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CA Final · Indirect Tax Laws · Valuation under the Customs Act, 1962

Arjun Traders of Delhi imports a consignment invoiced at USD 20,000. The bill of entry under section 46 is presented on 12 August, when the exchange rate notified by the Board is Rs 80 per USD. On 18 August, when duty is paid, the notified rate is Rs 82 per USD. Per section 14, at what rupee figure is the price converted for valuation, ignoring freight and insurance?

The value is Rs 16,00,000. The price is calculated at the exchange rate in force on the date the bill of entry is presented under section 46, which is Rs 80 per USD on 12 August. The later payment date rate of Rs 82 is not used.

  1. ARs 16,00,000, using the rate on the date the bill of entry is presentedCorrect
  2. BRs 16,40,000, using the rate on the date of payment of duty
  3. CRs 16,20,000, using the average of the two rates
  4. DRs 16,40,000, using the rate on the date of the order for clearance

Explanation

The third proviso to section 14(1) requires the price to be converted at the rate of exchange in force on the date the bill of entry is presented under section 46. USD 20,000 x Rs 80 = Rs 16,00,000. Using the payment date rate gives Rs 16,40,000, which is the wrong base date.

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