Valuation of captively consumed goods must first use comparable outside sales, with cost basis only as a fallback.

Valuation of captively consumed goods under Rule 6(b) of the Central Excise (Valuation) Rules, 1975 had to proceed first on the basis of comparable outside sales, and only where such value could not be determined, on cost of production or manufacture. The goods were partly sold and largely captively consumed, and the record showed some outside sales were available. At the stay stage, the Revenue did not place sufficient material to displace the impugned order, and the cited circular was noted to be subsequent to the relevant period. The stay application was therefore rejected.

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Issues: Whether stay of the Commissioner (Appeals)' order was warranted on the valuation of captively consumed goods under Rule 6(b) of the Central Excise (Valuation) Rules, 1975.

Analysis: The respondents' goods were partly sold and largely captively consumed. For captively consumed goods, Rule 6(b) contemplated valuation first on the basis of comparable goods sold outside and, only if such value could not be determined, on the cost of production or manufacture. The record showed that some outside sales were available, and the material placed by the Revenue did not demonstrate sufficient merit to displace the impugned order at the stay stage. The Tribunal also noted that the cited circular was subsequent to the relevant period and proceeded on the assumption that valuation under the cost-based limb was otherwise warranted.

Conclusion: Stay was not justified and the application was rejected.

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