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

Case: Rohan Exports Ltd imports raw material from a related foreign supplier and also pays the supplier a royalty. Which statement on adding items to transaction value is correct under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007?

Royalty and licence fees are added to transaction value when they relate to the imported goods and are payable as a condition of sale of those goods. Buying commission and post-import transport costs are not added, and timing of payment does not exclude royalty.

  1. ARoyalty and licence fees are added if they relate to the imported goods and are payable as a condition of saleCorrect
  2. BRoyalty is never added because it is paid after import
  3. CBuying commission paid to the buyer's agent is always added
  4. DCost of transport within India after landing is added

Explanation

Rule 10 requires adding royalties and licence fees relating to the imported goods that the buyer must pay, directly or indirectly, as a condition of sale. Buying commission is excluded, and post-importation inland transport is not added.

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