LPG valuation and blending dispute: buyer's resale price and penalties could not be sustained on incomplete factual verification.

Demand and penalties for LPG clearances could not be sustained on the existing record where the alleged blending of Butane and Propane was not shown to have occurred in every transaction. The tribunal noted that the mere availability of blending facilities did not prove that all clearances were non-trading clearances, and the buyer's resale price could not be adopted as assessable value without examining the buyer's records and the underlying agreement. As the factual basis was incomplete, the impugned order was set aside and the matter was remanded to the Commissioner for de novo adjudication.

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Issues: Whether the demand and penalties could be sustained on the footing that all clearances of LPG involved blending and therefore attracted duty, and whether the assessable value could be enhanced on the basis of the downstream buyer's sales price.

Analysis: The record showed that the appellant purchased LPG from suppliers and asserted that it was resold in bulk as such, with blending of Butane and Propane LPG occurring only in some cases. The mere existence of a facility to blend two varieties of LPG did not by itself establish that such activity had been undertaken in respect of every clearance. The record of the buyer was not examined, and the agreement between the parties was not available for proper verification. In these circumstances, the factual basis for treating all transactions as non-trading clearances and for adopting the buyer's sale price as the assessable value was found to be incomplete.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner for de novo adjudication.

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