Captive-consumption valuation requires adjusted comparison with external sales, not automatic adoption of market prices.

Captively consumed ammonia had to be valued under the captive-consumption valuation rule, and comparable goods sold outside the factory could be used only after reasonable adjustments for relevant differences such as quantity, transport, packing and other factors affecting value. The mere existence of external sales did not end the inquiry or permit unadjusted adoption of those prices. Because the earlier remand directions on the applicable valuation basis and comparable-decision guidance had not been properly applied, the matter required fresh determination on the correct legal basis and the valuation order was set aside for reconsideration.

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Issues: Whether the assessable value of ammonia captively consumed in the manufacture of other goods was required to be determined under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975 by reference to comparable goods sold outside the factory with reasonable adjustments.

Analysis: The valuation dispute related to ammonia cleared partly for sale and partly for captive consumption. The rule governing goods not sold but consumed in manufacture of other articles was held to be applicable. The existence of sales of comparable goods did not by itself conclude valuation, because the proviso to the rule required the proper officer to make reasonable adjustments taking into account relevant factors such as quantity, transportation, packing and other differences affecting value. Since the earlier remand directions to consider the relevant valuation rule and the comparable decision were not properly addressed, the matter required fresh determination by the adjudicating authority.

Conclusion: The valuation had to be reconsidered under Rule 6(b)(i) after making appropriate adjustments, and the matter was remanded for fresh adjudication.

Final Conclusion: The appeal succeeded to the extent that the valuation order was set aside and the issue was sent back for reconsideration on the correct legal basis.

Ratio Decidendi: Where excisable goods are captively consumed, valuation must be made under the applicable valuation rule for captive consumption, using comparable goods only after reasonable adjustments for relevant differences.

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