Captive consumption valuation must use the most conservative representative comparable price, not the highest available price.

For valuation of goods cleared for captive consumption under excise rules, the comparable price selected must reflect the real value of the goods and retain a conservative, representative character. Where comparable goods of the same assessee or another assessee are used, the chosen price should be a normal price during the relevant period rather than the highest price on a particular date, because using the peak price would distort valuation. The correct measure is therefore the most conservative representative price. On that basis, the Tribunal's valuation was upheld and the revenue's challenge failed.

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Issues: Whether, for valuation of goods cleared for captive consumption under the excise rules, the highest comparable price could be adopted or only the most conservative representative price could be taken.

Analysis: The valuation exercise had to be governed by the principle that the price adopted must represent the real value of the goods and remain conservative in character. Where comparable goods of the same assessee or of another assessee are used as the basis, the selected price must reflect a normal representative price during the relevant period. Adoption of the highest price on a particular date would distort the valuation exercise and would not preserve the character of the normal price.

Conclusion: The highest comparable price could not be adopted as the basis of valuation. The most conservative price was the correct measure, and the assessee's valuation challenge succeeded.

Final Conclusion: The valuation adopted by the Tribunal was upheld and the revenue's challenge failed, resulting in affirmation of the assessee's position.

Ratio Decidendi: In valuing goods for captive consumption on the basis of comparable goods, the adopted price must be the most conservative representative price and not the highest available price.

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