Valuation of captively consumed yarn under Rule 6(b)(ii) remitted for fresh margin of profit determination.

Valuation of captively consumed cotton and cellulosic yarn under rule 6(b)(ii) turned on whether margin of profit should be computed with reference to the textile division producing the goods or the assessee's overall profit position. The Tribunal noted support from an earlier decision and observed that the fairness of the margin applied by the lower authority required reconsideration. It waived pre-deposit and remitted the valuation issue for fresh determination, leaving the margin of profit to be recalculated on reconsideration.

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Issues: Whether, for valuation of captively consumed cotton and cellulosic yarn under rule 6(b)(ii) of the Valuation Rules, the margin of profit had to be determined with reference to the textile division producing the goods or on the basis of the assessee's overall profit position.

Analysis: The dispute turned on the proper method of computing the margin of profit for captively consumed goods. The Tribunal noted that the assessee's contention found support in an earlier decision and that the matter required consideration of the equitability of the margin of profit applied by the lower authority. In view of that, the Tribunal waived pre-deposit and sent the matter back for fresh determination on the valuation aspect.

Conclusion: The issue was remitted for reconsideration of the margin of profit, and the assessee succeeded to that extent.

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