Notional interest on buyer advances not added to assessable value absent proof of price suppression

Notional interest on an advance received from the buyer was not includible in the assessable value of tailor-made goods for central excise purposes where the goods were manufactured to specification and the advance was taken as a normal trade practice to guard against non-clearance. In the absence of any material showing that the advance depressed the price, no nexus existed between the advance and the price, so the proposed enhancement of assessable value was unwarranted and the demand was liable to be set aside.

---

---

Issues: Whether notional interest on the advance received from the buyer was liable to be added to the assessable value of the tailor-made goods for purposes of central excise duty.

Analysis: The goods were manufactured to the buyer's specifications and the advance was received as part of trade practice to protect the manufacturer against the risk of non-clearance. There was no material showing that receipt of the advance had depressed the price of the goods in any manner. In the absence of such nexus between the advance and the price, the proposed addition of notional interest to the assessable value was unwarranted.

Conclusion: The addition of notional interest to the assessable value was not justified and the demand was liable to be set aside.

---