Notional interest on advances excluded from excise valuation where no nexus with final product price was shown.

Notional interest on advances was excluded from central excise assessable value because the advances were not shown to have increased the price of the raw material or depressed the price of the final product. No nexus was established between receipt of the advances and the valuation of the goods, so the Supreme Court principle governing inclusion of notional interest did not apply on these facts. The result was that notional interest on advances was not includible in the assessable value for excise valuation.

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Issues: Whether notional interest on advances received by the assessee was includible in the assessable value of the goods for central excise valuation.

Analysis: The advances were found not to have enhanced the price of the raw material, and no nexus was established between the advances and the price of the final product. In the absence of any showing that receipt of the advances depressed the price of the final product, the principle laid down by the Supreme Court was held to govern the issue.

Conclusion: Notional interest on advances was not includible in the assessable value.

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