Captive consumption valuation turns on comparability of goods; sold yarn in a different processed form could not replace the accepted method.

Valuation of captively consumed cotton yarn was upheld on the basis accepted by the lower authorities because Rule 6(b) permits different valuation methods according to the circumstances. The department failed to show that yarn sold after re-rolling into another form was comparable to the captively consumed yarn, and the chapter note treated the changed form as separately manufactured goods. On that footing, the sold yarn could not be used as the proper valuation benchmark, and the Revenue's challenge failed.

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Issues: Whether the valuation of cotton yarn captively consumed was required to be made on the basis of the price of yarn sold after re-rolling into other forms, or on the basis adopted by the assessee and accepted by the lower authorities.

Analysis: The appeal did not demonstrate any error in the approach accepted by the lower authorities. Rule 6(b) contemplates different methods of valuation depending on the attending circumstances, and the chosen method was not shown to be incorrect. The objection based on the sold yarn was not supported by any analysis showing that the yarn in the sold form and the yarn captively consumed were comparable goods. The finding that the changed form of yarn was treated as separately manufactured goods under the chapter note also supported the view that the sold yarn could not be taken as the proper basis for captive valuation.

Conclusion: The valuation adopted for captively consumed yarn was upheld and the Revenue's challenge failed.

Ratio Decidendi: Where the department does not establish that the goods sold in a different form are comparable to the goods captively consumed, the valuation method accepted by the lower authority under Rule 6(b) cannot be disturbed merely because the goods are capable of being sold in another processed form.

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