Captive consumption valuation under excise law required fresh merits review, not dismissal for non-compliance with pre-deposit.

Valuation of an intermediate product used for captive consumption, with some outside sales, required fresh scrutiny because the price-declaration regime under Rule 173C and the dynamic market-price basis under section 4 of the Central Excise Act had to be examined on the facts. The Tribunal held that the balance of convenience was not wholly in favour of the department and that the appellate authority should consider the controversy afresh rather than insist on pre-deposit and dispose of the appeal for default. The matter was remitted to the Commissioner for a decision on merits without pre-deposit.

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Issues: Whether the dismissal of the appeal for non-compliance with the pre-deposit direction was justified, and whether the matter required reconsideration on merits.

Analysis: The appeal involved valuation of an intermediate product used for captive consumption, where limited outside sales had also taken place. The Tribunal noted that the change in the price-declaration regime under Rule 173C and the dynamic nature of market prices under section 4 of the Central Excise Act required a proper examination of the facts and the effect of the amended procedure. In these circumstances, the view that the balance of convenience was wholly in favour of the department was not accepted. The appellate authority was therefore required to consider the controversy afresh instead of insisting upon pre-deposit and disposing of the appeal for default.

Conclusion: The appeal was allowed and the matter was remitted to the Commissioner for fresh decision on merits without insisting on pre-deposit.

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