Captive-consumption valuation must use the correct rule and consider deductions before adopting comparable sale prices.

Captively consumed goods under Rule 6(b)(i) must be valued on the basis of comparable goods, and not automatically on the wholesale selling price of identical goods sold to outside buyers. Where the assessee specifically claims deductions for packing, advertisement and other expenditure included in the outside sale price, that plea must be examined before final valuation. An order applying Rule 4 instead of the correct captive-consumption provision could not be sustained, and the matter was remanded for fresh determination by the Commissioner (Appeals) in accordance with law.

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Issues: Whether the assessable value of goods captively consumed was required to be determined on the basis of the selling price of identical goods sold to outside buyers, and whether the matter required remand for fresh determination after considering the assessee's claim for deductions.

Analysis: The dispute concerned valuation of a product partly captively consumed and partly sold in the market. The appellate authority had proceeded on the basis of wholesale selling price and applied Rule 4 of the Central Excise (Valuation) Rules, whereas the assessee contended that captive-consumption valuation was governed by Rule 6(b)(i). The latter rule was held to be the applicable provision, but it still required assessment on the value of comparable goods. The record showed that the assessee had raised a specific plea that the price charged to outside buyers included additional elements such as packing, advertisement and other expenditures, and there was no finding on that plea.

Conclusion: The order adopting the wholesale selling price as the assessable value could not be sustained as it rested on the wrong valuation provision and ignored the assessee's claim for deductions. The matter was remanded for de novo decision by the Commissioner (Appeals) in accordance with law.

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