CAS-4 valuation excludes selling and administrative expenses and applies retrospectively for captive consumption goods.

For valuation of goods transferred to a sister concern or captively consumed, cost of production is to be computed on the CAS-4 basis. Selling and distribution expenses, as well as administrative expenses, are excluded from cost of production, and the Tribunal rejected the argument that CAS-4 could not apply to the period before 1 July 2000. The earlier circular was not accepted as a bar to retrospective application, and the Tribunal followed its consistent view in the assessee's own matters. The issue was accordingly decided in favour of the assessee.

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Issues: Whether selling and distribution expenses and administrative expenses form part of the cost of production for determining assessable value of goods transferred to a sister concern or captively consumed, and whether the CAS-4 method applies retrospectively.

Analysis: The dispute turned on valuation of goods cleared for captive consumption or stock transfer. Under CAS-4, selling and distribution expenses and administrative costs are not treated as part of cost of production. The Revenue's reliance on the earlier circular and the contention that CAS-4 could not govern the period prior to 1.7.2000 was rejected, as the Tribunal had consistently held in the assessee's own cases that CAS-4 computation is retrospectively applicable. The Tribunal therefore found no basis to include those expenses in the cost of production.

Conclusion: Selling and distribution expenses and administrative expenses are not includible in the cost of production, and the CAS-4 method applies retrospectively; the issue is decided in favour of the assessee.

Ratio Decidendi: For valuation of captively consumed goods, cost of production is to be determined on the CAS-4 basis, excluding selling and distribution expenses and administrative expenses, and that method applies retrospectively.

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