Excise Valuation Rule 11 Applies When Goods are Partly Captively Consumed and Partly Sold to a Sister Concern: CESTAT

The CESTAT has ruled that excise valuation applies when goods are partly captively consumed and partly sold to a sister concern. The case involved a manufacturer who produced goods for both internal consumption and external sales. The tribunal found that the manufacturer had undervalued the goods sold to its sister concern. According to the CESTAT, such transactions require an appropriate valuation for excise duty purposes. The ruling emphasizes that excise duty must be paid based on the fair value of the goods, whether sold to unrelated parties or sister concerns, to ensure a fair assessment of duty. This decision has significant implications for how excise duty is calculated in mixed-use scenarios, specifically between related entities.