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

Under Section 14 of the Customs Act, 1962, the transaction value of imported goods is accepted as the customs value when the buyer and seller are not related and price is the sole consideration. Which of the following, as per the text of Section 14, is a rate used to convert the foreign currency price into rupees?

The price is converted at the rate of exchange in force on the date the bill of entry is presented under section 46, as the proviso to Section 14(1) provides. Invoice date, vessel arrival and duty payment dates are not the basis for the conversion.

  1. AThe rate of exchange in force on the date on which the bill of entry is presented under section 46Correct
  2. BThe rate of exchange in force on the date of arrival of the vessel at the port, irrespective of bill of entry
  3. CThe rate of exchange on the date on which the foreign supplier issues the invoice
  4. DThe rate of exchange on the date on which duty is finally paid by the importer

Explanation

The third proviso to Section 14(1) states that the price is calculated with reference to the rate of exchange in force on the date on which a bill of entry is presented under section 46 (or shipping bill under section 50 for exports). The invoice date and payment date are not the reference dates.

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