Captive-consumption valuation stayed where factory-gate comparables were found not comparable due to added process costs.

Captive-consumption valuation was prima facie unsustainable where the claimed factory-gate comparables included additional process costs and were therefore not comparable with the yarn consumed captively. Because that factual finding by the original authority remained unchallenged, the factory-gate price could not be treated as the proper basis for valuation at this stage. On that footing, recovery of the duty demand was stayed pending disposal of the appeal, and further proceedings for recovery were directed not to be taken.

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Issues: Whether recovery of duty on captively consumed yarn should be stayed pending appeal in view of the finding that the proposed factory-gate goods were not comparable.

Analysis: The original authority had recorded a factual finding that the alleged comparable yarn sold at the factory gate included additional process costs and, therefore, was not comparable with the captively consumed yarn. That finding remained unchallenged. On a prima facie view, there was no basis to uphold the order of the Commissioner (Appeals) or to treat the factory-gate price as the proper basis for the captive-consumption valuation at this stage.

Outcome: Recovery of the duty demand was stayed and further proceedings under Section 35F of the Central Excise Act, 1944 were directed not to be taken pending disposal of the appeal.

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