Foreign Trade International Ltd. has imported one machine from England. It has given the following particulars: Sr. No. Particulars Amount (i) Price…

Computation of total duty and integrated tax payable Particular Amount Price of machine 8,000 UK pounds Add: Design and development charges [Note 1] 500 UK pounds Total 8,500 UK pounds (₹) Total in rupees @ ₹100 per pound [Note 2] ₹8,50,000.00 Add: Local agency commission [Note 1] (2% of 8000 UK pounds) = 160 UK pounds × ₹100 ₹16,000.00 FOB value as per Customs 8,66,000.00 Add: Air freight (8,66,000 x 20%) [Note 3] 1,73,200.00 Add: Insurance @ 1.125% of customs FOB [Note 4] 9,742.50 CIF Value 10,48,942.50 Assessable value (rounded off) 10,48,943.00 Add: Basic custom duty @ 10% [Note 5] 1,04,894.30 Add: Social Welfare Surcharge @ 10% on ₹1,04,894.30 10,489.43 Total 11,64,325.62 Add: Integrated tax @ 18% 2,09,578.61 Total duty and integrated tax payable (Rounded off) 3,24,962 Notes: 1. Design and development charges paid in UK and commission paid to local agent (since it is not buying commission) are includible in the assessable value [Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007] 2. 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]. 3. If the goods are imported by air, the freight cannot exceed 20% of FOB price [Fifth proviso to rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007]. 4. Where the insurance charges are not ascertainable, such cost is taken as 1.125% of FOB value of the goods [Third proviso to Rule 10(2) of the Customs Valuation (Determination of value of Imported Goods) Rules, 2007]. 5. Section 15 of the Customs Act, 1962 provides that rate of duty shall be the rate in force on the date of presentation of bill of entry or the rate in force on the date of arrival of aircraft, whichever is later.