Vinit Overseas Ltd. of New Delhi has imported a machine from U.K. (England) by vessel. The details of the import transaction are as follows: S. No Particulars Amount UK (£) (i) Cost of the machine at the factory of the e

Computation of assessable value and Customs duty payable Particulars Amount (£) Cost of Machine at the factory of the exporter 18,000 Add: License fee relating to imported goods payable by the importer as a condition of sale (note 1) 900 Transport charges from factory of exporter to the port for shipment 600 Handling charges paid for loading the machine at Port of exportation 500 FOB value 20000 Add: Freight from port of export to port of import (Note 3) (20000 × 20%) 4000 Add: Insurance (Actual) 200 CIF Value 24200 Add: Landing charges (Note 4) NIL Assessable value (in UK £) 24200 Exchange Rate 1UK £ (Note 5) ₹ 101 Assessable value of the Machine for Customs Duty (£ 24200 x 101) ₹ 24,44,200 Note Rule 10(1)(c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 inter alia provides that value of license fee paid as a condition of sale to be included for the purposes of arriving at the assessable value. As per rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, only charges incurred for delivery of goods 'to' the place of importation are includible in the transaction value. Hence, handling charges associated with the delivery of the imported goods at the place of importation not to be added to the CIF value of the goods. Hence Handling Charges ₹ 12,000 not added. As per First proviso to rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR)] in case the cost of transport, loading, unloading and handling charges associated with the delivery of the imported goods to the place of importation is not ascertainable, such cost shall be 20% of the free on-board value of the goods. The question has not indicated as to when the ownership of goods have been transferred to the buyer. In ordinary course, Free on Board (FOB) value denotes the value at the time the goods are loaded on the vessel. Thus, freight from factory to port and handling charges at the port before loading are liable to be included in the ex-factory price to arrive at the FOB Value. No landing charges are to be added to the CIF value in view of the rule 10(2) of the CVR. Rate of exchange determined by CBEC on the date of bill of entry is to be considered [Clause (a) of the explanation to section 14 of the Customs Act, 1962].