Skip to content

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

Sundaram Tech, an Indian buyer, imports equipment from a Japanese seller. A bill of entry is presented under section 46 on 18 November. The Board-determined rate of exchange on 18 November is Rs 0.55 per yen, while on the date of payment of duty, 25 November, it is Rs 0.57 per yen. The price is 4,00,000 yen, with no other costs. Which statement and value follow from section 14?

The price is converted at the 18 November rate, the bill of entry date, giving Rs 2,20,000 (4,00,000 yen at Rs 0.55). The third proviso to section 14(1) ties the exchange rate to presentation of the bill of entry, not to the later date of duty payment.

  1. APrice is converted at the rate on 25 November, giving Rs 2,28,000
  2. BPrice is converted at the rate on 18 November, giving Rs 2,20,000Correct
  3. CPrice is converted at the rate on 25 November, giving Rs 2,20,000
  4. DPrice is converted at the rate on 18 November, giving Rs 2,28,000

Explanation

The third proviso to section 14(1) requires the price to be calculated at the rate of exchange in force on the date the bill of entry is presented under section 46, which is 18 November. 4,00,000 x 0.55 = Rs 2,20,000. Using the 25 November rate gives 4,00,000 x 0.57 = Rs 2,28,000, which is wrong because payment date is not the test.

Did you get it right without looking?

One question tells you little. A timed set on Valuation under the Customs Act, 1962 shows your real accuracy, how long you take and where you lose marks.

Practise Valuation under the Customs Act, 1962Free diagnostic mock

More Valuation under the Customs Act, 1962 questions