2026 (3) TMI 1367 - AT - Central Excise

Freight after factory-gate clearance is not part of assessable value when sale is complete before delivery.

Freight charges for delivery of gas cylinders were treated as excludible from assessable value under central excise valuation because the decisive factor ... Assessable value - Place of removal - freight charges incurred for delivery of gas cylinders to the buyer's premises - exclusion of freight from the assessable value despite delivery having been effected at the premises of the buyer - Post-Removal Expenditure. Freight exclusion - Transaction value - Place of removal - HELD THAT: - The Tribunal held that the dispute stood concluded by the decision of the Supreme Court in Commissioner of Customs & Central Excise, Nagpur v. Ispat Industries Ltd. [2015 (10) TMI 613 - SUPREME COURT] It noted that the decisions in Roofit Industries Ltd. [2015 (4) TMI 857 - SUPREME COURT] and Ispat Industries Ltd. [2015 (10) TMI 613 - SUPREME COURT] dealt with post-removal expenditure, but applicability depended on the material facts. Proceeding on that basis, the Tribunal accepted that the present case was governed by the principle applied in Ispat Industries Ltd and not by Roofit Industries Ltd. The finding against exclusion of freight from the assessable value was therefore unsustainable. [Paras 5, 6] The impugned order was set aside and the appeal was allowed. Final Conclusion: Applying the Supreme Court decision in Ispat Industries Ltd and distinguishing Roofit Industries Ltd on facts, the Tribunal held that freight was not includible in the assessable value in the present case. The demand sustained in the impugned order was therefore set aside and the appeal was allowed. Issues: Whether freight charges incurred for delivery of gas cylinders to the buyer's premises were excludible from the assessable value under the central excise valuation regime, and whether the demand confirmed by treating such freight as part of the assessable value was sustainable.Analysis: The dispute turned on the place of removal and the point at which title in the goods passed. On the facts accepted in the judgment, the supply arrangement was on a net delivered price basis, but the controlling question was whether the sale was complete at the factory gate or only upon delivery and acceptance at the buyer's premises. The decision relied upon the distinction drawn in the Supreme Court's valuation jurisprudence between cases where the buyer's premises are not a place of removal and cases where the contract shows that ownership and risk continue with the seller until delivery. Applying the Supreme Court's later view that factual distinctions govern the inclusion of freight, the judgment treated the present case as falling within the line of authority where freight after clearance from the factory is not part of the assessable value.Conclusion: Freight charges were not includible in the assessable value, and the demand sustained on that basis was unsustainable.Ratio Decidendi: Where goods are sold at the factory gate and freight represents post-removal expenditure, freight cannot be added to the assessable value merely because delivery is made to the buyer's premises.