Captive valuation of molasses requires proof of comparable grade before using higher market sales as the benchmark.

Captive consumption valuation of molasses was to be determined under Rule 6(b)(ii) of the Valuation Rules by reference to comparable sales. The department's attempt to raise the assessable value on the basis of higher-priced sales by other sugar mills failed because the materials did not prove that those sales related to molasses of the same grade as the appellant's clearances. The assumption that an earlier higher valuation by the appellant itself established identity of grade was rejected. In the absence of proof that the comparable molasses was of a different grade, the price of Rs. 1100 per tonne remained the proper benchmark.

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Issues: Whether the assessable value of molasses captively consumed in the manufacture of alcohol was to be determined on the basis of the price of comparable goods sold by another manufacturer, and whether the department had established that the higher-priced sales relied upon were of molasses of the same grade.

Analysis: The value for captive clearances had to be fixed under Rule 6(b)(ii) of the Valuation Rules by reference to comparable sales. The department sought to enhance the declared value on the footing that molasses had been sold by other sugar mills at higher prices. However, the materials relied upon did not establish that the sales at Rs. 1100 per tonne or Rs. 1600 per tonne related to molasses of the same grade as the appellant's clearances. The reasoning that the appellant's earlier valuation at a higher figure necessarily showed identity of grade was not accepted. In the absence of proof that the molasses sold at Rs. 1100 was of a different grade, that price was the proper comparable value.

Conclusion: The assessable value was to be taken at Rs. 1100 per metric tonne, and the department's enhancement to Rs. 1600 per tonne was not sustained.

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