Notional interest on customer advances is excluded from excisable value absent proof of nexus to the price charged.

Notional interest on advances received from customers for tailor-made goods was held not includible in the assessable value of excisable goods because the revenue failed to show that the advances depressed the price charged or otherwise affected valuation. A nexus between the advance and the price charged must be established before presumed interest can be added to assessable value; absent such linkage, the notional interest cannot form part of the valuation.

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Issues: Whether notional interest earned on advances received from customers for execution of orders was includible in the assessable value of excisable goods.

Analysis: The advances were taken in respect of tailor-made goods manufactured to the customers' exact specifications. No evidence was produced to show that the receipt of advances had depressed the price or that any presumed gain from interest had any bearing on the assessable value. The principle applied was that a nexus must be established between the advance and the price charged before notional interest can be brought into valuation.

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

Ratio Decidendi: Notional interest on customer advances is not includible in assessable value unless the revenue establishes a nexus between the advance and a reduction in the price charged.

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