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 was the place of removal and whether sale was complete at the factory gate or only on delivery. On the facts accepted, the arrangement pointed to post-clearance freight as a delivery expense, not part of the transaction value. Applying Supreme Court valuation principles distinguishing factory-gate sales from cases where ownership and risk continue until delivery, the demand was held unsustainable to the extent it added freight to assessable value.

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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.

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