Comparable goods must be used first for captive consumption valuation; cost of production applies only when no comparison is possible.

Assessable value of captively consumed excisable goods had to be determined under Rule 6(b)(i) by reference to comparable goods, with reasonable adjustments for relevant differences. Rule 6(b)(ii) applied only where valuation under clause (i) was not ascertainable. Because the in-house goods and the outside supplier's goods were found to be similar and comparable, and no material displaced that finding, valuation could not be shifted to cost of production merely because the units operated on different scales. Resort to Rule 6(b)(ii) was therefore impermissible.

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Issues: Whether the assessable value of captively consumed excisable goods was to be determined under Rule 6(b)(i) on the basis of comparable goods or under Rule 6(b)(ii) on the basis of cost of production.

Analysis: Rule 6(b)(i) applies where the value of captively consumed goods can be determined by reference to comparable goods produced by the assessee or by another assessee, with reasonable adjustments for relevant differences. Rule 6(b)(ii) applies only when valuation under clause (i) is not ascertainable. On the facts found, the goods produced by the outside supplier and those manufactured in-house were similar and comparable, and there was no material to displace that position. Once comparable goods were available, valuation could not be shifted to cost of production merely because the units were of different scale.

Conclusion: The assessable value had to be determined under Rule 6(b)(i) on the basis of comparable goods, and resort to Rule 6(b)(ii) was not permissible.

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