RSM Ltd. has imported inputs without payment of duty under Advance Authorization. The CIF value of such inputs is 10,00,000. The inputs are…
CA Final · Indirect Tax Laws · MTP · January 2026
RSM Ltd. has imported inputs without payment of duty under Advance Authorization. The CIF value of such inputs is 10,00,000. The inputs are processed and the final product is exported. The exports made by RSM Ltd. are subject to general rate of value addition prescribed under Advance Authorization Scheme. No other input is being used by RSM Ltd. in the processing. What should be the minimum FOB value of the exports made by the RSM Ltd. as per the provisions of Advance Authorization under FTP? (4 Marks)
Suggested Answer and Working Notes:
Advance Authorization necessitates exports with a minimum of 15% value addition (VA). VA = [(A - B)/B x 100] A = FOB value of export realized, B = CIF value of inputs covered by authorization. Therefore, the minimum FOB value of the exports made by RSM Ltd. should be - 11,50,000 to attain 15% VA.
Topics: Foreign Trade Policy
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