15,000 chalices were imported for charitable distribution in India by Social Welfare Charitable Trust. The Trust did not pay either for the cost of…

CA Final · Indirect Tax Laws · MTP · May 2025
15,000 chalices were imported for charitable distribution in India by Social Welfare 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: Sl. No. Particulars Amount 1. Freight paid (air) (in USD) 4,500 2. Design & development charges paid in USA (in USD) 2,500 3. Commission payable to an agent in India (in ₹) 12,500 Exchange rate notified by CBIC and rate of basic duty is as follows: Date of Bill of Entry BCD Exchange Rate in 8 th September 20% 70 Date of arrival of aircraft BCD Exchange Rate in 30 th September 10% 72 The inter-bank rate was 1 USD = 73 Compute the amount of Assessable value of chalices. Make suitable assumptions where required. Working notes should form part of your answer.

Suggested Answer and Working Notes:

Computation of Assessable Value Particulars Amount (US $) FOB value computed by Customs Officer (including design and development charges) 20,000 US $ Amount (₹) Exchange rate [Note 1] 70 per $ FOB value computed by Customs Officer (in rupees) 14,00,000.00 Add: Commission payable to agent in India 12,500.00 FOB value as per Customs 14,12,500.00 Add: Air freight (₹ 14,12,500 × 20%) [Note 2] 2,82,500.00 Add: Insurance (1.125% of 14,12,500) [Note 3] 15,890.63 CIF value for customs purposes 17,10,890.63 Assessable value 17,10,890.63 Note: 1. Rate of exchange notified by CBIC on the date of filing of bill of entry has to be considered [Third proviso to section 14 of the Customs Act, 1962]. 2. In case of goods imported by air, freight cannot exceed 20% of FOB value [fifth proviso to rule 10(2) of the Customs (Determination of Value of Imported Goods) Rules, 2007]. 3. Insurance charges, when not ascertainable, have to be included @ 1.125% of FOB value of goods [Third proviso to rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007].

Topics: Customs: Valuation under the Customs Act, 1962

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