Transportation-related charges excluded from excise value; excess freight and linked expenses could not be taxed or penalised.

Amounts recovered in excess of actual freight, including related demurrage, jetty construction and survey expenses, were treated as transportation-linked charges and not part of manufacture or assessable value for excise. The excess freight recovery could not be added to the value for duty, and the related expenses were likewise excluded because they were attributable to movement of finished goods to the customer's nominated place. On that basis, the duty demand was not sustainable and penalties were not imposable.

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Issues: Whether amounts collected in excess of actual freight, together with related charges such as demurrage, jetty construction and survey expenses, formed part of the assessable value for excise duty and whether penalties were leviable.

Analysis: The disputed amounts were held to be connected with transportation of the finished goods to the customer's nominated place and not with manufacture. The excess recovered as freight could not be included in assessable value. The related expenses for jetty construction, demurrage and survey were likewise attributable to transportation and not to the manufacturing cost. In view of the settled principle that excise duty cannot be levied on a profit element in transportation charges, the demand was unsustainable.

Conclusion: The duty demand on these expenses was not payable and the penalties were not imposable.

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