C H A P T E R

28 Valuation Under the

Customs Act, 1962

28.1 VALUATION AS PER TRANSACTION VALUE [SECTION 14(1)] AND ADDITION AS PER
RULE 10
Q.1. Examine the validity of the following statements with reference to the Customs Act, 1962:
(i) Service charges paid to canalizing agent are not includible in the assessable value of
imports.
(ii) Inspection charges are not includible in the assessable value of the imported goods if
contract does not specify for certification by an independent agency.
 [May 2013, 3 Marks]
Ans. (i) The statement is not valid
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(ii) The statement is valid
As per Rule 10(1) of the Customs (Determination of Value of Imported Goods) Rules,
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Bombay Dyeing & Mfg. CC

Q.2. The importer entered into contract for supply of crude sunflower seed oil @ U.S. $ 435 C.I.F./
Metric ton. Under the contract, the consignment was to be shipped in the month of July, 2017.
The period was extended by mutual agreement and goods were shipped on 5th August, 2018
at old agreed prices. In the meanwhile, the international prices had gone up due to volatility in
the market and other imports during August, 2018 were at higher prices. Department sought
to increase the assessable value on the basis of the higher prices as contemporaneous imports.
Decide whether the contention of the department is correct. You may refer to decide case law,
if any, for your decision. [May 2013, 3 Marks]

28.1
 P
A
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T
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&
F
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28.2

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Ans. u not Correct

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Q.3. XYZ Industries Ltd., has imported certain equipment from Japan at an FOB cost of 2,00,000
Yen (Japanese). The other expenses incurred by M/s XYZ Industries in this connection are
as follows:
(i) Freight from Japan to Indian port: 20,000 yen
(ii) Insurance paid to Insurer in India: 10,000
(iii) Designing charges paid to Consultancy firm in Japan: 30,000 yen
(iv) M/s XYZ Industries had expended ` 1,00,000 in India for certain development activities
with respect to the imported equipment
TAXMANN®

(v) XYZ Industries had incurred road transport cost from Mumbai port to their factory in
Karnataka: 30,000
(vi) Central Board of Indirect Taxes and Customs had notified for purpose of Sec. 14(3) of
the Customs Act, 1962 exchange rate 1 yen = 1.3948.
(vii) M/s XYZ Industries had effected payment of the Bank based on exchange rate 1 Yen =
0.4150
(viii) The commission payable to the agent in India was 5% of FOB cost of the equipment in
Indian Rupees.
Arrive at the assessable value for purposes of Customs duty under the Customs Act, 1962
providing brief notes whenever required with appropriate assumptions. [May, 2008]
Ans. Computation of assessable value

Particulars Amount
F
O
B
V
a
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g
i
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n
i
n
q
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0
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2
0
,
0
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0

Add
Total (A) 2,50,000 yen
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Add
CIF in INR 1,12,648
Assessable Value u/s 14(1) 1,12,648
 C
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28.3

Working Notes :
1
.
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2
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f
A
v
.
Q.4. From the following particulars determine the assessable value of the imported equipment
giving explanation for each item:
(i) FOB cost of equipment (Japanese Yen) 2,00,000 Yen
(ii) Freight charges in Japanese Yen 20,000 Yen
(iii) Charges for development connected to equipment paid in India 60,000
(iv) Insurance charges paid in India for transportation from Japan 15,000
(v) Commission payable to agent in India 15,000
Exchange rate as per RBI is 1 Yen = 0.45
Exchange rate as per CBIC is 1 Yen = 0.50 [May 2009, 5 Marks]
Ans. Statement Showing Computation of Assessable
Value as per Section 14 of Customs Act, 1962

Particulars Amount
F
O
B
v
a
l
u
e
g
i
v
e
n
i
n
q
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s
t
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2
,
0
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,
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0
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: a
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Add
T
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2
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2
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CIF in Indian Rupees 1,40,000

Total Assessable Value 1,40,000

Q.5. T Ltd. imported some goods from LMP Inc. of United States by air freight. You are required
to compute the value for purposes of customs duty under the Customs Act, 1962 from the
following particulars:

CIF value US$ 6,000

Freight paid US$ 2,000
Insurance cost US$ 700
The bank had received payment from the importer at the exchange rate of US$ 1 = 46 while the
CBIC notified exchange rate on the relevant date was US$ 1 = 45.5 (Make suitable assumptions
where required and provide brief explanations to your answer). [Nov. 2010, 5 Marks]
Ans. Computation of Assessable value for Customs purpose

PARTICULARS AMOUNT
C
I
F
v
a
l
u
e

6
0
0
0
U
S
$
:
F
r
e
i
g
h
t

2
0
0
0
U
S
$

Less
:
I
n
s
u
r
a
n
c
e

7
0
0
U
S
$

Less
FOB value 3300 US $
:
F
r
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t
(
2
0
%
o
f
F
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B
v
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l
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e
)
[
N
o
t
e
1
]

6
6
0
U
S
$

Add
 P
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28.4

PARTICULARS AMOUNT

:
I
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s
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r
a
n
c
e
(
a
c
t
u
a
l
)

7
0
0
U
S
$
Add
CIF for customs purpose 4660 US $
E
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[
N
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2
]

4
5
.
5
0
p
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U
S
$
`
Assessable value (` 45.50 × 4660 US $) ` 2,12,030
Working Notes:
1
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6
.
Q.6. Compute the assessable value of the machine imported by M/s. Exports India Pvt. Ltd., under
the Customs Act, 1962.

