Excise valuation and interest on receivables: credit-sale pricing may include a deductible financing component in assessable value.

In excise valuation, a credit-sale price that is higher than the cash-sale price may reflect an embedded financing element. Where the record shows that the difference between cash and credit pricing represents interest on receivables or the credit period component built into the price, that element cannot be ignored in computing assessable value. A Tribunal's view that no separate interest was shown to have been recovered was held unsustainable where the evidence supported the claimed deduction and the contrary finding was contrary to the record. The deduction for interest on receivables was therefore allowable, and the demand based on its rejection could not stand.

---

---

Issues: Whether, in computing the assessable value for excise purposes, the assessee was entitled to deduction on account of interest on receivables where the credit-sale price was higher than the cash-sale price and the difference represented the credit element built into the price.

Analysis: The assessee had sold the goods both on cash and credit terms, with the cash-sale price being lower by 1.75% than the credit-sale price. The record showed that provisional assessment had been made and, on finalisation, the assessee claimed deduction towards interest on receivables supported by accounting certificates. The Tribunal treated the credit-sale invoice price as the normal price and rejected the claim on the footing that no separate interest was shown to have been recovered. That approach overlooked the price difference between cash and credit sales and the material placed on record showing that the credit price itself included the financing element for the credit period. The finding that no such element existed in the price was therefore contrary to the record and perverse.

Conclusion: The deduction towards interest on receivables was allowable, the denial of the claim was unsustainable, and the demand based on the contrary view could not be sustained.

Final Conclusion: The appeals were allowed, the impugned orders were set aside, and consequential refund relief followed.

Ratio Decidendi: Where the evidence shows that the credit-sale price is higher than the cash-sale price and the difference represents the credit/financing component built into the price, that element cannot be ignored while determining assessable value.

---