Comparable-goods valuation for captive blended yarn upheld despite material differences, with adjustments required instead of cost-based valuation.

Blended yarn captively consumed in fabric manufacture was to be valued under Rule 6(b)(i) by reference to comparable goods, with suitable adjustments for differences in material characteristics. Differences in variety, input ratio, or quality did not justify shifting to cost-of-manufacture valuation where the rule expressly required the comparable-goods method. The remand direction merely required the authority to determine value on that basis after making the necessary adjustments, and the challenge to the remand order failed.

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Issues: Whether blended yarn captively consumed in the manufacture of fabric was required to be valued under Rule 6(b)(i) on the basis of comparable goods with suitable adjustments for differences in material characteristics, or on the basis of cost of manufacture.

Analysis: The assessment dispute concerned blended yarn produced from poly wool and poly viscose yarns. The valuation rule specifically contemplated determination of assessable value with reference to comparable goods, and where the goods under assessment and the comparable goods differed in material characteristics, suitable adjustments were required to be made. The existence of differences in variety, ratio of inputs, or quality did not justify ignoring the statutory method under Rule 6(b)(i) and resorting to cost-based valuation. The impugned remand merely required the adjudicating authority to fix value on the basis of comparable goods after making the necessary adjustments.

Conclusion: The challenge to the remand order failed. Valuation under Rule 6(b)(i) by reference to comparable goods with appropriate adjustments was upheld, and the appeal was dismissed.

Ratio Decidendi: Where the valuation rule expressly provides for assessment on the basis of comparable goods, differences in material characteristics are to be neutralised by suitable adjustments rather than by abandoning that method in favour of cost of production.

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