Comparable transaction value for captively consumed goods requires fresh verification and reasonable adjustment before rejection of valuation basis.

Valuation of captively consumed intermediate goods may be based on prices of comparable goods purchased from other manufacturers where the dispute concerns comparability rather than identity of the goods. The comparable transaction value cannot be rejected outright merely because the suppliers differ; the authority must re-verify the facts, apply the applicable valuation rule, and make reasonable adjustments where required. The assessee must be given an opportunity to produce records and be heard before fresh determination.

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Issues: Whether the valuation of captively consumed intermediate goods could be made on the basis of prices of comparable goods purchased from other manufacturers, and whether the matter required remand for fresh consideration under the valuation rules.

Analysis: The dispute related only to valuation of intermediate products used captively in the manufacture of the final product. The record showed that the same goods were being purchased from multiple manufacturers and their invoices had been used by the assessee as the basis for valuation. The objection in the notice was not to the identity of the goods, but to the comparability of the manufacturers. In these circumstances, the comparable transaction value could not be rejected outright. At the same time, the adjudicating authority was required to re-verify the facts and determine valuation under the applicable valuation rule with reasonable adjustments, after giving the assessee an opportunity to produce records and be heard.

Conclusion: The comparable goods basis was not rejected in principle, but the valuation issue was remanded to the adjudicating authority for fresh decision in accordance with the valuation rule.

Final Conclusion: The assessee succeeded to the extent that the adverse order was set aside and the matter was sent back for de novo determination of valuation.

Ratio Decidendi: Where captively consumed goods are also purchased from other manufacturers and the dispute is only about valuation comparability, the authority must reassess the matter on the basis of the applicable valuation rule and may make reasonable adjustments rather than reject comparable prices without fresh verification.

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