US$
FOB price of the machine 10,000
Air freight paid 2,500
Insurance for transit of machine Not Ascertainable
Cost of development work in India 40,000
Local agent’s commission 10,000
Cost of local transport 5,000
TAXMANN®

Exchange rate applicable US $1 = Z 45

Provide explanation for your answer. [May 2011, 5 Marks]
Ans. Computation of assessable value as per Section 14 of Customs Act, 1962

Particulars Amount (` )
F
O
B
p
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c
e
o
f
t
h
e
m
a
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h
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e

4
,
5
0
,
0
0
0
(
$
1
0
,
0
0
0
×
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[
$
1
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,
0
0
0
×
4
5
]

1
0
,
0
0
0
Add : As per Rule 10(1) of Import Valuation Rules, 2007
(
)
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ii
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6
0
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0
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Add : As per Rule 10(2) of Import Valuation Rules, 2007

(
)
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W
h
i
c
h
e
v
e
r
i
s
l
e
s
s
]

9
2
,
0
0
0

a.
(
2
0
%
o
f
4
,
6
0
,
0
0
0
)

b.
(
)
I
n
s
u
r
a
n
c
e
[
1
.
1
2
5
%
o
f
F
O
B
]
=
(
1
.
1
2
5
%
o
f
4
,
6
0
,
0
0
0
)

5
1
7
5

ii
CIF value/Assessable value 5,57,175

Working Notes:
1
.
W
e
p
r
e
s
u
m
e
l
o
c
a
l
a
g
e
n
t
c
o
m
m
i
s
s
i
o
n
i
s
r
e
l
a
t
e
d
t
o
F
O
B
V
a
l
u
e
.
2
.
Ca
oc
s
ti
o
f.
l
o
c
a
l
t
r
a
n
s
p
o
r
t
i
s
n
o
t
i
n
c
l
u
d
i
b
l
e
i
n
a
s
s
e
s
s
a
b
l
e
v
a
l
u
e
a
s
i
t
i
s
a
p
o
s
t
i
m
p
o
r
t
a
t
i
o
n
t
v
i
t
y
3
.
N
o
l
a
n
d
i
n
g
c
h
a
r
g
e
s
s
h
o
u
l
d
b
e
a
d
d
e
d
f
o
r
C
I
F
v
a
l
u
e
[
R
u
l
e
1
0
(
2
)
]
.
 C
H
.
2
8
:
V
A
L
U
A
T
I
O
N
U
N
D
E
R
T
H
E
C
U
S
T
O
M
S
A
C
T
,
1
9
6
2
28.5

Q.7. Determine the assessable value for the purpose of Customs Act, 1962 from the following
information in respect of import of a Machine from UK:

(i) FOB Value £ 6,000

(ii) Air Freight £ 1,500
(iii) Design and development charges paid in UK 500
(iv) Design and development charges paid in India 10,000
(v) Commission paid to local agents 1% of FOB Value
(vi) Date of Bill of Entry 10-4-2018
(Exchange rate notified by CBIC £ 1 = 70)
(vii) Date of entry Inward 20-4-18
(Exchange rate notified by CBIC £ 1 = 65) I
Insurance charges are not ascertainable.
Make assumptions where required and provide suitable explanations. [Nov 2011, 5 Marks]
Ans. Computation of assessable value as per Section 14 of Customs Act, 1962

Particulars Amount

£
6
0
0
0
FOB price of the machine
Add : As per Rule 10(1) of Import Valuation Rules, 2007
(
)
L
o
c
a
l
a
g
e
n
t
c
o
m
m
i
s
s
i
o
n
(
1
%
o
f
£
6
0
0
0
)

£ 5 6
6 0 6
0 0 0
i
(
)
C
o
s
t
o
f
D
e
s
i
g
n
a
n
d
D
e
v
e
l
o
p
m
e
n
t
C
h
a
r
g
e
s
P
a
i
d
i
n
U
K
[
A
s
p
e
r
R
u
l
e
1
0
(
1
)
]

£ ,
ii

TAXMANN®
V
a
l
u
e
a
s
p
e
r
C
u
s
t
o
m
s

£
5
Add : As per Rule 10(2) of Import Valuation Rules, 2007
(
)
A
i
r
F
r
e
i
g
h
t

i
.
[
A
c
t
u
a
l
o
r
2
0
%
o
f
F
O
B
W
h
i
c
h
e
v
e
r
i
s
l
e
s
s
]

£
1
3
2
1
a
(
2 a
0 n
% c
o
f [
£ .
6
5 5
,
6 %
) o
0

(
)
I
n
s
u
r

e
1
1
2

f
F
O
B
]
=
(
1
.
1
2
5
%
o
f
£
6
,
5
6
0
)

£
7
3
.
8
ii
CIF value/Assessable value £ 7954.8
Assessable value (` ) £ 7954.8 × ` 70 (WN 1) 5,56,836
Working Note
Eh1
xa
cs6
hb2
ae
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gn
ec
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a
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ei
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fr
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nr
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e 9
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r
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h1
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e
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k
e

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n
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t
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ue
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of
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k
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w
r

n
n
a
.

Q.8. PQR Industries Ltd., has imported certain equipment from Japan at an FOB cost of 2,00,000
yen (Japanese). The other expenses incurred by M/s. PQR Industries Ltd. in this connection
are as follows:
 P
A
R
T
I
I
:
C
U
S
T
O
M
S
&
F
T
P
28.6

(i) Freight from Japan to Indian Port 20,000 yen

(ii) Insurance paid to insurer in India (for the importation of the machine) 10,000
(iii) Designing charges paid to consultancy in Japan 30,000 yen
(iv) M/s. PQR Industries Ltd. had expended 1,00,000 in India for certain developmental
activities with respect to the imported machine.
(v) PQR Industries Ltd. had incurred road transport cost from Mumbai 30,000
port to their factory in Karnataka.
(vi) CBIC had notified for purposes of Sec. 14 of the Customs Act, 1962 exchange rate of
1 yen = 0.3948. The interbank exchange rate as announced by the authorized dealer
was 1 yen = 40
(vii) M/s. PQR Industries Ltd. had effected payment based on exchange rate 1 yen = 0.4150
(viii) The commission payable to the agent in India was 5% of the FOB cost of the equipment
in Indian rupees.
Arrive at the assessable value for purposes of valuation under the Customs Act, 1962 with brief
notes wherever necessary for each of the adjustments at (i) to (viii) above.
 [May 2012, 5 Marks]
Ans. Computation of assessable value as per Section 14 of Customs Act, 1962

