Captive consumption valuation and pre-deposit waiver: superseding circulars govern pending matters, and hardship must justify dispensation.
For captively consumed goods, the valuation method reflected in the superseding Board circular was treated as the correct basis for pending and recalculation matters, and the earlier circular could not be relied upon. In relation to pre-deposit, section 35-F required deposit as the norm, with waiver available only on a demonstrated case of undue hardship; the assessee's financial position and prior conduct did not justify dispensation. The order directing further deposit was therefore sustained, and the challenge failed on both valuation and pre-deposit grounds.
Issues: (i) Whether the assessable value of goods captively consumed had to be determined in terms of the later Board circular for pending or ongoing matters; (ii) Whether the assessee was entitled to waiver of pre-deposit under the proviso to section 35-F of the Central Excise Act, 1944.
Issue (i): Whether the assessable value of goods captively consumed had to be determined in terms of the later Board circular for pending or ongoing matters.
Analysis: The valuation dispute concerned goods captively consumed within the assessee's own factory network. The earlier circular governing valuation had been superseded by a later circular issued by the Central Board of Excise and Customs, which reflected the correct method under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975. Since the issue was one of determination of assessable value and the earlier method had been found incorrect, the later circular was treated as the proper basis for recalculation in pending matters regardless of the assessment year.
Conclusion: The later circular was held applicable for correct valuation in pending and recalculation matters, and the earlier circular could not be relied upon.
Issue (ii): Whether the assessee was entitled to waiver of pre-deposit under the proviso to section 35-F of the Central Excise Act, 1944.
Analysis: Under section 35-F, pre-deposit is the norm and waiver is available only where deposit would cause undue hardship, subject to conditions safeguarding revenue. The assessee had itself offered a substantial further deposit before seeking modification, had already received large refund amounts during the pendency of the proceedings, and was financially in a position that did not justify further dispensation. In these circumstances, the refusal to waive the additional deposit was not shown to be illegal or unreasonable.
Conclusion: The assessee was not entitled to waiver of the pre-deposit, and the order directing deposit was sustained.
Final Conclusion: The appeal failed on both valuation and pre-deposit grounds, and the dismissal of the writ petition was left undisturbed.
Ratio Decidendi: For captively consumed goods, the correct valuation method applicable to pending or recalculation matters is the method reflected in the superseding Board circular, and waiver of pre-deposit under section 35-F is available only on a demonstrated case of undue hardship that justifies dispensing with the statutory deposit.