Valuation of captively consumed goods based on comparable sold goods upheld; separate quantity discount rejected

Captively consumed goods were to be valued by reference to comparable goods sold in the market under the valuation rules, and no separate quantity discount could be claimed for the captive clearances themselves because there was no sale of those goods. The assessable value was therefore correctly taken from comparable sold goods after deducting the discount actually applicable to those sold goods, and the additional discount claim was rejected.

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Issues: Whether captively consumed goods could be granted an additional quantity discount on the basis that 80% of production was consumed captively, and whether valuation based on comparable sold goods was valid.

Analysis: The assessable value of captively consumed goods was required to be determined with reference to comparable goods sold in the market under the valuation rules. As there was no sale of the captively consumed goods themselves, no separate discount could be claimed in respect of those goods. The value of comparable sold goods, after deduction of the discount actually applicable to such sold goods, had been correctly adopted for the captively consumed goods.

Conclusion: The claim for additional discount was rejected and the valuation made under Section 4(4)(d)(ii) of the Central Excise Act, 1944 and Rule 6 of the Central Excise Valuation Rules was upheld.

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