Post-clearance freight charges excluded from excise assessable value where duty is confined to manufacture.

Freight and transportation charges incurred after clearance from the factory gate were treated as post-manufacturing expenditure and not part of the assessable value for excise duty. Excise was applied as a levy on manufacture, not on post-clearance profit or later transport costs, and the notice did not allege deliberate depression of price by inflating freight. On that basis, the duty demand and penalty could not be sustained, and consequential relief followed.

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Issues: Whether freight and transportation charges incurred after clearance from the factory gate were includible in the assessable value for excise duty, and whether the duty demand and penalty could be sustained.

Analysis: The dispute turned on the principle that excise duty is a levy on manufacture, not on post-clearance profit or variations in transportation expenditure. Charges relating to transport beyond the factory gate were treated as a post-manufacturing activity and, on the facts, the show cause notice did not allege deliberate depression of price by inflating freight.

Conclusion: Freight and transportation charges incurred after clearance were not includible in the assessable value, and the duty demand and penalty could not be sustained.

Final Conclusion: The appeal succeeded and the impugned order was set aside with consequential relief.

Ratio Decidendi: Post-clearance transportation charges are not part of the assessable value for excise duty, as excise is levied on manufacture and not on post-manufacturing expenditure.

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