PARTICULARS AMOUNT
F
O
B
V
a
l
u
e

¥
2
,
0
0
,
0
0
0
:
D
e
s
i
g
n
a
n
d
d
e
v
e
l
o
p
m
e
n
t
c
h
a
r
g
e
s
[
N
o
t
e
2
]

¥
3
0
,
0
0
0
Add
TAXMANN®

Total ¥ 2,30,000
T
o
t
a
l
i
n
r
u
p
e
e
s
@
0
.
3
9
4
8
p
e
r
p
o
u
n
d
[
N
o
t
e
1
]

9
0
8
0
4
` `
:
L
o
c
a
l
a
g
e
n
c
y
c
o
m
m
i
s
s
i
o
n
[
N
o
t
e
6
]
(
5
%
o
f
¥
2
,
0
0
,
0
0
0
)
=
¥
1
0
,
0
0
0
×
0
.
3
9
4
8

3
9
4
8
Add ` `
FOB value as per Customs ` 94752
:
F
r
e
i
g
h
t
(
¥
2
0
,
0
0
0
×
0
.
3
9
4
8
)

7
8
9
6
Add `
:
I
n
s
u
r
a
n
c
e
@
1
.
1
2
5
%
o
f
c
u
s
t
o
m
s
F
O
B
[
N
o
t
e
5
]

1
0
,
0
0
0
Add `
CIF Value ` 112648
Assessable value (rounded off) ` 112648
Notes:
(
1
)
Ab
se
pe
e
rc
So
en
c
t
i
oe
nr
1d
4.
o
f
t
h
e
C
u
s
t
o
m
s
A
c
t
,
1
9
6
2
R
a
t
e
o
f
e
x
c
h
a
n
g
e
n
o
t
i
fi
e
d
b
y
t
h
e
C
B
I
C
h
a
s
n

s
i
d
e
(
2
)
Vi
a
l
up
eo
o
fe
dd
e
s
i
go
nd
w.
o
r
k
u
n
d
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r
t
a
k
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e
l
s
e
w
h
e
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t
h
a
n
i
n
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n
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a
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v
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f
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m
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(
3
)
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up
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voe
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e

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.
(
4
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n
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e
.
(
5
)
I
n
s
u
r
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n
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f
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h
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a
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(
6
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ne
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l
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e
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l
0
(
1
)

t
l
t
i

l
e
s
,
0
.
(
7
)
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oa
au
l
na
d
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nn
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cu
hl
a
r
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s
a
r
e
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b
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I
F
v
a
l
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u
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e
1
0
(
2
)
o
f
l
t
i
o

e
s
 C
H
.
2
8
:
V
A
L
U
A
T
I
O
N
U
N
D
E
R
T
H
E
C
U
S
T
O
M
S
A
C
T
,
1
9
6
2
28.7

Q.9. M/s. Foreign Trade International Ltd. have imported one machine from England. They have
given the following particulars:

(i) FOB value of Machine £ 8,000

(ii) Air freight paid £ 2,500
(iii) Design and development charges paid in England £ 500
(iv) Commission @ 2% of F.O.B. value paid to local agent in Indian Currency.
(v) Date of Bill of Entry is 24-10-2017 [rate of basic Customs Duty is 20%. Exchange
rate as notified by C.B.I.C. is 68 per Sterling Pound]
(vi) Date of arrival of aircraft is 20-10-2017 when rate of basic Customs Duty was 18%,
exchange rate as notified by C.B.I.C. was 70 per Sterling Pound.
(vii) Integrated tax leviable under Sec. 3(7) of Customs Tariff Act, 1975 is 12%.
(viii) Insurance charges, though actually paid, details are not available.
Compute the assessable value and determine the Customs Duty payable by M/s. Foreign Trade
International Ltd. Give brief notes also wherever necessary.
Note: Ignore GST Compensation Cess. [Nov. 2012, 5 Marks]
Ans. Computation of assessable value as per Section 14 of Customs Act, 1962

Particulars Amount
F
O
B
V
a
l
u
e

£
8
0
0
0
Add : As per Rule 10(1) of Import Valuation Rules, 2007
(
)
L
o
c
a
l
a
g
e
n
t
c
o
m
m
i
s
s
i
o
n
(
2
%
o
f
£
8
0
0
0
)

£
1
6
0

TAXMANN®
i
(
)
C1
o0
s
t1
o
f
D
e
s
i
g
n
a
n
d
D
e
v
e
l
o
p
m
e
n
t
C
h
a
r
g
e
s
P
a
i
d
i
n
E
n
g
l
a
n
d
[
A
s
p
e
r
R
u
l
e

£
5
0
0
ii
(
)
]

Value as per Customs £ 8660

Add : As per Rule 10(2) of Import Valuation Rules, 2007
(
)
A
i
r
F
r
e
i
g
h
t

i
.
[
A
c
t
u
a
l
o
r
2
0
%
o
f
F
O
B
w
h
i
c
h
e
v
e
r
i
s
l
e
s
s
]

£
1
7
3
2
a
(
2 a
0 n
% c
o
f [
£ .
8 2
6 5
6 %
0
) o

(
)
I
n
s
u
r

e
1
1

f
F
O
B
]
=
(
1
.
1
2
5
%
o
f
£
8
,
6
6
0
)

£
9
7
.
4
2
5
ii
CIF value/Assessable value £ 10489.425
Assessable value (` ) £ 10489.425 × ` 68 (Note 2) (Rounded off) 713281
Computation of Customs Duties As per Customs Tariff Act, 1975

Particulars Amount (` )
A
s
s
e
s
s
a
b
l
e
v
a
l
u
e
(
r
o
u
n
d
e
d
o
f
f
)

