Comparable sales may support excise valuation without factory gate sales, but missing prices require determination under the prescribed rule.

Where goods are supplied for site installation and no factory gate sale exists, assessable value may be based on prices of similar goods sold to other customers, and that comparative valuation was sustained. Where no price is available even in the part-II price list, a notional differential between part-I and part-II prices is not an acceptable basis; assessable value must instead be determined under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975, after hearing the assessee and passing a speaking order. The text thus distinguishes between valuation by comparable sales and valuation under the prescribed rule when no comparable price is available.

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Issues: (i) Whether, in the absence of any factory gate sale, the assessable value of the goods could be based on prices of similar goods sold to other customers. (ii) Whether, for goods for which no price was available even in the part-II price list, the assessable value could be fixed on a notional differential basis instead of under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975.

Issue (i): Whether, in the absence of any factory gate sale, the assessable value of the goods could be based on prices of similar goods sold to other customers.

Analysis: The goods were supplied for site installation and there was no factory gate sale. In that situation, the Department adopted the prices of similar goods sold to other customers and reflected in the part-II price lists. The absence of a factory gate sale justified resort to comparable sales for the similar goods.

Conclusion: The adoption of prices of similar goods sold to other customers was upheld and this part of the valuation was sustained.

Issue (ii): Whether, for goods for which no price was available even in the part-II price list, the assessable value could be fixed on a notional differential basis instead of under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975.

Analysis: Where no price was available even in the part-II price list, the notional method based on the differential between part-I and part-II prices was held to be inappropriate. The proper course was determination of assessable value under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975, after giving the assessee an opportunity of hearing and passing a speaking order.

Conclusion: The matter was remanded for fresh determination of assessable value under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975.

Final Conclusion: The valuation adopted for goods having comparable sales was sustained, while the valuation for goods without any part-II price was set aside for re-determination in accordance with the valuation rules.

Ratio Decidendi: In the absence of a factory gate sale, assessable value may be based on comparable sales of similar goods, but where no price exists even for such comparable class, valuation must be determined under the prescribed valuation rule and not on a notional differential basis.

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