Captive consumption valuation may use normal market price where declared sales price is genuine and no extra consideration exists.

Declared wholesale price of aluminium strips sold in the market was accepted as the normal price for valuing comparable strips captively consumed, because the sale price was shown to be actual and no additional consideration was evidenced. As the input aluminium wire rods were duty paid and proforma credit was available, the effective input cost was lower than the cum-duty price, supporting adoption of the declared market price under Section 4(1)(a) of the Central Excise Act and Rule 6(b)(i) of the Central Excise Valuation Rules, 1975. The alternative valuation method under Rule 6(b)(ii) was not attracted, and the differential duty demand could not be sustained.

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Issues: Whether the declared wholesale price of aluminium strips cleared for home consumption could be treated as the normal price for valuing strips captively consumed, or whether valuation had to be made under the alternative method in Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975.

Analysis: The declared price of the strips sold in the market was not shown to be higher than the actual price at which they were sold, nor was there any evidence of additional consideration. The input aluminium wire rods were duty paid and the appellant was availing proforma credit on the inputs, so the effective cost of the input to the appellant was lower than the cum-duty price. In these circumstances, the declared price of the comparable goods represented the normal price contemplated by Section 4(1)(a) of the Central Excise Act, and that value could validly be adopted for the goods captively consumed under Rule 6(b)(i). The alternative method under Rule 6(b)(ii) was therefore not attracted.

Conclusion: The valuation adopted by the appellant was correct and the differential duty demand could not be sustained.

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