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

Meera Textiles Ltd. imports machine parts from Germany. The contract price is EUR 10,000. The bill of entry is presented on 12 March, when the Board-determined exchange rate is Rs 90 per EUR. The goods are cleared on 20 March, when the rate is Rs 92 per EUR. Ignoring freight, insurance and other additions, what is the assessable value of the goods under Section 14 of the Customs Act, 1962?

The assessable value is Rs 9,00,000. Section 14 requires the foreign currency price to be converted at the exchange rate in force on the date the bill of entry is presented, here Rs 90 per EUR, not the later clearance date rate. So 10,000 EUR multiplied by 90 gives Rs 9,00,000.

  1. ARs 9,00,000Correct
  2. BRs 9,20,000
  3. CRs 9,10,000
  4. DRs 9,40,000

Explanation

Under the third proviso to Section 14(1), the price is converted at the rate of exchange in force on the date the bill of entry is presented under section 46. That date is 12 March, so the rate is Rs 90. Value = 10,000 x 90 = Rs 9,00,000. Rs 9,20,000 wrongly uses the clearance-date rate.

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