Captive consumption valuation required adjustment for processing and packing differences before using comparable market sales.

For valuation of captively consumed nylon filament yarn under Rule 6(b)(i), the value of comparable market sales had to be adjusted where the sold goods had undergone aging or reconditioning, rewinding into paper containers, and packing, while the captive goods had not. Those processing and packing differences were material to value determination, so a valuation based only on sale price without adjustment was not sustainable. The department's adopted valuation was therefore rejected.

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Issues: Whether, for valuation of nylon filament yarn captively consumed by the assessee, adjustment had to be made to the value of comparable goods sold in the market to account for differences in processing and packing under Rule 6(b)(i).

Analysis: The sold yarn had undergone aging or reconditioning, rewinding into paper containers in the form of cheeses, and subsequent packing, whereas the captively consumed yarn was not subjected to those processes. Rule 6(b)(i) required adjustment between comparable goods and the goods under consideration where material characteristics differed. The difference in processing and packing was relevant to the value determination, and the departmental valuation based solely on the sale price without making such adjustment was not sustainable.

Conclusion: Adjustment for the cost impact of the differing processes and packing was required, and the valuation adopted by the department could not be sustained.

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