Captive consumption valuation excludes unrelated income from profit margin under Rule 6(b)(ii), and the valuation method was accepted.

For captive consumption valuation under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975, only profit attributable to the manufacture and clearance of the goods is relevant in computing assessable value. Income unconnected with such manufacture and clearance is excluded from the profit margin calculation. Applying the earlier larger bench view, the tribunal accepted that unrelated income should not form part of the valuation base and upheld the exclusion. The valuation method adopted by the appellants on that basis was therefore accepted.

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Issues: Whether, for valuation of goods cleared for captive consumption, income unrelated to manufacture and clearance of the goods could be excluded while computing profit margin under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975.

Analysis: For captive consumption valuation, only the profit relevant to the manufacture and clearance of the impugned goods is to be considered. Income that is unconnected with such manufacture and clearance does not enter the computation of the assessable value. Applying the earlier larger bench view, the exclusion of unrelated income from the profit percentage was held to be proper.

Conclusion: The exclusion of unrelated income was upheld, and the valuation based on the profit margin adopted by the appellants was accepted.

Ratio Decidendi: For captive consumption under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975, only income relevant to the manufacture and clearance of the goods is to be considered in computing profit, and unrelated income is to be excluded.

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