Excise valuation for captive-use and turnkey supplies must follow comparable-goods method before any costing-based approach.

Excise valuation of goods cleared for captive use or supplied for turnkey projects must be determined under Section 4(1)(b) and the Valuation Rules in sequence, with Rule 4 applying where valuation can be based on like goods sold with necessary adjustments. Because no valid basis was shown to reject the Rule 4 method and the respondent did not establish that comparable goods were unavailable, valuation on that basis was upheld. Resort to Rule 6(b) was not permitted, as that costing method applies only when value cannot be fixed under Rule 4 or Rule 5.

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Issues: Whether the valuation of excisable goods cleared for captive use and supplied for turnkey projects was to be determined under Rule 4 of the Central Excise (Valuation) Rules, 1975, and whether valuation on a costing basis under Rule 6(b) was permissible.

Analysis: The goods were cleared without a sale in the ordinary market and were transferred for own use or supplied to turnkey projects. In such a case, valuation had to proceed under Section 4(1)(b) of the Central Excise Act, 1944 and the Valuation Rules applied in sequence. Rule 4 governed valuation by reference to like goods sold, with necessary adjustments. The respondent did not establish that identical or like goods were unavailable for comparison, and no valid basis was shown to disturb the valuation fixed under Rule 4. Resort to Rule 6(b) was not available because that method operates only where value cannot be determined under Rule 4 or Rule 5.

Conclusion: Valuation under Rule 4 was upheld and the costing method under Rule 6(b) was rejected. The duty demand followed as a consequence.

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