JUDGMENT
K.K. Usha, J.
1. In this appeal at the instance of the assessee the issue arising for consideration is whether equalized freight shown separately in the invoices are to be added to the assessable value of the goods, even though in the order impugned the Commissioner has taken the view that all the goods were being removed on payment of duty from the factory premises itself. On going through the show cause notice it will be seen that part of the goods are sold from the depots of the assessee at different places. In the impugned order the Commissioner has taken the view that the equalized freight charge is to be included while arriving at the assessable value of the goods. The correctness of the above view is challenged in this appeal.
2. The period involved in this appeal is from 1.7.2000 to 31.3.2001. In the common order passed by us in Appeal No. E/2324/2002-NB(A) and connected cases we have held that in cases where sale price at the factory gate is available and if the three conditions referred under Clause (a) are satisfied the assessable value of the goods is the transaction value. The definition of the term ‘transaction value’ under Section 4(3)(d) would show that no other ingredient has to be added to the sale price at the factory gate for arriving at the assessable value. Determination of value by applying Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as the Valuation Rules) would arise only in the case of excisable goods coming under Clause (b) of Sub-section (1) and, therefore, Rule 5 of the Valuation Rules has no application in the matter of computing the assessable value of goods in respect of which sale has taken place at the factory gate. We also held that under the above circumstances whether the freight charges are shown as actual or on equalized basis separately in the invoice is irrelevant. Freight charges cannot be added to the factory gate price for the purpose of arriving at the assessable value. We follow the above ratio and hold in the present appeal that in respect of the goods which have a factory gate price, freight and insurance charges cannot be added to it for arriving at the assessable value.
3. Now we will come to the question of computing the assessable value of the goods which were sold at the depot. Even in respect of such sales we are of the view that the freight and insurance expenses incurred for transporting the goods from the depot to the buyers’ place and shown separately in the invoice whether in terms of actual amount, or on equalized basis, cannot be added for arriving at the assessable value for the following reasons.
4. During the relevant period under Section 4 (1)(3)(c) depot was not brought under the term “place of removal”. Therefore, when excisable goods are sold
from the depot, it would come under Section 4(1)(b). The value of such goods is to be determined in accordance with the Valuation Rules. Rule 7 provides for the procedure for computing the transaction value of the goods sold from depot. The Rule 7 reads as follows :
“Rule 7. Where the goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as ‘such other place)’ from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same. At the time nearest to the time of removal of goods under assessment.”
There is no case for the Revenue before us that the three conditions required therein namely, excisable goods are sold after their clearance from the place of removal, that the assessee and the buyer of the said goods are not related and that the price is the sole consideration for sale. If that be so, thq value of the goods sold from the depot shall be the normal transaction value of such goods sold from the depot at or about he removal of the goods under assessment. Rule 7 does not mandate for adding the freight charges incurred for transporting the goods after the sale from the depot to the customers’ premises. The issue whether cost of transportation can be excluded when it is shown in the invoice on equalized basis would arise only in cases where Rule 5 is applied and where the assessee is claiming a deduction in respect for freight charges from a consolidated price shown in the invoice.
5. The above not being the position in this case, we find no reason to uphold the order passed by the Commissioner.
6. We, therefore, hold that in spite of the amendment brought to the statute and coming into force of the new Valuation Rules freight charges are not liable to be included in the assessable value of the goods concerned in this appeal. We, therefore, set aside the order impugned and allow the appeal. It is also ordered that the appellant will be entitled to all consequential reliefs including refund of excess payment made, if any.
Appeal is allowed as above.