Captive-consumption valuation follows comparable sale price when similar goods are sold to independent buyers.

Where goods were captively consumed but also sold to independent buyers at contemporaneous prices, valuation was required to be based on the comparable sale price of similar goods under Rule 6(b)(1) of the Valuation Rules. The availability of an actual market price for similar goods made that basis the proper measure, rather than the alternative method pressed by the assessee under Rule 6(b)(2). The appellate finding adopting the sale price range for outside sales was upheld, and the appeal was dismissed.

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Issues: Whether the value of goods captively consumed was to be determined under Rule 6(b)(1) of the Valuation Rules on the basis of the price at which similar goods were sold to customers, or under Rule 6(b)(2) as contended by the appellant.

Analysis: The goods were not confined to captive use alone and were also sold to various buyers at contemporaneous prices. Where a comparable market price is available from sales of similar goods to independent customers, that price forms the proper basis for valuation of the goods consumed captively. The earlier appellate finding that the sale price range of the goods sold to outside parties could be adopted was found to be correct.

Conclusion: Valuation had to be made under Rule 6(b)(1) on the basis of the sale price of similar goods, and the appellant's contention based on Rule 6(b)(2) failed.

Final Conclusion: The appeal was dismissed and the Revenue's valuation method was upheld.

Ratio Decidendi: Where comparable sales to independent purchasers are available, captive-consumption valuation must be based on that comparable price rather than a notional or alternative method.

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