Captive consumption valuation requires exclusion of packing and outward expenses when using sale price of comparable goods.

In valuation of polyester texturised yarn captively consumed in the manufacture of twisted yarn, the Tribunal stated that the sale price of similar goods cleared for home consumption could be used under Rule 6(b)(1) only after proper adjustments. It followed earlier authority that packing expenses relating to goods sold from the factory are not includible when valuing goods captively consumed, and comparable outward expenses had to be excluded from the assessable value. On that basis, the Revenue's valuation including packing-related s was held unsustainable, and the appeal was allowed with the impugned order set aside in favour of the assessee.

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Issues: Whether, while valuing polyester texturised yarn captively consumed in the manufacture of twisted yarn, the sale price of similar goods cleared for home consumption could be adopted without deduction of packing and related expenses under Rule 6(b)(1) of the Central Excise (Valuation) Rules, 1975.

Analysis: The dispute concerned valuation of captively consumed goods where the same product was also sold from the factory. The applicable valuation rule permitted determination of value by reference to the sale price, but only after making appropriate adjustments to arrive at the correct value of the goods used captively. The Tribunal followed the earlier decision holding that packing expenses incurred in relation to goods cleared for sale are not includible in the assessable value of the goods captively consumed. On that basis, the elements such as packing and other comparable outward expenses were required to be excluded while determining the captive consumption value.

Conclusion: The valuation adopted by Revenue was not sustainable to the extent it included packing-related expenses. The appeal was allowed and the impugned order was set aside in favour of the assessee.

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