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

Gupta & Co. imports machinery. Under section 14, which statement about valuation is correct?

The correct statement is that transaction value is the price paid or payable for delivery at the time and place of importation, with additions such as royalties, licence fees and transportation to the place of importation, to the extent and in the manner specified in the rules.

  1. AThe transaction value is the price actually paid or payable for delivery at the time and place of importation, and includes royalties and licence fees and costs of transportation to the place of importation to the extent and in the manner specified in the rulesCorrect
  2. BThe transaction value excludes the cost of transportation to the place of importation and insurance in all cases
  3. CThe price is calculated at the exchange rate in force on the date of payment of duty
  4. DTariff values fixed by the Board apply only if the buyer and seller are related

Explanation

The first proviso to section 14(1) adds commissions, royalties, licence fees, transportation to the place of importation, insurance and handling charges, as specified in the rules. The exchange rate is that on the date the bill of entry is presented under section 46, not the payment date. Under section 14(2), tariff values are fixed by the Board for a class of goods irrespective of relationship.

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