Assessable value excludes buyer-paid bank interest where the seller only receives the discounted sale price.

Interest paid by the buyer to its bankers under an independent bill marketing arrangement was not includible in the assessable value for central excise where the seller received only the discounted sale price and had no role in, or benefit from, the financing. The transaction value remained the net price actually realised by the seller, and Board circulars confirmed that a separately disclosed cash discount for immediate or prompt payment reduces the assessable value to that net amount. On that basis, the buyer-paid bank interest could not form part of the value of the goods, and the demand and penalties were unsustainable.

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Issues: Whether interest paid by the buyer to its bankers under a bill marketing scheme, in a transaction where the seller received only the discounted sale price and was not privy to the financing arrangement, was includible in the assessable value of the goods for central excise purposes.

Analysis: The goods were sold at a separately disclosed cash discount and the seller received only the discounted price within a short time of delivery. The financing arrangement between the buyer and its bank was independent of the sale transaction and the seller had no role in, or benefit from, the interest paid by the buyer to the bank. The Board circulars clarified that where cash discount is allowed for immediate or reasonably prompt payment, the net sale price after such discount represents the assessable value under the definition of normal or transaction value.

Conclusion: The buyer-paid interest under the bank arrangement was not includible in the assessable value, and the demand and penalties were unsustainable.

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