Residuary excise valuation requires reasoned findings on price components before differential duty on scrap can be sustained.

Residuary valuation under Rule 11 of the Central Excise (Valuation of Price of Excisable Goods) Rules, 2000 requires the adjudicating authority to examine the components of price and record clear reasons for accepting or rejecting the assessee's computation under section 4 of the Central Excise Act, 1944. Where the order-in-original fails to explain the basis for valuation, including objections on transport and baling charges, a differential duty demand on scrap cleared to captive foundries cannot be sustained on that order alone. The matter was remanded for fresh adjudication with reasons.

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Issues: Whether the demand of differential duty on scrap cleared to captive foundries, determined under the residuary valuation rule, could be sustained when the adjudicating authority failed to record reasons on the valuation components and the computation adopted.

Analysis: The dispute turned on valuation under Rule 11 of the Central Excise (Valuation of Price of Excisable Goods) Rules, 2000 read with section 4 of the Central Excise Act, 1944. The order-in-original did not explain the basis for rejecting the assessee's valuation or the manner in which the assessable value was computed, even though the show cause notice raised specific objections regarding deduction of transport and baling charges. In a residuary valuation exercise, the adjudicating authority was required to examine the components of price and give findings on the proposed computation. The impugned order instead proceeded on broad observations and did not contain the necessary reasoning to support the demand.

Conclusion: The valuation and demand could not be sustained on the basis of the impugned order, and the matter was remanded for fresh adjudication with reasons.

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