7
1
3
2
8
1

`
A
d
d
:
B
a
s
i
c
c
u
s
t
o
m
d
u
t
y
@
2
0
%
[
N
o
t
e
3
]

1
,
4
2
,
6
5
6

`
A
d
d
:
S
o
c
i
a
l
W
e
l
f
a
r
e
S
u
r
c
h
a
r
g
e
@
1
0
%
o
n
1
,
4 )
2
,
6
5
6

1
4
,
2
6
6

` `
T
o
t
a
l
v
a
l
u
e
f
o
r
l
e
v
y
o
f
I
n
t
e
g
r
a
t
e
d
T
a
x
u
/
s
3
(
7

8
,
7
0
,
2
0
3

`
A
d
d
:
I
n
t
e
g
r
a
t
e
d
t
a
x
l
e
v
i
a
b
l
e
u
n
d
e
r
s
e
c
t
i
o
n
3
(
7
)
@
1
2
%

1
0
4
4
2
4

`
2
6
1
3
4
6

Total duty and integrated tax payable (Rounded off)

1
4
2
6
5
6
+
1
4
2
6
6
+
1
0
4
4
2
4
)

`
(` ` `
 P
A
R
T
I
I
:
C
U
S
T
O
M
S
&
F
T
P
28.8

Notes:
1
.
A
s
p
e
r
R
u
l
e
1
0
o
f
t
h
e
C
u
s
t
o
m
s
(
D
e
t
e
r
m
i
n
a
t
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:
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)
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%
o
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r
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.
i
(
)
i
nk
sn
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r
aw
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e
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t
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.
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%
o
f
F
O
B
p
r
i
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i
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ii

.
(
)
t
h
e
c
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m
i
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iii
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.
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o
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4

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t

,
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]
.
3
.
Ro
a
t
ea
o
fi
da
u
t
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pt
r
ee
va
a
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da
a
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o
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s
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A
c
,

2
]
Q.10. BSA & Company Ltd. have imported a machine from UK. From the following particulars
furnished by them, arrive at the assessable value for the purpose of customs duty payable:

i. FOB cost of the machine 10,000 U.K. Pounds

ii. Freight (air) 3,000 U.K. Pound
iii. Engineering and design charges paid to a firm in UK 500 U.K. Pounds
iv. License fee relating to imported goods payable by the buyer as 20% of F.O.B. cost
a condition of sale
v. Materials and components supplied by the buyer free of cost 20,000
valued
vi. Insurance paid to the insurer in India 6,000
TAXMANN®

vii. Buying commission paid by the buyer to his agent in UK 100 U.K. Pounds
Other Particulars :

i. Inter-bank exchange rate as arrived by the authorized dealer: 72.50 per U.K. Pound
ii. CBIC had notified for purpose of Sec. 14 of the Customs Act, 1944, Exchange rate of
70.25 per U.K. Pound.
iii. Importer paid 5,000 towards demurrage charges for delay in clearing the machine
from the Airport
(Make suitable assumptions wherever required and show workings with explanations)
[May 2013, 5 Marks]
Ans. Computation of assessable value of machine imported by BSA & Co.

PARTICULARS AMOUNT
P
r
i
c
e
o
f
t
h
e
m
a
c
h
i
n
e

£
1
0
,
0
0
0
:
E
n
g
i
n
e
e
r
i
n
g
a
n
d
d
e
s
i
g
n
c
h
a
r
g
e
s
p
a
i
d
i
n
U
K
[
N
o
t
e
1
]

£
5
0
0

Add
:a
L
i
c(
e2
n0
c%
eo
f
ef
eP
r
e
l
a
t
i
no
gf
t
oa
ic
mh
pi
on
r
t
e[
dN
go
ot
oe
d1
s]
p
a
y
a
b
l
e
b
y
t
h
e
b
u
y
e
r
a
s
a
c
o
n
d
i
t
i
o
n

£
2
,
0
0
0

Add
o
f
s
l
e

r
i
c
e

e
)

Total £ 12,500
V
a
l
u
e
i
n
I
n
d
i
a
n
c
u
r
r
e
n
c
y
[
£
1
2
,
5
0
0
×
7
0
.
2
5
]
[
N
o
t
e
2
]

8
,
7
8
,
1
2
5

` `
:
M
a
t
e
r
i
a
l
s
a
n
d
c
o
m
p
o
n
e
n
t
s
s
u
p
p
l
i
e
d
b
y
t
h
e
b
u
y
e
r
f
r
e
e
o
f
c
o
s
t
[
N
o
t
e
1
]

2
0
,
0
0
0

Add `
FOB (As per Customs) ` 8,98,125
:
F
r
e
i
g
h
t
(
2
0
%
o
f
8
9
8
1
2
5
)
[
N
o
t
e
3
]

1
,
7
9
,
6
2
5

Add `
:
I
n
s
u
r
a
n
c
e
p
a
i
d
t
o
t
h
e
i
n
s
u
r
e
r
i
n
I
n
d
i
a
[
N
o
t
e
1
]

6
,
0
0
0

Add `
CIF value ` 10,83,750
Assessable value (rounded off) ` 10,83,750
 TAXMANN®
eel e e o s t
r m e edt ,
)ed r
i e
28.9

l eu b s]. m h l e l
A machine was originally imported from Japan at 250 lakh in August, 2017 on payment of all

2018 and re-imported without any re-manufacturing or re-processing in October 2018 after

However, the fair cost of repairs carried out (including cost of material < 6 lakh) would have
duties of customs. The said machine was exported (sent-back) to supplier for repairs in January,

[Nov. 2014, 5 Marks]

e
repairs. Since the machine was under warranty period, the repairs were carried out free of cost.

