Valuation of captively consumed goods sale price to independent buyers determines assessable value, relieving higher cost-based duty.

Where a manufacturer sells part of its produce to unrelated buyers and consumes the balance captively, the correct valuation principle is that the sale price to independent buyers constitutes the assessable value for the captively consumed goods, since both removals are comparable transactions; valuation based on cost of production was rejected and higher duty demands premised on such cost valuation were set aside. Prior tribunal precedents applying sale price as the basis for valuation of captive consumption were applied to support this outcome, resulting in allowance of the appeals.

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Issues: Whether sale price to independent buyers constitutes the correct assessable value for goods removed for captive consumption where part of produce is sold in the open market and the remainder is captively consumed.

Analysis: The appeals concern valuation of goods removed for captive consumption. The factual pattern is that part of the produce was sold to unrelated buyers and the remainder was transferred for captive use. Prior Tribunal authority (Steel Complex Ltd. v. C.C.E., Calicut) addressed the same factual matrix and concluded that the sale price to independent buyers appropriately constitutes the assessable value for captively consumed goods, rejecting valuation based on cost of production. The present appeals involve identical transactional facts and require application of the same principle.

Conclusion: Sale price to independent buyers shall be the assessable value for goods removed for captive consumption; the appeals are allowed in favour of the assessee and the impugned orders are set aside.

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