Notional interest on buyer advances is excluded from assessable value unless the Department proves a pricing nexus.

Notional interest on buyer advances is includible in the assessable value of tailor-made goods only if the Department proves a nexus between the advance and the price charged. The fact that the goods are tailor-made does not shift that burden to the assessee. In the absence of evidence showing that the advance influenced pricing, the condition for adding notional interest is not met, and the amount is not includible in valuation. The analysis follows the Board circular and earlier Tribunal decisions supporting this approach.

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Issues: Whether notional interest on advances received from buyers was includible in the assessable value of tailor-made goods, and on whom the burden lay to establish a nexus between the advance and the price charged.

Analysis: Valuation is primarily the Department's function, and the mere fact that the goods are tailor-made does not shift the burden of establishing nexus to the assessee. Inclusion of notional interest on advances depends upon proof that the advance the price of the goods. In the absence of such evidence, the precondition for addition of notional interest to assessable value is not satisfied. The Board circular and earlier Tribunal decisions supporting this view were followed.

Conclusion: Notional interest on advances was not includible in the assessable value, and the burden remained on the Department to prove nexus.

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