Instructions on when notional interest on advances should be included in the assessable value. For such inclusion it has to be shown that the price charged has a nexus with the deposit

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..... ts taken by manufacturers The issue regarding inclusion of notional interest on advance deposits in the assessable value of excisable goods has been re- examined by the Board in view of several references received from the field formations and the trade seeking clarifications. 2. In this connection. Board reiterates the Law Ministry's opinion dated 28.9.84 as circulated under F.No.2/2/86-CX.I da .....

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..... o pay large amounts of interest which naturally would have got reflected in the purchase price to be charged from the buyers as it would form a part of the cost of production which would be passed on to the customers. To that separate price charged from Ponds (1) Ltd. the extent of benefit obtained by the assessee on interest-free loan was required to be reloaded by hiking the price charged from P .....

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..... record to show that the receipt of the deposit from some of the dealers could possibly influence the fixation of the sale price even with regard to those sales which are made at the factory gate against cash and not on credit. Had there been a difference in the selling price where for example special discount was given to the dealer who had given a deposit then it may have been possible to say tha .....

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..... nts of Supreme Court, Board clarifies that: (i) The notional interest on advances deposited by the wholesale buyers would be included for the purpose of determination of assessable value if the deposit influences the fixation of sale price either by way of charging a less price from or by offering a special discount to the buyer who has given the deposit. (ii) If two different price exist, one f .....

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..... a rate lower than the normal bank rate, the difference in both interest rates should be equivalent to the extent of benefit derived by the manufacturer. The money value of the extent of benefit should be quantified and added for the purpose of determination of the assessable value. 7. This supersedes the Board's Circular No. 215/49/96 (F.No. 6/1/91-CX.I) dated 27.5.96. F.No. 6/10/98-CX.I .....

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