Captive consumption valuation includes cost of production plus reasonable manufacturing profit; 5% margin upheld.

For excise valuation of air-coolers manufactured for captive consumption, assessable value is determined by adding a reasonable manufacturing profit to the cost of production. The text states that where excisable goods are produced and used within the manufacturer's own factory, this cost-plus approach applies, and the 5% margin adopted was not shown to be excessive or unreasonable. The profit addition was therefore upheld as part of the correct assessable value.

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Issues: Whether, for excise valuation of air-coolers manufactured for captive consumption, a reasonable profit margin could be added to the cost of production while determining the assessable value.

Analysis: The revision challenged only the addition of a 5% profit element to the manufacturing cost. It was found that where excisable goods are produced and used within the manufacturer's own factory, the assessable value is properly determined by taking the cost of production together with a reasonable manufacturing profit. No material was shown to establish that the 5% margin adopted was excessive or unreasonable.

Conclusion: The addition of the 5% profit margin was upheld and the assessable value was correctly determined.

Ratio Decidendi: In valuation of excisable goods used for captive consumption, assessable value includes both manufacturing cost and a reasonable manufacturing profit.

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