Sneha International Ltd., Bombay imported a drill machine from USA (by air). Machinery reached Delhi airport from where it was transshipped to…

CA Final · Indirect Tax Laws · PYQS · November 2024
Sneha International Ltd., Bombay imported a drill machine from USA (by air). Machinery reached Delhi airport from where it was transshipped to Mumbai airport. Contracted CIF price of machine was US $ 20,000 which was to be delivered in February 2024. But on request of Sneha International Ltd., supplier agreed to deliver the machine in January 2024 for which US $ 2000 was charged over and above the contracted CIF price. Other information is given below:- S. No. Particulars Amount (i) Air freight $ 5000 (ii) Insurance charges paid $1200 (iii) Inspection charges of drill machine paid by the supplier (The same was neither mentioned in the terms of contract nor required for making the goods ready for shipment). $500 (iv) Transport charges from Delhi airport to Mumbai Airport 50000 You are required to determine the assessable value of imported machine (rounded off to nearest one rupee) under the Customs Act, 1962 from the particulars given above. Notes:- (a) Rate of exchange to be taken as 83 for one $ (b) Brief reasoning for treatment of each item should form part of your answer.

Suggested Answer and Working Notes:

Computation of assessable value Particulars Amount (₹) CIF value (re-negotiated price) [Since the contract price was re-negotiated owing to early delivery of the machine, transaction value, being price actually paid or payable for the goods, will be re-negotiated price, i.e. [$ 22,000 (20,000 + $ 2,000) x 83] 18,26,000 Less: Air freight [$ 5,000 x 83] 4,15,000 Less: Insurance [$ 12,000 x 83] 99,600 FOB value (in rupees) 13,11,400 Add: Inspection charges [Not includible in value since only the payments actually made as a condition of sale of imported goods by buyer to seller are includible and inspection charges are not required for making the goods ready for shipment.] Nil FOB value as per Customs 13,11,400 Add: Air Freight (20% of 13,11,400) [Air freight cannot exceed 20% of FOB value.] 2,62,280 Add: Insurance [Actual insurance charges paid are includible.] 99,600 Transport charges from Delhi airport to Mumbai airport [Cost of transport charges associated with transshipment of imported goods to another customs station in India are not includible.] Nil Assessable value (in ₹) 16,73,280

Topics: Customs: Valuation under the Customs Act, 1962

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