Related-party excise valuation turned on transaction value versus cost-based Rule 9 valuation, with the Revenue challenge failing.

For clearances to a related person for captive consumption, the valuation issue turned on whether transaction value under section 4(1)(a) applied or whether Rule 9 under section 4(1)(b) required valuation at 115% of cost of production. The dispute arose from stock transfers to a sister concern, but the Revenue's challenge to the valuation method was no longer sustainable because the Tribunal decision relied on by the Commissioner (Appeals) had not been carried in appeal to the Supreme Court. The valuation adopted by the Commissioner (Appeals) therefore remained undisturbed.

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Issues: Whether the value of clearances made to a related person for captive consumption was required to be determined under section 4(1)(a) on the basis of transaction value, or under section 4(1)(b) read with Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 by taking 115% of the cost of production.

Analysis: The dispute arose from stock transfers of excisable goods to a sister concern. The Revenue's challenge rested on the valuation method, but the basis for that challenge had ceased to survive because the Tribunal's earlier decision relied upon by the Commissioner (Appeals) had not been appealed by the Revenue before the Supreme Court. In the circumstances, the ground urged in the present appeal was no longer sustainable.

Conclusion: The valuation adopted by the Commissioner (Appeals) was not disturbed and the Revenue's appeal failed.

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