Comparability of factory-gate sales versus captive consumption governs stay of duty recovery in a central excise dispute.

In a stay application concerning duty on captively consumed yarn, recovery was stayed because the departmental comparison with factory-gate sales failed on prima facie comparability. The original authority had found that the sold yarn included additional processing costs not present in the captively consumed yarn, and that finding was not challenged by the Revenue. As the proposed comparable goods were therefore not shown to be truly comparable, there was no sufficient basis to permit recovery pending appeal. Recovery of the duty demand was stayed, and no recovery proceedings were to be initiated during the operation of Section 35F of the Central Excise Act, 1944.

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Issues: Whether, in a stay application concerning duty on captively consumed yarn, recovery of the demanded duty should be stayed where the departmental case depended on comparison with factory-gate sales of yarn alleged to be comparable.

Analysis: The original authority had recorded a finding that the goods sold at the factory gate were not comparable, since the price of the sold yarn included additional processing costs not present in the captively consumed yarn. That factual finding had not been challenged by the Revenue. On a prima facie view, the proposed comparable goods were not shown to be truly comparable, and there was no sufficient basis to approve recovery pending appeal.

Outcome: Recovery of the entire duty demand was stayed and no recovery proceedings were to be initiated during the operation of Section 35F of the Central Excise Act, 1944.

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