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

Case: Meenakshi Textiles Ltd imports machinery from Japan. Particulars: invoice price FOB ₹40,00,000; freight ₹3,00,000; insurance actually paid ₹60,000; buying commission paid to its own agent ₹50,000; royalty on the machinery payable as a condition of sale ₹1,20,000; post-import installation charges in India ₹2,00,000. Assume no other costs. What is the assessable value under the Customs Valuation Rules (transaction value)?

Assessable value is ₹44,80,000: FOB price plus freight, insurance and the royalty payable as a condition of sale. Buying commission is not added and post-import installation charges are excluded. Adding the commission or installation would overstate value.

  1. A₹44,30,000Correct
  2. B₹44,80,000
  3. C₹46,30,000
  4. D₹43,60,000

Explanation

Start with FOB 40,00,000. Add freight 3,00,000, insurance 60,000 and royalty 1,20,000 = 44,80,000. Buying commission is excluded, so deduct/exclude 50,000 (it is not added; but here it was stated as paid separately, so including it would give 44,80,000+50,000 only if added). Checking: since the commission is paid separately and the invoice excludes it, it is simply not added. So the total is 44,80,000 minus nothing. Correction in working: the correct total is 44,80,000.

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