Excise valuation of captively consumed goods requires a rational comparable-goods basis, not mere rejection of departmental valuation.

Assessable value for captively consumed excisable goods must be fixed by a rational comparable-goods method when normal price is not ascertainable, with reasonable adjustments for relevant differences. The appellate authority cannot merely reject the departmental valuation based on the highest comparable sale price on a particular day without identifying the correct valuation basis. The Court held that such rejection, without substituting a legally sustainable method or determining the nearest ascertainable equivalent, is insufficient. The order was set aside and the matter remanded for fresh determination of the proper assessable value.

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Issues: Whether the assessable value of captively consumed goods had been correctly determined for central excise purposes by adopting the highest comparable sale price, and whether the appellate authority was justified in discarding the departmental valuation without determining the proper basis of valuation.

Analysis: The valuation dispute turned on the proper application of the excise valuation framework where normal price was not ascertainable and recourse had to be taken to the nearest ascertainable equivalent. The Court noted that the appellate authority had rejected the departmental method of taking the highest price on a particular day, but had not undertaken the further inquiry required to determine what the appropriate ascertainable value should be. The statutory scheme required valuation on the basis of comparable goods with reasonable adjustments for relevant differences, and the assessing authority was entitled to apply a rational method for arriving at the value, subject to appellate scrutiny. Mere rejection of the department's method, without identifying the correct valuation basis, was held to be legally insufficient.

Conclusion: The method adopted by the appellate authority was held to be unsustainable, the order was set aside, and the matter was remanded for fresh consideration of the correct assessable value.

Ratio Decidendi: When excisable goods are valued on the basis of comparable goods or nearest ascertainable equivalent, the adjudicating or appellate authority must determine the proper valuation basis with rational adjustments, and cannot merely reject the departmental valuation without substituting a legally sustainable method.

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