Comparable market price governs captive consumption valuation, and an incorrect cost-plus approach cannot justify extended limitation.

For captively consumed polyamide chips, valuation should follow the comparable market price method under Rule 6(b)(i) of the Central Excise Valuation Rules, 1975 where an open-market price is available, rather than the cost of production plus profit method under Rule 6(b)(ii). The commentary explains that the appellant had also purchased the same material from the market, making the comparable-price rule applicable. It further states that, on this valuation interpretation, invocation of the extended period of limitation was not justified and the demand based on that approach could not stand. The impugned order was set aside and the appeal succeeded with consequential relief.

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Issues: Whether the value of captively consumed polyamide chips was required to be determined on the basis of comparable market price under Rule 6(b)(i) of the Central Excise Valuation Rules, 1975, or on cost of production plus profit under Rule 6(b)(ii) of those Rules, and whether the extended period of limitation could be invoked.

Analysis: The valuation scheme gives priority to comparable price where such price is available. Since the appellant had also purchased the same material from the open market, the matter called for valuation under Rule 6(b)(i) rather than Rule 6(b)(ii). The dispute turned on interpretation of the valuation provisions, and on that footing the invocation of the extended period of limitation was not justified.

Conclusion: The extended period of limitation was not invokable, and the demand founded on that basis was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: Where comparable market price is available for captively consumed goods, valuation must be made under the comparable-price rule and not on a cost-plus-profit basis; a demand resting on an incorrect valuation approach cannot sustain invocation of the extended period of limitation.

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