Captive consumption valuation: notional profit cannot be loaded where records show consistent losses, and recovery was stayed.

For captively consumed goods valued under Rule 6(b)(ii) of the Valuation Rules, 1975 read with Section 4 of the Central Excise Act, assessable value cannot be enhanced by loading notional profit where the company's balance sheets show consistent actual losses and no real profit during the relevant period. On that factual basis, the tribunal treated the assessee as having a prima facie case for interim relief and granted complete waiver of pre-deposit of duty and interest, while staying recovery during pendency of the appeal.

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Issues: Whether, for captively consumed goods valued under Rule 6(b)(ii) of the Valuation Rules, 1975 read with Section 4 of the Central Excise Act, 1944, notional profit could be loaded despite consistent losses, and whether the appellant was entitled to waiver of pre-deposit and stay of recovery.

Analysis: The appellant's balance sheets showed continuous losses over several years, including the period relevant to the demand. In such circumstances, the situation was distinguished from a case of general profitability with only an isolated loss year. The authority applied the principle that the assessable value for captive consumption must reflect actual financial results, and that where the figures show no real profit, there is no basis for adding notional profit. On that footing, a prima facie case was made out for interim relief.

Conclusion: Complete waiver of the pre-deposit of duty and interest was granted and recovery was stayed during pendency of the appeal, in favour of the appellant.

Final Conclusion: The order afforded interim protection to the appellant by declining to insist on pre-deposit and by suspending recovery until disposal of the appeal.

Ratio Decidendi: For captively consumed goods, assessable value cannot be enhanced by adding notional profit where the evidence shows consistent actual losses and no real profit during the relevant period.

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