CAS-4 based valuation governs captive consumption, while cost audit reports cannot replace production cost under Rule 8.

For captive consumption by a sister unit, assessable value under Rule 8 of the Central Excise Valuation Rules, 2000 is to be based on cost of production certified on CAS-4 principles. A company's cost audit report under Section 233B of the Companies Act, 1956 is not a substitute because it is prepared for corporate reporting and may include sales and administrative expenses beyond the factory level. Where the CAS-4 certificates are furnished before clearance and are not disputed, they provide the correct basis for valuation of goods cleared for captive use.

---

---

Issues: Whether, for goods cleared to a sister unit for captive consumption, the assessable value was to be determined on the basis of CAS-4 cost certificates under Rule 8 of the Central Excise Valuation Rules, 2000, or on the basis of the company's cost audit report under Section 233B of the Companies Act, 1956.

Analysis: The goods were not sold in the market but were consumed by the appellant's sister concern, so Rule 8 governed valuation. The cost certificates issued on CAS-4 basis were furnished before clearance and were not disputed by the revenue. By contrast, the cost audit report prepared under Section 233B of the Companies Act, 1956 was meant for corporate reporting and reflected the overall yearly cost structure, including expenses beyond the factory of production such as sales and administrative expenses, which are not part of the cost of production for Rule 8 purposes. Since Rule 8 requires valuation on the cost of production for captive consumption, the CAS-4 method was the correct basis.

Conclusion: The valuation adopted by the appellant on CAS-4 basis was correct and the contrary demand based on the cost audit report was unsustainable.

Final Conclusion: The duty demand and consequential orders could not survive, and the appellant succeeded on the valuation issue.

Ratio Decidendi: For captive consumption under Rule 8 of the Central Excise Valuation Rules, 2000, assessable value must be based on the cost of production as certified on CAS-4 principles, and a company's cost audit report prepared for corporate reporting cannot be substituted where it includes extraneous post-factory expenses.

---