Compute the amount of customs duty payable (if any) on re-import of the machine after
repair. The ownership of the machine has not been changed during the period. (Ignore GST
been 9 lakh. Actual insurance and freight charges (to and fro) were 3 lakh. The rate of basic

b r i oot b i o fi b 0 0 0 0
af d v 7 o pr ar h a 0 0 0 4

13,32,000

2,91,840
R o0 t f i r ns t 0 0 0 8

Amount (` )
yr[ l
u s sf o v a rti y , , , ,
ae e r0 u ne) ec oa r a 0 0 2 9
pyu o p2 an 2 l s e p 0 2 1 5
sul h hs, C r
t i( ers d t
f y ,
2 ,
1 ,
1
dbv a s t
f e e h 0 bi ee a t 1
fc1 r b
o
oee7 .
]
e
u
iu
F
l h
t o ae daro
l p ,
s
u
d
ghl
t l
a [ R f tmu
s l u eut
r c r s
dyb0 0 v e) o oeR of n d a m
a c s ) ch wo i e e
ebs
t 2 e. i rd y e y o
r d s , l C p o ( eto htl t
a

e s b ) hgt csa ln 2 s

Value for computing integrated tax under section 3(7) of Customs Tariff
oe s e aBI Bo 1 t i o u
plis l s G ( n
i h cun s r c
mpau C Od 0 ]
Explanation

s 1 nr 7 wi t
c o e e
ipeR e F i a 0 ra i h h
osu h) s
s e f e e de 0 sa t
i t
r t
t t s a h o t l el 2 mfr ed u ,
gtsno d ,yt
%p
r
o u
R dcn , oea n f ;
e e
s
2 nn i 2 ui s t h o
6
9 i
t e eo 6b 0m2 [
e].
l
c y e
l s t
ufs
sc
t y
b
m a
c
1 a nil
b G 9d d I na u g a
, l
e o 1e u7
l i l [ R coo e s n
T d , fi e f 0 e f cin l e
C r pde
u t i ceo a
v20 ed e
us) o p
h b e
h v
A e
emc l t c t e r l yuc w a t i
customs duty is 10% and rate of IGST on like article is 12%
r Ao xu e, a r d e o g
soao

Customs duty and integrated tax payable [(A) +(B)+ (C)]

S f o o l t u l d e
M eci np sn t el
a b s
e l f v o
u ds l
o n b e
h
0
0
O c lm me o V aul e s e Dar f e t t 0
T ndlI ong nf s s
s e l
b G me , t
x s n ,
S enaf t n s
e R e ga d her e u i 0

As per Notification No. 46/2017 Cus. dated 30-6-2017

U caeo
i s r
s a
uh c a o s ) vrs
a e et
r ev , m d: ]
2
,
1
C l l a e Cc t n s s dhe s t
r e he s . eer h
E , a o a d o www r s e l
l
H K i
r dlu ex ht i eoo ecs
r s a d g fid k
he ga

`
T Ue i
a a f hG e eap s(o
r s
e
y o n l
u n a
l n
o
)
%
t pV t i
e n t t g m i r H o a fu 3
R na fo r i nd r aheI a i 3 g h % 2

Particulars
i f a r a . eas s 1
dmso
E o e f m i f pp s c
hrto d r t 0
,en )t er e
D ee y n r

`
N i
a g 1 a dt cu n r a i e t a d o + 1 ×
e r r hte er i e rw h t o ee
U pal a o (
4 e ,t e do nme u rn
e t r
o n vt p )
s @ 0
0
N ss hti 1h r up oel l t ih i p ou x l %
O e fcn a i D l m s,diba f w d bp e a 0 e 0
,
I go
r ei nt a( c I e sdf V a dt
eo m l
u am r i
r 1 g
r 2
T
a n c oo
i t y s nf
i gu uo ss b d i
- o e
t e
t a 3
,
A
ho n m t bm to r h l du e
t e h do f a @ h 3
U
i a r c e dto o a c os ,
s r r s ec a c 1
L ct r e enc e nue hTn n ol e o fie m y r
A ni t s s c.i o gagn : p e s i d t
V gnd u e e tu
r sal s eti i r h d c b e f u u (

`
: i sD or
t oC i ed ba der a o m t o el t o d S %
s oin e p nV go et i i o pl r
8
2 e ( f ao tin t ahs s - d g si o t
s s e 2
. dca l s e mhe of
i r o r c e n sw p o m r 1
Explanation

r o g m e r a a
H dau m i t s
s
r
udl nr om
pfh t c s
e
h ns
od m c o f
l @
C nstt o h ef i n lte n e t i g t e
WORKING NOTES:

aacs t
i r o mio mtei mo g
i b d i
t o - n s x

compensation cess)
a we o o f i o e u W
grau w s ) t er ite
- s c tn; o o d g r i c a
nedC
y d d0
2
(
ma dotD
r( e ofr
s s o g p nd s d
u l
a
t
i
rua n e e oo 1
oi
cm
n ppo
i m s
r
fcdt
i
h
ui
mat d i
h oe
ct
d
o l
c
c
i
s i
c
d
e
e bt h t
a gr h i pm o g n e s o n a o t
ee sft rl gle se r
i eina g srt t r eor g i B S a
nh e u eu ne o r e hp ( r
i
g too
c pc h i
y t yhAs
l t ud
l ein do o n t f h : : g

Act, 1975
nyf0 l tor uDe n t eu a uci l op p w lm
l o k d d e
sa ft fh vcl na ox x a i e a d d t
n
Ebo 1 Ac I B( Oo tC a v ge e o - l A A I
. . . . . enu
i r a ee
cr
u
l 9
1 2 3 4 5 ht r ) ) ) nn a
t so

(B)
(A)

(C)
foun ( ( ( i V [

b
c
S o

`
i if

Q.11.

