Duty liability on Receipt of Interest on Delayed payment

usually when we transact and receive payment, the interest portion is ignored by seller, 

however in case of excessive delay in settle of bills, interest is charged by vendor, and debited to the account of buyer, which is paid by buyer. 

quantam of such interest is known only after or at the time of actual payment by the buyer , and vendor issue debit notes to buyer after receiving payment. so its purely financial add on, it is not related to transaction value.

However if vendor issue advance interest debit in invoice and allow certain period credit against interest, then its deemed part of sales consideration, as it is well known to vendor in advance, and in this case the assessable value will get increased with gross interest charged over the sales value.

Interest on delayed payments will not form part of transaction value.  There is board circular on this issue.  Where it is clearly stated that interest under financial arrangements between the assessee and buyer would not be considered as part of value provided the following conditions are satisfied:

1. The interest charges are clarly distinguished from the price paid or payable.

2.  The financing arrangement must be in writing.

3.  Where required the assessee must demonstrate that such goods are actually sold at the price which has been declared as paid or payable.

Circular No. M.F. (D.R.) F. No. 354/81/2000-TRU, dated 30-6-2000

Pls go through the above circular.  It may help you.