Freight charges are excludable from the assessable value for central excise duty if the transaction is determined to be an 'ex-works' sale where title and risk pass at the factory gate, distinguishing it from sales where ownership remains with the seller until delivery.

PER: ASHOK JINDAL

The issue in this appeal of M/s Om Containers, against order¹ of Commissioner of Central Excise & GST (Appeals), Nashik which, while disposing off appeal against confirmation of duties of central excise amounting to ₹ 43,41,085/- for the period from March 2015 to January 2016 (comprising ₹ 43,41,085/- under section 11A of Central Excise Act, 1944, along with appropriate interest thereon under section 11AB/11AA of Central Excise Act, 1944, is the exclusion of freight from the assessable value despite delivery having been effected at the premises of the buyer that, according to the adjudicating authority, had been disapproved by the Hon’ble Supreme Court in Commissioner of Customs & Central Excise, Ahmedabad v. Roofit Industries Ltd [2015 (319) ELT 670 (SC)] in addition to inconsistency with section 4 of Central Excise Act, 1944 and Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.

2. The appellant is a manufacturer of ‘gas cylinders’ supplied to oil marketing companies (OMC) for retail sale of cooking gas etc. and are contracted for supply at ‘net delivered price (NDP)’ through tenders. It was contended by the appellant, M/s Om Containers, that they were being reimbursed for freight borne on such delivery by buyers on actual basis owing to which these charges merited reduction from the contracted price to arrive at the ‘transaction value’, applicable to clearance from ‘factory of removal’, which was resisted by central excise authorities on the ground that such exclusion was inappropriate where the title and ownership of goods remained with the assessee until cylinders had been accepted by the buyer with risk of carriage vesting in the seller.

3. Learned Counsel for the appellant submits that in their own case, for the earlier period, this Tribunal has decided similar matter in Final Order No. 85115/2016 dated 23^rd January 2026. Therefore, the issue is no longer res integra and in view the same the impugned order needs to be set aside.

4. On the other hand, Learned Authorized Representative supported the impugned order.

5. Heard the parties and considered the submissions.

6. We find that in appellant’s own case, for earlier period, the Tribunal observed as under:

“5. We take note that the two decisions, and both relating to post-removal expenditure, were rendered contemporaneously. Doubtlessly, the former pertained to different valuation scheme applicable during the period of dispute and the latter to one of the schemes but the applicability of either on material facts should settle the dispute. In particular, our attention was drawn to

‘32. It will be seen that this is a decision distinguishing the Escorts JCB’s case on facts. It was found that goods were to be delivered only at the place of the buyer and the price of the goods was inclusive of transportation charges. As transit damage on the assessee’s account would imply that till the goods reached their destination, ownership in the goods remained with the supplier, namely, the assessee, freight charges would have to be added as a component of excise duty. Further, as per the terms of the payment clause contained in the procurement order, payment was only to be made after receipt of goods at the premises of the buyer. On facts, therefore, it was held that the sale of goods did not take place at the factory gate of the assessee. Also, this Court’s attention was not drawn to Section 4 as originally enacted and as amended to demonstrate that the buyer’s premises cannot, in law, be “a place of removal” under the said Section.

33. As has been seen in t