Ans.
 P
A
R
T
I
I
:
C
U
S
T
O
M
S
&
F
T
P
28.10

Q.12. Maxiline Corp., not being an EOU, had imported technical instruments from USA for ` 180 lakh
on payment of duty. It had to subsequently send back the same to the supplier for repair. The
supplier has agreed to provide discount of 50% of the fair cost of repairs, resulting in Maxiline
Corp. paying USD 15,000.
Following further particulars are available:

Particulars Date Rate of Inter Bank Rate notified by

Duty Exchange rate CBEC

2
1
-
0
2
-
2
0
1
8

2 1
0 5
% %

6 6
0 2

6 6
2 1
Bill of Entry
2
6
-
0
2
-
2
0
1
8
Aircraft arrival
IGST u/s 3(7) of Customs Tariff Act, 1975 -12%.

Outwards (Amt. in ` ) Inwards (Amt. in ` )

2
0
,
0
0
0

3
0
,
0
0
0
Insurance
8
0
,
0
0
0

1
,
2
0
,
0
0
0
Air Freight
Other details available on records:
(a) Goods are re-imported within 3 years of despatch for repair.
(b) Both the exported and imported goods are the same.
(c) There is no change in the ownership of technical instruments.
(d) The export is not from a public/private warehouse and repairs does not amount to
manufacture.
TAXMANN®

Determine total duty payable with appropriate notes for your computation.
 [May 2018, 5 Marks]
Deh
u
t
yds
o
fuhw
cpc
uoo
s
t
ohac
mern
sfed
wa
h
i
coas
hs
wo
of
u
l
dp
bi
er
Ans. As per Notification No. 46/2017-Cus. dated 30-6-2017
l
ec
v
i
ar
b
l
ed)
i
funf
t
ht
enr
vc
a
l
uiei
enan
o
fcn
r
e
-
it
mfgo m
pmhn
oatc
r
t
ee
dr
gi
ol
os
ds,
seb
a
f
t
e
rr
r
ep
pa
a
i
r
s(
whw
e
r
m
a
ecl

f
t

i
rc
cun
tl
r
e
ar
sde
a
r
i
e t fi
o
i
l
u
d
g
o
s
o

t
a
u
d
i
nh
e
i
r
s
w
e
t
e
rf
u

s
t
s

ai
t
l
y
i
n
c
u
r
e
os
ra
nt
o
,e
i
sr sr
u
a
na u
ci

dt
f
r
e
i

c
h
a
r
g
e
s
o
t
w
a
y
s
.
H
o
e
v
e
r
,
o
l
o
i
n
g
o
t
i
o
n
e
e
d
t
o
b
i
s )
d o
o
a ma
v
l
g
h
i
s
c

e
s
s
i
o
: w
n
(
ge
op
d

s
t
b
e
r
e
-
i
p
o
r
t
e
d
i
t
h
i
n
3
y
e
a
r
s
,
e
x
t
e
n
d
a
b
l
e
b
y
f
u
r
t
h
e
r
2
y
e
a
r
s
,
a
f
t
e
r
t
h
e
i
r
a
x
o
t
t
i
o
n
;
(
)
e
x
p
o
r
t
e
d
g
o
o
d
s
a
n
d
t
h
e
r
e
-
i
m
p
o
r
t
e
d
g
o
o
d
s
m
u
s
t
b
e
t
h
e
s
a
m
e
;

b
(
)
o
w
n
e
r
s
h
i
p
o
f
t
h
e
g
o
o
d
s
s
h
o
u
l
d
n
o
t
c
h
a
n
g
e
.

c
S
i
no
cm
ep
a
l
le
t
ha
es
su
pn
ed
c
i
fir
e:
d
c
o
n
d
i
t
i
o
n
s
a
r
e
f
u
l
fi
l
l
e
d
i
n
t
h
e
g
i
v
e
n
c
a
s
e
,
t
o
t
a
l
d
u
t
y
p
a
y
a
b
l
e
w
i
l
l
b
e
c

u
t
d

Computation of total duty payable by Maxiline Corp.

Particulars Amount (`)
F
a
i
r
c
o
s
t
o
f
r
e
p
a
i
r
s
(
i
n
d
o
l
l
a
r
s
)
=
$
1
5
,
0
0
0
/
5
0
%

$
3
0
,
0
0
0
F
a
i
r
c
o
s
t
o
f
r
e
p
a
i
r
s
(
i
n
r
u
p
e
e
s
)
=
$
3
0
,
0
0
0
×
6 0
2 +
[
N
o
t
e
-
] 0
1

1
8
,
6
0
,
0
0
0
.
0
0

`
:
I
n
w
a
r
d
a
n
d
o
u
t
w
a
r
d
i
n
s
u
r
a
n
c
e
[
2
0
,
0
0

3
0
,
0
0
]

5
0
,
0
0
0
.
0
0

Add ` `
:
I
n
w
a
r
d
a
n
d
o
u
t
w
a
r
d
a
i
r
f
r
e
i
g
h
t
[
8
0
,
0
0
0
+
1
,
2
0
,
0
0
0
]

2
,
0
0
,
0
0
0
.
0
0

Add ` `
A
s
s
e
s
s
a
b
l
e
V
a
l
u
e

2
1
,
1
0
,
0
0
0
.
0
0
:
B
a
s
i
c
c
u
s
t
o
m
s
d
u
t
y
(
B
C
D
)
@
1
5
%
[
N
o
t
e
-
2
]

3
,
1
6
,
5
0
0
.
0
0

Add
3
1
6
5
0
.
0
0

Add: Social Welfare Surcharge

Value for computing IGST 21,10,000.00
I
G
S
T
@
1
2
%

2
,
9
4
,
9
7
8
.
0
0
=
[
3
,
1
6
,
5
0
0
+
3
1
,
6
5
0
+
2
,
9
4
,
9
7
8
]

