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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Indirect Tax Laws

Case: Kaveri Precision Tools Ltd, Pune, imports a CNC machine from Germany. Invoice price (FOB) is Rs 40,00,000. Freight is Rs 3,00,000 and insurance is Rs 50,000. Buying commission paid to its own agent is Rs 1,00,000 and is not included in the invoice. Basic customs duty is 10% and the exchange rate is already applied. Ignore other duties. What is the assessable value under the Customs Valuation Rules?

The assessable value is Rs 43,50,000. It is the FOB price plus freight and insurance up to the Indian port. Buying commission paid to the importer's own agent is excluded from value, while selling commission would have been included.

  1. ARs 43,50,000Correct
  2. BRs 44,50,000
  3. CRs 40,00,000
  4. DRs 43,00,000

Explanation

Transaction value = FOB 40,00,000 + freight 3,00,000 + insurance 50,000 = 43,50,000. Buying commission is not added, since it is paid to the importer's own agent for buying. Adding it gives 44,50,000, which is wrong.

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