Assessable value and duty demands fail where buyer advances do not influence price and verified duty is already paid on discounts.

Notional interest on buyer advances is includible in assessable value only where the advances influence the selling price; on the facts stated, the pricing policy was unchanged and the assessee already paid interest on the advances, so no addition was justified. Where discounts shown in invoices were not actually passed on, and duty on amounts covered by debit notes had already been discharged, no further duty demand survived. The verified report supported the assessee's position, and the demands and penalty were set aside.

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Issues: (i) Whether notional interest on advances received from buyers was required to be added to the assessable value. (ii) Whether duty was payable on discounts shown in invoices but not actually passed on, and on amounts covered by debit notes raised on buyers.

Issue (i): Whether notional interest on advances received from buyers was required to be added to the assessable value.

Analysis: The applicable circular clarified that notional interest is includible only where the selling price is influenced by the advance. The assessee was already paying interest on the advances at a rate higher than the bank lending rate, and the discount policy remained the same for buyers paying within seven days or supplying advances. On the facts found, the selling price was not influenced by the advances, and the adjudicating authority had accepted this position.

Conclusion: Notional interest was not required to be added to the assessable value, and the demand on this count was unsustainable.

Issue (ii): Whether duty was payable on discounts shown in invoices but not actually passed on, and on amounts covered by debit notes raised on buyers.

Analysis: The verification report of the Range Superintendent showed that wherever discount had been shown but not actually passed on, duty had already been paid, and the duty relatable to debit notes had also been paid. The report was accepted and no contrary sustainable basis remained for the demand.

Conclusion: No further duty demand was sustainable on this account.

Final Conclusion: The demands and penalty were set aside, and the assessee obtained complete relief.

Ratio Decidendi: Notional interest on buyer advances is includible in assessable value only when the advances influence the selling price, and no further duty can be demanded where the verified duty liability on discounts or debit notes has already been discharged.

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