Assessable value for related-party clearances cannot rest on resale price without lawful justification for enhancement.

Where the bulk of clearances were exported, the recipient's resale price could not be treated as a comparable basis for valuing clearances to a related concern. The show cause notice also failed to set out any lawful justification for enhancing value. In the absence of a valid basis for adopting the higher resale price as assessable value, the demand and associated penalties were unsustainable. The order setting aside the demand and penalties was therefore upheld.

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Issues: Whether the demand and penalties based on adoption of the recipient's resale price as the assessable value for clearances to a related person were sustainable.

Analysis: The bulk of the clearances were exported and, therefore, did not furnish a comparable transaction value for determining alleged undervaluation in the clearances made to the related concern. No justification for enhancement of value was shown in the show cause notice. In the absence of a lawful basis for adopting the higher value, the demand could not be sustained.

Conclusion: The demand and penalties were not sustainable and the appeal was liable to be dismissed.

Final Conclusion: The impugned order setting aside the demand and penalties was upheld.

Ratio Decidendi: Where the bulk of clearances are exported and no lawful justification for value enhancement is established, the resale price of the related buyer cannot be adopted as the assessable value for domestic clearances.

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