Total duty and tax payable ` ` ` 6,43,128

 C
H
.
2
8
:
V
A
L
U
A
T
I
O
N
U
N
D
E
R
T
H
E
C
U
S
T
O
M
S
A
C
T
,
1
9
6
2
28.11

Notes:
1
.
Rt
a
t
ea
o
fp
el
xc
ca
hb
al
nr
ga
et
ne
o
t
i
fit
ee
dm
bs
yo
t
ht
eh
Cr
Bd
Ip
Cr
oo
ni
do
a
t
eo
o
fe
pt
r
e
s
e1
n
t
a
t
i
oo
nf
o
fe
b
i
l
lu
o
ft
em
n
t
r
yA
wt
o1
u
l
d2
b.
e
h
e
p
i

i
n
r

f
i

v
s
t
s
c
i
o
n
4
(
1
)
t
h
C
s
o
s
c
,
9
6
2
.
Rw
a
t
ei
o
fe
dv
u
t
yi
i
sl
t
ht
ee
r
a
t
et
i
nr
f
os
r
co
ef
op
nr
dv
a
t
eo
o
fo
ps
r
e
s
ei
n
t
a
t
i
o(
n1
o
fo
b
i
l
le
o
fC
eu
n
t
r
ym
os
rA
a
r
r
i
v1
l9
a
f2
o
a
i
r
c
r
a
f
t
,
h
c
h
e
r
s
a
r
i
n
e
m

o
i
s
t
e
c
t
o
n
1
5
)
f
t
h

s
t
o

c
t
,
6
.
EXAMINER’S COMMENT
M$M
o1a
s
t5
o
f0n
t
hi
eso
eer
xap
ad.
m
no
i
e$
e
s3
c0
o,
m0
m0
i
t
t
es
du
mi
i
s
t
ai
kn
et
bi
yn
wo
rr
or
ne
g
l
yc
co
om
np
s
i
dt
e
r
i
no
gn
f
a
i
rt
co
ot
s
td
o
fu
r
ep
pa
a
i
r
sa
ol
t
bb
ey
0i
,
0
n
t

r
e
l
t
n
g

o
c

c
t

u
a
t
i

o
f

a
l
t
y

y
b
e
x
l
i
e
C

Q.13. (1) Vishal Industries imported goods from U.S.A., CA.F. value bearing US $ 2600. Air freight
500 US $. insurance cost 100 US $. landing charges are not ascertainable
(2) Date of bill of entry is 25-9-2018 and basic custom duty on this date is 10% and exchange
rate notified by Central Board of Excise and Customs in US $ 1 = 62
(3) Date of entry inward is 21-10-2018. Basic customs duty on this date is 20% and exchange
rate notified by Central Board of Excise and Customs is US $ 1 = 60
(4) Integrated tax payable u/s 3(7) of the Customs Tariff Act is 12%, Social Welfare Surcharge
is 10% on duty. Compute the assessable value and amount of total customs duty payable
under the Customs Act, 1962
Make suitable assumptions, where required. Working notes should form part of your answer
(Ignore GST compensation cess) [May 2015, 5 Marks]
Ans. Computation of assessable value and customs duty payable:

TAXMANN®
U
S
$
2
,
6
0
0
CIF Value
A
i
r
F
r
e
i
g
h
t

U
S
$
5
0
0
Less
I
n
s
u
r
a
n
c
e
C
h
a
r
g
e

U
S
$
1
0
0

U
S
$
6
0
0
Less

U
S
$
2
,
0
0
0
FOB Value (As per Customs)
: .

Add
A
i
r
F
r
e
i
g
h
t
r
e
s
t
r
i
c
t
e
d
t
o
2
0
%
o
f
F
O
B
V
a
l
u
e

U
S
$
4
0
0
i
.
A
c
t
u
a
l
I
n
s
u
r
a
n
c
e
C
h
a
r
g
e
s

U
S
$
1
0
0
ii
U
S
$
2
,
5
0
0
CIF Value/Assessable Value
Assessable value in Indian ` (US$ 2,500 × 62) ` 1,55,000
Computation of imported cost and customs duty (Amounts in ` ) :

Particulars Amount
A
s
s
e
s
s
a
b
l
e
V
a
l
u
e

1
,
5
5
,
0
0
0
( (
A B
) )

:
B
a
s
i
c
C
u
s
t
o
m
s
d
u
t
y
@
2
0
%
o
f
A
s
s
e
s
s
a
b
l
e
V
a
l
u
e
(
2
0
%
o
f
1
,
5
5
,
0
0
0
)

3
1
,
0
0
0

Add
:
S
o
c
i
a
l
W
e
l
f
a
r
e
S
u
r
c
h
a
r
g
e
@
1
0
%
o
f
A
(
1
0
%
o
f
3
1
,
0
0
0
)

3
,
1
0
0

Add
T
o
t
a
l
v
a
l
u
e
f
o
r
l
e
v
y
o
f
I
n
t
e
g
r
a
t
e
d
T
a
x
u
/
s
3
(
7
)
o
f
C
T
A
,
1
9
7
5

(C) 1,89,100
(
D
)

:
I
n
t
e
g
r
a
t
e
d
t
a
x
u
n
d
e
r
s
e
c
t
i
o
n
3
(
7
)
@
1
2
%
o
f
C
(
1
2
%
o
f
1
,
8
9
,
1
0
0
)

2
2
,
6
9
2

Add
Total cost of imported goods 2,11,792
Total Customs Duty [A+B+D](Rounded off) 56,792
I
n
t
elS
g
r
a
t
eh
d
t
as
xs
l
es
v
i
ab
b
l
ev
ua
nl
de
e
ro
s
et
c
t
i
oi
nm
3
(
7
)t
o
fd
t
ho
eo
Cd
us
s
t
ou
ms
so
Tm
a
r
i
f
fu
Ai
c
t
,a
1n
9d
7a
5p
i
sp
l
ei
v
i
eb
dl
oS
no
t
hi
ea

