Captive-consumption valuation must use unit-specific profit margin, not the company's overall profit margin for assessable value.

For captive-consumption valuation of ore concentrate under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975, the assessable value must reflect the profit margin of the specific unit from which the goods are cleared, not the overall profit margin of the company. Profit or loss from other business activities is irrelevant to this valuation exercise, and balance-sheet profits for the year cannot replace the unit-wise profit element attributable to the transferred goods. The Tribunal applied the same principle earlier accepted in the assessee's own case and confirmed that only the profit linked to the concerned captive-consumption unit is material.

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Issues: Whether, for valuation of ore concentrate cleared for captive consumption under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975, the assessable value was to be based on the profit margin of the particular captive-consumption unit or on the overall profit margin of the assessee company.

Analysis: The dispute related only to the profit element to be added while valuing ore concentrate transferred to the assessee's smelting units. The Tribunal noted that the same question had already been decided in the assessee's own case concerning another unit, following the Larger Bench view that profits or losses from other activities of the company are irrelevant for captive-consumption valuation and that only the profit margin relatable to the goods cleared from the concerned unit is material. On that basis, the Tribunal found no reason to adopt the overall company profit reflected in the balance sheet for the relevant year.

Conclusion: The assessable value had to be determined with reference to the profit margin of the ore concentrate unit only, and not the overall profit margin of the respondent company. The Revenue's challenge was rejected.

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