Comparable-goods valuation must be used first; direct cost-based excise valuation was rejected and the matter remanded.

Under the Central Excise valuation scheme, comparable-goods valuation must be applied first where identical or comparable goods are available, and cost-based valuation under Rule 6(b)(ii) cannot be used directly without exhausting Rule 6(b)(i). Plastic bottles manufactured at Pondicherry were found comparable to bottles made at Bhuvaneshwar because both were produced without caps and stoppers, so the Bhuvaneshwar value had to be adopted as the primary basis. The assessable value was remanded for fresh determination on that footing, while limitation was left open for the original authority.

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Issues: Whether the assessable value of the plastic bottles manufactured at Pondicherry was to be determined under Rule 6(b)(i) on the basis of comparable goods, instead of straightaway applying Rule 6(b)(ii) on cost construction.

Analysis: The value under the Central Excise valuation scheme is to be determined in the order prescribed by the rules, and Rule 6(b)(ii) cannot be invoked directly unless valuation under Rule 6(b)(i) is not possible. The bottles manufactured at Pondicherry were held comparable to the bottles manufactured at Bhuvaneshwar, since both were produced without caps and stoppers. As comparable goods were available within the assessee's own production, the value of the Bhuvaneshwar bottles had to be adopted under Rule 6(b)(i). The claim for direct cost-based valuation of the Pondicherry unit was therefore not accepted at that stage.

Conclusion: Valuation of the Pondicherry bottles had to be redetermined on the basis of the comparable Bhuvaneshwar bottles under Rule 6(b)(i), and the matter was remanded to the original authority.

Final Conclusion: The assessable value issue was sent back for fresh determination on the basis of comparable goods, with the question of limitation left open for consideration by the original authority.

Ratio Decidendi: Where comparable goods manufactured by the assessee are available, valuation must first be made under the comparable-goods rule and the cost-based method cannot be applied directly without exhausting that primary mode of valuation.

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