Captive consumption valuation may use higher outside sale price, and reassessment can stand where material particulars were withheld.

For captively consumed goods, the assessable value may be based on the higher price at which the same goods were actually sold to outside buyers during the relevant period, because that market sale price is the proper valuation benchmark on these facts. The earlier normal price approach was found inapplicable where the same goods were sold externally at a higher price. Reopening under the proviso to section 11A was also sustained, as the demand was raised within six months of finalisation and rested on non-disclosure of material particulars about the actual sale price. The duty demand was therefore upheld.

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Issues: (i) Whether, for goods captively consumed, the assessable value could be fixed with reference to the higher price at which the same goods were sold to outside buyers; (ii) Whether the demand was sustainable after reopening the assessment under the proviso to section 11A.

Issue (i): Whether, for goods captively consumed, the assessable value could be fixed with reference to the higher price at which the same goods were sold to outside buyers.

Analysis: The goods cleared for captive consumption were the same goods that were also sold outside during the relevant period at a higher price. In such circumstances, the market sale price of comparable goods was the proper basis for valuation of the captively consumed goods. The reasoning adopted by the appellate authority on the basis of the earlier normal price principle was found inapplicable on these facts, because the case did not involve different classes of buyers but a situation where actual outside sale price of the same goods was available.

Conclusion: The higher sale price realised from outside buyers was correctly adopted for valuation of the captively consumed goods, against the assessee.

Issue (ii): Whether the demand was sustainable after reopening the assessment under the proviso to section 11A.

Analysis: The assessment had been reopened within six months from the date of finalisation, and the demand was founded on non-disclosure of relevant details concerning the actual sale price of the goods. On that basis, reopening of the assessment and raising of the demand was held to be permissible.

Conclusion: The reopening of assessment and the consequent demand were held to be valid, against the assessee.

Final Conclusion: The appellate order was set aside and the revenue challenge succeeded, leaving the duty demand intact.

Ratio Decidendi: Where the same goods are sold outside at a higher price during the relevant period, that sale price may be adopted for valuing the goods captively consumed, and reassessment is permissible when the demand is raised within the statutory time limit on the basis of withheld material particulars.

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