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CMA Final · Indirect Tax Laws and Practice · Valuation and Related Party Transactions

Regarding the valuation of imported goods under section 14 of the Customs Act, 1962, which statement is correct?

The transaction value of imported goods includes, besides the price, amounts for royalties and licence fees, insurance, commissions and transport costs to the place of importation, to the extent specified in the rules. It does not apply as such where buyer and seller are related or price is not the sole consideration.

  1. ATransaction value applies even where the buyer and seller are related and price is not the sole consideration
  2. BThe transaction value of imported goods includes royalties and licence fees, insurance and costs of transportation to the place of importation, as specified in the rulesCorrect
  3. CThe Board can fix tariff values only for export goods, not imported goods
  4. DTransaction value excludes commissions and brokerage paid in connection with the import

Explanation

The first proviso to section 14(1) adds to the price any amount for costs and services such as commissions and brokerage, royalties and licence fees, transport to the place of importation and insurance, as per the rules. Transaction value requires buyer and seller to be unrelated and price the sole consideration, and section 14(2) lets the Board fix tariff values for imported or export goods.

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