Valuation of captively consumed goods must generally include normal profit, and lower forums must follow the binding larger Bench principle.

For valuation of captively consumed excisable goods, the normal profit element is ordinarily relevant, even where the assessee has incurred losses. A lower forum must apply the binding larger Bench valuation principle and cannot sustain a contrary approach without independently examining the merits. The Tribunal had failed to consider the larger Bench view and had not properly addressed the valuation basis, so the matter was required to be reconsidered in accordance with law. The order was set aside and the issue remitted for fresh determination, with all contentions kept open.

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Issues: Whether, in valuing captively consumed goods, notional profit had to be added even where the assessee had incurred losses and the Tribunal had failed to apply the binding valuation principle.

Analysis: The appeal concerned valuation of captively consumed goods under the excise valuation framework. The Court noted that one line of Tribunal authority had held that no addition towards profit was warranted where the unit was incurring losses, but another larger Bench decision had held that the value of captively consumed goods must ordinarily include the normal margin of profit which a manufacturer would have earned on sale. Since the Tribunal had not independently examined the merits and had also omitted to consider the larger Bench view, the valuation question could not be sustained on the basis adopted by it.

Conclusion: The valuation issue was required to be reconsidered in light of the binding larger Bench view, and the Tribunal's order was set aside.

Final Conclusion: The matter was sent back for a fresh decision according to law, with all contentions left open.

Ratio Decidendi: For valuation of captively consumed excisable goods, the normal profit element is ordinarily relevant, and a lower forum must follow the binding larger Bench view while determining such valuation.

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