Comparable goods valuation governs captive consumption; cost-based valuation applies only when comparison is unavailable.

Captively consumed goods were to be valued primarily on the basis of comparable goods under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975, with reasonable adjustments for relevant differences such as material characteristics. Cost of production including profit applied only when value could not be determined under that clause. Because comparable goods were available and the assessment was made on that basis, the lower authority's valuation method was consistent with the rule and the Revenue's cost-based valuation approach was rejected.

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Issues: Whether captively consumed goods were liable to be valued on the basis of comparable goods, or whether valuation had to be made on cost of production including profit.

Analysis: Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975 treated the value of comparable goods as the primary basis for valuing captively consumed goods. The proviso permitted reasonable adjustments for relevant differences, including material characteristics. Rule 6(b)(ii) applied only where value could not be determined under clause (i), in which event cost of production including profit would be used. Since comparable goods were available and the assessed value was based on those goods, the valuation adopted by the lower authority was in accordance with the rule.

Conclusion: Valuation on the basis of comparable goods was correct and the Revenue's claim for cost-based valuation failed.

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