Note:
sW
ue
ml
t
o
t
a
o
fr
t
e
a
e
s
a
l
e

u
f
h
e

p
o
r
e
g

,
c
t
s
d
t
e
s

l
c
a
e

c
l
f
a
r
e
u
c
h
a
r
g
e
.
 P
A
R
T
I
I
:
C
U
S
T
O
M
S
&
F
T
P
28.12

Q.14. 15,000 Chalices were imported for charitable distribution in India by XY Charitable Trust.
The Trust did not pay either for the cost of goods or for the design and development charges,
which was borne by the supplier Customs officer computed its FOB value at USD 20,000
(including design and development charges), which was accepted by the Trust Other details
obtained were as follows:

SI. Particulars Amount

No.
. 2
1

F
r
e
i
g
h
t
p
a
i
d
(
a
i
r
)
(
i
n
U
S
D
)

4
,
5
0
0
. 3

D
e
s
i
g
n
&
D
e
v
e
l
o
p
m
e
n
t
c
h
a
r
g
e
s
p
a
i
d
i
n
U
S
A
(
U
S
D
)

2
,
5
0
0
. 4

C
o
m
m
i
s
s
i
o
n
p
a
y
a
b
l
e
t
o
a
n
a
g
e
n
t
i
n
I
n
d
i
a
(
i
n
) b

1
2
,
5
0
0
`
.

E
x
c
h
a
n
g
e
r
a
t
e
a
n
d
r
a
t
e
o
f
b
a
s
i
c
d
u
t
y
n
o
t
i
fi
e
d
y
C
B
I
C
i
s
a
s
f
o
l
l
o
w
s
:
Date of Bill of Entry BCD Exchange Rate in `
0
8
-
0
9
-
2
0
1
8

2 1 w
0 0 a
% % s

6 6
0 2
3
0
-
0
9
-
2
0
1
8
W
h
i
l
e
t
h
e
i
n
t
e
r
-
b
a
n
k
r
a
t
e

1
U
S
D
=
6
3
. 6
5

I
n
t
e
g
r
a
t
e
d
t
a
x
p
a
y
a
b
l
e
u
/
s
3
(
7
)
o
f
t
h
e
C
u
s
t
o
m
s
T
a
r
i
f
f
A
c
t
,
1
9
7
5

1
2
%
.

S
o
c
i
a
l
W
e
l
f
a
r
e
S
u
r
c
h
a
r
g
e
a
s
a
p
p
l
i
c
a
b
l
e

Compute the Assessable value and amount of total customs duty payable under the Customs
Act, 1962. Make suitable assumptions where required Wrong notes should form part of your
answer. (Ignore GST Compensations cess) [Nov. 2015, 5 Marks]
TAXMANN®

Ans. Computation of total customs duty and integrated tax payable

PARTICULARS AMOUNT
Fc
Oh
Ba
vg
a
l
u)
e
c
o
m
p
u
t
e
d
b
y
C
u
s
t
o
m
s
O
f
fi
c
e
r
(
i
n
c
l
u
d
i
n
g
d
e
s
i
g
n
a
n
d
d
e
v
e
l
o
p
m
e
n
t
2
0
,
0
0
0
U
S
$
r
e
s
E
x
c
h
a
n
g
e
r
a
t
e
[
N
o
t
e
1
]

6
0
p
e
r
$
`
FOB value computed by Customs Officer (in rupees) 12,00,000
A
d
d
:
C
o
m
m
i
s
s
i
o
n
p
a
y
a
b
l
e
t
o
a
g
e
n
t
i
n
I
n
d
i
a

1
2
,
5
0
0
FOB value as per customs 12,12,500
A
d
d
:
A
i
r
f
r
e
i
g
h
t
(
1
2
,
1
2
,
5
0
0
×
2
0
%
)
[
N
o
t
e
2
]

2
,
4
2
,
5
0
` 0
A
d
d
:
I
n
s
u
r
a
n
c
e
(
1
.
1
2
5
%
o
f
1
2
,
1
2
,
5
0
0
)
[
N
o
t
e
3
]

1
3
,
6
4
0
.
6
3
`
CIF value for customs purposes 14,68,640.63
Assessable value 14,68,640.63
A
d
d
:
B
a
s
i
c
c
u
s
t
o
m
d
u
t
y
@
1
0
%
(
1
4
6
8
6
4
0
.
6
3
×
1
0
%
)
-
r
o
u
n
d
e
d
o
f
f
[
N
o
t
e
4
]

1
,
4
6
,
8
6
4
.
0
6

`
A
d
d
:
S
o
c
i
a
l
W
e
l
f
a
r
e
s
u
r
c
h
a
r
g
e
@
1
0
%
o
n
1
4
6
8
6
4
.
0
6
r
o
u
n
d
e
d
o
f
f

1
4
,
6
8
6
.
0
4

`
Total 16,30,190.73
I
n
t
e1
g
r
a
e1
t
d9
t
a7
x3
l
e1
v
i
a%
b
e[
l
uo
nu
dn
e
re
s
eo
c
t
i
o]
n[
3
(
7
)e
o
f]
C
u
s
t
o
m
s
T
a
r
i
f
f
A
c
t
,
1
9
7
5
@
1
2
%

1
,
9
5
,
6
2
2
.
8
9
(
6
3
0
0
.
×
2
)
R

d
d
f
f
N
o
t
5

`
Total customs duty and integrated tax payable
1
4
6
8
6
4
.
0
6
+
1
4
6
8
6
.
0
4
+
1
9
5
6
2
2
.
8
9
)

3,57,173
(` ` `
NOTES:
1
.
R[
a
t
ei
o
fp
er
xo
cv
hi
as
no
gt
eo
ns
o
tc
i
fii
eo
dn
b1
y4
Co
Bt
Ih
Ce
oC
nu
t
hs
eo
dm
a
t
eA
o
ft
fi
l
i
n6
g2
o
f
b
i
l
l
o
f
e
n
t
r
y
h
a
s
t
o
b
e
c
o
n
s
i
d
e
r
e
d
T
h
r
d

e
t

t
s
c
,
1
9
]
.