Captive consumption valuation requires the nearest ascertainable equivalent from comparable goods, with reasonable adjustments before rejecting a valuation method.

For captive consumption of excisable goods, assessable value must be fixed on the normal price where ascertainable, or otherwise on the nearest ascertainable equivalent under the valuation rules. Comparable goods value must be used with reasonable adjustments for relevant differences, and a valuation cannot be rejected merely because the department relied on the highest price of a day. The tribunal was found not to have determined the proper price or the basis for arriving at it, so its approach was not legally tenable and the matter required fresh consideration by the appellate authority.

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Issues: Whether, for captive consumption of excisable goods, the assessable value was to be determined by reference to the nearest ascertainable equivalent under the valuation rules and whether the appellate tribunal was justified in rejecting the departmental valuation merely because the highest price of a particular day had been adopted.

Analysis: Section 4 of the Central Excise Act, 1944 contemplates valuation on the basis of the normal price where ascertainable, and where it is not ascertainable, the nearest ascertainable equivalent is to be determined in the manner prescribed. The valuation rules require adoption of comparable goods value with reasonable adjustments for relevant differences. A valuation exercise cannot be invalidated merely because the department selected the highest price without first examining whether that price, or some other price such as an average or period-wise comparable price, could properly represent the nearest ascertainable equivalent. The tribunal had not itself determined the appropriate price or the basis on which it should be ascertained.

Conclusion: The tribunal's approach was held not legally tenable, and the matter required fresh consideration by the appellate authority.

Ratio Decidendi: In valuation of captively consumed excisable goods, the authority must determine the nearest ascertainable equivalent on a rational basis from comparable goods, with reasonable adjustments where required, and cannot reject or accept a valuation method without first fixing the appropriate assessable value on relevant material.

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