BlueCrest Machinery Co., a manufacturing firm in India, imported a machine from a UK supplier in May. FOB value of the machine was 10,000 UK Pound.…

Computation of total customs duty and integrated tax payable by BlueCrest Machinery Co. Particulars Amount (in £) FOB value 10,000 Add: License fee required to be paid in UK [Note – 1] 400 Customs FOB value 10,400 Exchange rate is 99per £ [Note – 2] ₹ Value in rupees 10,29,600.00 Add: Air freight [Restricted to 20% of 10,29,600 (Customs FOB value)] [Note – 3] 2,05,920.00 Insurance @ 1.125% of 10,29,600 [Note – 4] 11,583.00 Buying commission is not includible in the assessable value [Note – 5] - CIF Value 12,47,103.00 Assessable value 12,47,103.00 Rate of duty is 10% [Note – 6] Add: Basic custom duty @ 10% (₹ 12,47,103 × 10%) - rounded off (A) 1,24,710 Add: Social Welfare Surcharge (10% of 1,24,710) [rounded off] (B) 12,471 Value for integrated tax 13,84,284 Add: Integrated tax @ 12% -rounded off (C) [Note – 7] 1,66,114 Total customs duty and integrated tax payable [(A) + (B) + (C)] 3,03,295 Notes: 1. Licence fee relating to imported goods payable by the buyer as a condition of sale is includible in the assessable value - Rule 10(1)(c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 [hereinafter referred to as Customs Valuation Rules]. 2. 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]. 3. In case of goods imported by air, freight cannot exceed 20% of FOB value [Fifth proviso to rule 10(2) of the Customs Valuation Rules]. 4. 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 Rules]. 5. Buying commission is not included in the assessable value [Clause (a)(i) of sub-rule (1) of rule 10 of the Customs Valuation Rules]. 6. Rate of duty will be the rate in force on the date of presentation of bill of entry or on the date of arrival of the aircraft, whichever is later [Proviso to section 15 of the Customs Act, 1962]. 7. Integrated tax is levied on the sum total of the assessable value of the imported goods, customs duties and applicable social welfare surcharge.