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Issues: Whether automotive engines cleared on stock transfer basis as original equipment to the assessee's own manufacturing units were to be valued on the basis of comparable wholesale sales under Rule 6(b)(i) of the Central Excise Valuation Rules, 1975, or on the cost construction method under Rule 6(b)(ii) of those Rules.
Analysis: The engines cleared for use as original equipment were not sold in the market but transferred to other units of the same company, and such clearances were to a separate class of buyers from wholesale spare-parts buyers. The goods cleared for the two channels were also not identical in form, since the engines transferred as original equipment lacked certain fittings and required further alignment before use. In such circumstances, the value of wholesale spare-parts sales could not be treated as comparable value for the transferred engines. With no sale involved for those clearances, valuation had to proceed under Section 4(1)(b) of the Central Excise Act, 1944, through the Valuation Rules.
Conclusion: Rule 6(b)(i) was inapplicable, and valuation under Rule 6(b)(ii) on cost construction was correct.
Final Conclusion: The Revenue's challenge failed, and the order adopting cost construction valuation for the original-equipment clearances was upheld.
Ratio Decidendi: Where goods are transferred, not sold, to a separate class of buyers and are not comparable in identity or use with wholesale market goods, valuation cannot be based on comparable sale price and must be determined under the cost construction method.
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