A material was imported by air at CIF price of US $5,000. Freight paid was US $1,500 and insurance cost was US $500. The banker realised the payment from importer at the exchange rate of ₹65 per US dollar. Central Board
CS Professional · Advanced Tax Laws and Practice · PYQS · June 2016
A material was imported by air at CIF price of US $5,000. Freight paid was US $1,500 and insurance cost was US $500. The banker realised the payment from importer at the exchange rate of ₹65 per US dollar. Central Board of Excise and Customs notified the exchange rate at ₹63 per US $. Find the value of material for the purpose of levying customs duty.
Answer & Explanation:
Computation of Assessable value of Imported Goods Sr. No. Particular Amount (US $) A CIF value of the material 5,000 Less: Air Freight (1,500) Less: Insurance (500) B FOB value (CIF value - Air freight - Insurance) 3,000 Add: Air Freight (20% of FOB value) 600 Add: Insurance actual 500 C CIF value as calculated (FOB + Air Freight + Insurance) 4,100 Add: Landing Charges (1% on CIF value) 41 D Assessable Value (CIF value + Landing Charges) 4,141 E Assessable value in INR (4,141 x 63) ₹2,60,883 Notes: If the goods are imported by air, the freight cannot exceed 20% of FOB price. Landing charges would be 1% of CIF value. Rate of exchange determined by CBEC would be considered as per clause (a) of the explanation to section 14 of the Customs Act, 1962.
Topics: Indirect Tax
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