Notional interest on customer advances enters assessable value only if the Revenue proves price depression and a clear sales nexus.

Notional interest on advances received from customers is includible in the assessable value of manufactured goods only where the Revenue proves a nexus between the advance and the sale price and shows that the advance actually depressed the price. In the absence of material demonstrating the extent of benefit derived by the assessee or any price reduction attributable to the advance, the demand for inclusion cannot be sustained. The stated principle is that customer advances affect valuation only when they have a demonstrable impact on pricing, not by assumption.

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Issues: Whether notional interest on advances received from customers was includible in the assessable value of the manufactured goods.

Analysis: Inclusion of notional interest depended on proof of a nexus between the customer advance and the sale price, and on evidence that the advance actually depressed the price of the goods. In the absence of material showing the extent of benefit derived by the assessee or any price depression attributable to the advance, the demand could not be sustained.

Conclusion: Notional interest on customer advances was not includible in the assessable value; the appeal was rejected.

Final Conclusion: The assessee succeeded and the Revenue's challenge to exclusion of notional interest from assessable value failed.

Ratio Decidendi: Notional interest on customer advances is includible in assessable value only when the Revenue proves a nexus between the advance and the sale price and establishes that the advance depressed the price of the goods.

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