Captive consumption valuation must reflect comparable goods and reasonable adjustments, not a uniform highest-price method.

Valuation of captively consumed stampings and laminations under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 required reasonable adjustment based on relevant factors and proper comparison with comparable goods. The article notes that the remand directions called for disclosure of the material relied upon and a fresh hearing, but no such material was disclosed; instead, the authorities adopted the highest purchase price of one supplier across all varieties despite differences in ratings and characteristics. That uniform method ignored variety-wise comparison and lacked a proper evidentiary basis, rendering the valuation arbitrary and the demand unsustainable.

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Issues: Whether the valuation of captively consumed stampings and laminations, by adopting the highest purchase price of one supplier for all varieties without disclosure of relied-upon material and without proper comparison with comparable goods, was sustainable under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975.

Analysis: The valuation rule required the proper officer to determine assessable value by making reasonable adjustments having regard to relevant factors, including differences in material characteristics and comparable goods. The remand directions had specifically required disclosure of the material relied upon and a fresh hearing, but no such material was disclosed. Instead, the authorities called upon the assessee to produce records and then adopted one highest purchase price across all varieties, although the goods comprised multiple varieties with different ratings and characteristics. Such a simplistic and uniform valuation method ignored the need for variety-wise comparison and proper adjustment, and had the effect of creating inflated duty demands without a reasonable evidentiary basis. The delay-based credit argument also supported the assessee's grievance, though the principal infirmity lay in the arbitrary valuation exercise.

Conclusion: The valuation was arbitrary and contrary to the remand directions, and the demand could not be sustained.

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