Goods Act principles, the analysis distinguishes ex works sales where post transfer charges are arranged by the buyer and invoiced separately; such charges are buyer borne and excluded from transaction value. The operative effect is that demands for duty based on inclusion of separately billed post removal transport charges are unsustainable and must be set aside.

---

---

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.

---