Excess transportation recoveries may enter assessable value, but extended limitation fails without proven suppression on the facts.

Excess recovery of transportation or carting charges from buyers, where goods are supplied under contract and delivered to the customer's destination, may form part of the assessable value when there is no factory gate sale and the recovery is directly connected with delivery; the excess over actual transportation expenditure is treated as part of invoice price. On limitation, the extended period could not be sustained because the charge structure had earlier been examined by the department and suppression was not established on the facts, so the demand beyond the normal period was barred.

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Issues: (i) Whether excess recovery of transportation charges from customers was includible in the assessable value of the goods; (ii) Whether the demand beyond the normal period was barred by limitation on the facts of the case.

Issue (i): Whether excess recovery of transportation charges from customers was includible in the assessable value of the goods.

Analysis: The goods were supplied to customers under contract and delivered to the customers' destination. The freight or carting charges recovered from the buyers were directly connected with the supply of the goods and, in the absence of a factory gate sale, the excess recovered over the actual transportation expenditure formed part of the invoice price for valuation purposes. The contention that the excess represented an excluded profit on an allied activity was not accepted on the facts.

Conclusion: The excess recovery of transportation charges was held includible in the assessable value, against the assessee.

Issue (ii): Whether the demand beyond the normal period was barred by limitation on the facts of the case.

Analysis: Although the assessee had not disclosed the correct position regarding the excess recovery, the issue of carting charges had earlier been examined by the departmental authorities and the records showed that the charges were separately shown. In these circumstances, the Tribunal gave the assessee the benefit of doubt on suppression and held that the Department ought to have examined the matter in time. The show cause notice having been issued beyond six months, the demand beyond the normal period could not survive.

Conclusion: The demand beyond six months was held barred by limitation, in favour of the assessee.

Final Conclusion: The valuation issue was decided against the assessee, but the extended-period demand was not sustained and only the demand within the normal limitation period could remain.

Ratio Decidendi: Where freight or transportation recoveries are directly attributable to delivery of goods under contract and there is no factory gate sale, any excess recovery may enter assessable value, but the extended period cannot be invoked absent sustainable suppression when the issue had earlier been examined by the department.

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