Per C.N.B. Nair :

These appeals have come before us upon reference by the West Regional Bench of this Tribunal. The issue involved is the valuation (for levy of Central Excise duty) of goods manufactured by an assessee and consumed by him in further manufacture. After noting the different decisions which had been rendered by the Tribunal on the issue, the Bench has observed as under:

"3. We thus find that in spite of the existence of a number of judgments on this aspect, there is no specific ratio arising out of them.

4. The main issue is the language of the subject rule, it makes for a projection of an eventuality which is bound never to arise.

5. In this situation we deem it proper to refer this issue to the Hon'ble President of the CEGAT with the request that it be placed before the Larger Bench for disposal and decision. As an interim order we waive pre-deposit of the duty confirmed and the penalties imposed."

2. We have learned Counsel representing the appellants M/s. Raymonds Limited and Premal Ichhapora and the learned DR.

3. Specific provisions relating to valuation of captively consumed goods are contained in Rule 6(b) of Central Excise Valuation Rules. We read the provision to facilitate a proper understanding of the issue.

"6(b) where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based."

(i) On the value of the comparable goods produced or manufactured by the assessee or by any other assessee; provided that in determining the value under this sub-clause, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors and in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods;"

Rule 6(b) contains two methods of valuation in regard to captively consumed goods. The first [6(b)(i)] is to adopt the value of "comparable goods". If that method cannot be adopted, the value is to be determined [6(b)(ii)] 'on the cost of production or manufacture, including the profit, if any, which the assessee would have normally earned on the sale of such goods." The issue placed before us concerns valuation goods according to second method.

4. The appellant M/s. Raymonds Limited is a multi production company engaged in the manufacture of fabrics, cement etc. The show cause notice was issued on the basis that the appellant had included in the cost of production statement only the overall profit made by them from the manufacture of all items, while for the purpose of valuation of woven fabrics in question, only the profit if any, which the assessee would have normally earned on the sale of the woven fabric was required to be included. With regard to the goods to be taken into account while determining the assessable value of captively consumed item, both sides are agreed that only the profit relating to the goods under assessment is to be taken into account and not the profit resulting from the manufacture of other goods. Both sides have also submitted that the computation ofprofit itself is a matter to be determined according to generally accepted principles of costing. The DR in this context has referred to text book provisions dealing with INTER-PROCESS PROFIT & TRANSFERPRICE and has stated that no decision is required to be rendered by the Tribunal on the method of computation of profit, as accounting profession has well established standards on the subject.

5. With regard to the Division Bench's observation that the provision under Rule relating to addition of profit "makes for a projection of an eventuality which is bound never to arise", the learned Counsel for the appellants and DR have submitted that manufacturers make routine profit loss projections in relation to various products manufactured by them, irrespective of whether those goods are sold or not. This is necessary for a manufactu