Captive transfer valuation follows independent buyer price where the same goods are also sold in the open market.

For captive clearances between units of the same assessee, assessable value is to be taken from the price charged to independent buyers when the assessee also sells the same goods in the open market. The Larger Bench ruling in Ispat Industries Ltd. was treated as binding and was held to override earlier contrary views, so Rule 8 of the Central Excise Valuation Rules, 2000 did not apply to the captive transfers in question. The revenue challenge therefore failed.

---

---

Issues: Whether the assessable value of goods cleared from one unit of the assessee to another unit of the same assessee for captive use was to be determined under Rule 8 of the Central Excise Valuation Rules, 2000, or on the basis of the price at which the same goods were sold to independent buyers.

Analysis: The dispute concerned clearances from Unit II to Unit I for captive use during the relevant period. The Tribunal noted that the point stood covered by the Larger Bench decision in Ispat Industries Ltd., which held that where an assessee sells the same goods to independent buyers and also clears goods for captive consumption to itself or another unit of the same assessee, the assessable value for captive clearances is to be taken from the price charged to independent buyers and not by applying Rule 8. As the Larger Bench decision was binding and had considered the earlier contrary decisions, no infirmity was found in the order under challenge.

Conclusion: The assessable value was not required to be determined under Rule 8, and the Revenue's challenge failed.

---