Captive consumption valuation excludes post-manufacture selling costs and interest; CAS-4 governs assessable value.

For captively consumed goods, assessable value must be determined on the basis of cost of production under CAS-4, and post-manufacture selling and distribution expenses are not includible. The Tribunal accepted that the Board's revised clarification aligned with its earlier decisions and with the governing valuation principles, and it rejected reliance on an earlier circular that had been modified. It also held that the Department could not ignore the Board's clarification when it was consistent with law and precedent. Accordingly, additions for selling and marketing expenses and interest were unsustainable, and the duty demand and penalties were set aside.

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Issues: Whether, for captively consumed goods, the assessable value had to include selling and marketing expenses and interest, and whether the demand and penalty could be sustained in view of the revised Board circular and CAS-4.

Analysis: The Tribunal held that the valuation of captively consumed goods was governed by the principles already accepted in its earlier decisions and by the Board's clarification that cost of production is to be determined strictly in accordance with CAS-4. It noted that the adjudicating authority had relied on a prior circular that stood modified, and accepted that selling and distribution expenses incurred after manufacture were not includible in the assessable value of captively consumed goods. The Tribunal also rejected the contention that the Department could disregard the Board's clarification where it accorded with law and judicial precedent.

Conclusion: The additions made towards selling and marketing expenses and interest were unsustainable, and the duty demand and penalties were set aside in favour of the assessee.

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