Rajat Pvt. Ltd. have imported a machine from U.K. and furnished following particulars in relation to such import: S. No. Particulars Amount (i) F.O.B. cost of the machine 20,000 U.K. Pounds (ii) Freight (air) 3,000 U.K.

Answer 4(a) Computation of assessable value of goods for customs purpose for Rajat Pvt. Ltd. Particulars UK Pounds FOB cost of Machine 20,000 Add: Engineering and Design charges (paid to a firm in UK) 500 Add: License fee relating to imported goods payable by the buyer as a condition of sale (20% on 20,000 UKP) 4,000 24,500 Value in Rs. Sub-Total (24,500 UKP * ₹ 70.20) As per explanation to section 14(1) of the customs act, 1962, assessable value should be calculated with reference to the rate of exchange notified by the CBIC. 17,19,900 Add: Material and components supplied by the buyer free of cost 20,000 FOB value as per customs 17,39,900 Add: Air Freight (since air freight is ascertainable and is lower than 20% of FOB value, actual sum to be considered. [3000 × 70.20 = ₹ 2,10,600) 2,10,600 Add: Insurance paid to the insurer in India 6,000 Buying commission paid by the buyer to his agent in UK Buying commission shall not be considered (Rule 10(1)(a)(i) of the CVR - Importer paid ₹ 5000 towards demurrage charges for delay in clearing the machine from the airport. Only ship demurrage charges or chartered vessels are included in the cost of transport of the imported goods. Thus, demurrage charges for delay on clearing the machine from the airport will not be includible in the assessable value. - CIF Value / Assessable Value 19,56,500