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Doubt in idt- customs, ca final

Nishant (Accounts Assistant) (378 Points)

06 March 2014

Hi, as we all know that while calcculting Assessable Value in customs we always include

'Landing Charges @ 1%' as per Rule 10 (1) , even if the Question does not mention anything about it .

So , simialrly should we also

A ) Include 'Insurance Charges' by default @ 1.125% of F.O.B. while calculating Assessable Value , even if the question does not mention anything about Insurance Charges

B)is it that we must include it only when there is a statement in the Question as follows :"Insurance Charges are not ascertainable".

Pl reply as to whether we must follow A) or B)

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11 Replies

PSPSPS (Practicing) (1344 Points)
Replied 06 March 2014

Answer is " A "

Insurance will be added by default, whether mentioned or not

1 Like

Anjan (Chartered Accountant) (69 Points)
Replied 06 March 2014

Dear Ashok,

In case of imports, the Transaction value is the price paid/payable for the goods when sold for export to India at the time and place of Importation(i.e the price up to a port in India when goods are imported).Hence CIF value should be considered.

Even If the question doesnt mention anything abt Insurance charges (or) if there is any statement in the question that "insurance cost is not ascertainable", you have to provide insurance charges @ 1.125% iof FOB in both the cases.

1 Like

Deep Shah (Student CA Final ) (28 Points)
Replied 07 March 2014

Insurance Charges are not added by default. Only if the question is unclear about insurance charges then you will have to take 1.125%. If question doesn't mention anything about Insurance charges then don't add. So the answer is Option B

1 Like

Anonymous (Student) (111 Points)
Replied 07 March 2014

The answer is in BOTH the cases you have to add Insurance charges @ 1.125% of F.O.B. whether nothing is given in the question about insurance or insurance is uncertainable. In reference of practice manual, there was also the same treatment by adding insurance charges @ 1.125% of F.O.B. if nothing is given in ques about insurance.

1 Like

Nitin A Malani (Chartered Accountant) (87 Points)
Replied 07 March 2014

Unless the question specifically contains any absolute amount of money incurred towards Insurance Charges, such charges must be calculated @ 1.125% of FOB value to derive CIF as the Assessable Value of goods under Importation.

Hence, "A" is the correct answer.

1 Like

V!$H@L $!ngh@L (free.........) (87 Points)
Replied 07 March 2014

whether question asks for adding the charges or not, keep the fundamental in mind i.e. no Goods will be landed in INDIA unless it is insured (practically), thats y convention to add 1.125% is there. Analysing the scenario and try to approach the answer practically would really help in the upcoming examinations.

Always write assumptions if there is any cofusion.

Regards.

1 Like

Punit Govil (CA FINAL(1st grp passed) CS FINAL M.COM) (228 Points)
Replied 07 March 2014

For CA examinations.....u will add the insurance charges (whether 1.125% or else) ONLY when question says about it.....if question is silent about insurance charges, so DONOT ADD the same....

1 Like

Saran Kumar (Staff Accountant) (71 Points)
Replied 07 March 2014

you can add an END Note

1 Like

GIRIDHAR DANDE (Cost Accountant) (1956 Points)
Replied 07 March 2014

LOGIC ?

we are finding the value of CIF- means COST+INSURANCE+FREIGHT. so goods imported into india we have to find CIF. so as per the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - RULE 10 we have to take it. so answer is A.

2 Like

anubha singh (article) (135 Points)
Replied 08 March 2014

if ACTUAL amount of insurance is given add that amount ,but if ACTUAL NOT GIVEN add 1.125% of FOB value . in all cases wheather mention in ques. or not it is added.

1 Like