Comparable goods valuation under Central Excise rules governs job-work petroleum coke; cost-based valuation and Dai Ichi Karkaria exclusion were rejected.

Where calcined petroleum coke was manufactured on job-work basis, valuation was held to fall under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975 because comparable factory-gate prices of the assessee's own similar product were available; resort to cost-based valuation under Rule 6(b)(ii) was therefore impermissible. The text also states that the Larger Bench ruling in Dai Ichi Karkaria did not apply, as it was rendered in the context of Rule 6(b)(ii) and captive consumption, and did not govern a dispute determined under Rule 6(b)(i). On that basis, exclusion of duty on raw materials for proforma credit was not available.

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Issues: (i) Whether the assessable value of calcined petroleum coke manufactured on job-work basis was to be determined under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975 by reference to comparable goods manufactured by the assessee, or under Rule 6(b)(ii) on the cost of production. (ii) Whether the duty paid on raw materials, in respect of which proforma credit had been availed, was excludible from the assessable value by applying the Larger Bench decision in Dai Ichi Karkaria.

Issue (i): Whether the assessable value of calcined petroleum coke manufactured on job-work basis was to be determined under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975 by reference to comparable goods manufactured by the assessee, or under Rule 6(b)(ii) on the cost of production.

Analysis: Rule 6(b)(i) applies where the excisable goods are not sold by the assessee but are used or consumed in the manufacture of other articles, and it adopts the value of comparable goods produced by the assessee or any other assessee. Rule 6(b)(ii) comes into play only when value cannot be determined under sub-clause (i). The assessee manufactured the same product both from market-purchased raw material and from raw material supplied for job work, and no material difference in the quality of the final product was shown. The comparable factory-gate price of the assessee's own product was therefore available and had to be taken as the basis.

Conclusion: Rule 6(b)(i) was applicable, and the matter was rightly remanded for assessment on the basis of comparable goods; the assessee's contention was rejected.

Issue (ii): Whether the duty paid on raw materials, in respect of which proforma credit had been availed, was excludible from the assessable value by applying the Larger Bench decision in Dai Ichi Karkaria.

Analysis: The Larger Bench decision was rendered in the context of Rule 6(b)(ii) and involved intermediate goods captively consumed by the manufacturer. Since the present case was governed by Rule 6(b)(i), and the applicability of that rule itself was the central issue, the earlier decision did not control the valuation dispute here.

Conclusion: The decision in Dai Ichi Karkaria was held inapplicable, and the assessee was not entitled to exclusion of duty on raw materials on that basis.

Final Conclusion: The appeal failed because the assessable value had to be determined by reference to comparable goods under Rule 6(b)(i), and the relied-upon precedent did not alter that result.

Ratio Decidendi: Where comparable goods manufactured by the assessee are available, valuation must be made under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975, and recourse to cost-based valuation under Rule 6(b)(ii) is impermissible unless comparable value cannot be determined.

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