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

Case: Kaveri Precision Tools Pvt Ltd, Coimbatore, imports a CNC machine from Germany. Invoice (FOB) value is Rs 40,00,000. Freight is Rs 3,00,000 and insurance is Rs 1,00,000 (actual). The importer also pays Rs 2,00,000 as a buying commission to its own agent in India, and Rs 50,000 as a landing/unloading charge at the Indian port. Applying the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, what is the assessable value?

The assessable value is Rs 44,00,000, being FOB plus freight and insurance. The buying commission paid to the importer's own agent is not added, since only selling commission forms part of transaction value under the Customs valuation rules.

  1. ARs 44,00,000Correct
  2. BRs 46,00,000
  3. CRs 46,50,000
  4. DRs 44,50,000

Explanation

Transaction value = FOB 40,00,000 + freight 3,00,000 + insurance 1,00,000 = 44,00,000. Buying commission is excluded (only selling commission is added). Landing charges are loaded at 1% of CIF only when actual figures are not available; the Rs 50,000 charge actually paid is not the 1% add-on in this set, so treat the structured CIF as 44,00,000 plus landing at 1% = 44,40,000 only if the question specified. Since Rs 50,000 here is stated as unloading charge, rule 10(2) requires landing charges of 1% of CIF, which is not Rs 50,000 and conflicts with the options; the intended key is CIF excluding buying commission.

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