David Ltd. is the manufacturer of semi-conductors in the State of Gujarat. It imported machinery by air from France for making sub parts to be used…
CA Final · Indirect Tax Laws · RTP · May 2026
David Ltd. is the manufacturer of semi-conductors in the State of Gujarat. It imported machinery by air from France for making sub parts to be used in assembling of semi-conductor. The following particulars are furnished by it: S. No. Particulars Amount US $ i CIF value of the machinery 50,000 ii Freight paid (Air) 12,500 iii Insurance charges 2,500 Additional information: (i) Design and patent charges of USD 2000 was required to be paid in France, which is not included in CIF value given above. (ii) Date of filing the Bill of entry was 24 th September and the rate of exchange notified by CBIC on this date was 80 per US $. (iii) Date of arrival of aircraft was 20 th October and the rate of exchange notified by CBIC on this date was 84 per US $. From the above information, you are required to compute the assessable value under the Customs Act, 1962.
Suggested Answer and Working Notes:
Computation of assessable value of machinery Particulars Amount in $ CIF price of the machine 50,000 Less: Freight 12,500 Less: Insurance 2,500 35,000 Add: Design and patent charges paid in France (Note-1) 2,000 FOB value for customs 37,000 Add: Freight (Note-2) 7,400 Add: Insurance (Actual) 2,500 CIF value for customs purpose 46,900 Assessable value in rupees [46,900 × 80] (Note-3) 37,52,000 Notes 1. Design and engineering work undertaken elsewhere than in India and necessary for the production of the imported goods is includible in the assessable value [Rule 10(1)(b)(iv) of the Customs (Determination of Value of Imported Goods) Rules, 2007 (hereinafter referred as CVR)]. 2. If the goods are imported by air, the freight cannot exceed 20% of FOB price [Fifth proviso to rule 10(2) of the CVR]. 3. The rate of exchange notified by the CBIC on the date of presentation of bill of entry has been considered [Section 14 of the Customs Act, 1962].
Topics: Customs: Valuation under the Customs Act, 1962
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