Q 8 ‘A’ imports by air from USA a Gear cutting machine complete with accessories and spares. Its HS classification is 84.6140 and Value US $ f.o.b. 20,000. - - Other relevant date/information: (1) At the request of importer, US $ 1,000 have been incurred for improving the design, etc. of machine, but is not reflected in the invoice, but will be paid by the party. (2) Freight - US $ 6,000. (3) Goods are insured but premium is not shown/available in invoice. (4) Commission to be paid to local agent in India Rs. 4,500. (5) Freight and insurance from airport to factory is Rs. 4,500. (6) Exchange rate is US $ 1 = Rs. 45. (7) Duties of Customs : Basic – 20% CVD – 16% Education cess on duty – 2%. Special CVD under section 3(5) of Customs Tariff Act is applicable. - - Compute (i) Assessable value (ii) Customs duty. How much Cenvat can be availed by importer, if he is manufacturer? [ICWA Inter December 2002 adapted]
Answer 8 (i) Computation of Assessable Value
| FOB Value of Machine US $ | $ | 20,000 | ||
| Add: Expenditure for improving design | $ | 1,000 | ||
| Add - Freight limited to 20% of FOB [Rule 9 (2)] | $ | 4,000 | ||
| Insurance @ 1.125% of FOB [Rule 9(2)c(iii)] | $ | 225 | ||
|
Sub-Total |
$ | 25,225 | ||
| Sub-Total In Rs @ Rs 45 per Rupee | Rs | 11,35,125 | ||
| Add - Agents Commission [Rule 9(1)(i)] | Rs | 4,500 | ||
| Total CIF Value | Rs | 11,39,625 | ||
| Add – Landing charges 1% of CIF | Rs | 11,396 | ||
| Assessable Value | Rs | 11,51,021 |
Duty payable will be as follows –
| Calculation of duty payable is as follows - | ||||
| Duty Rate % | Amount Rs | Duty Rs | ||
| (A) | Assessable Value Rs | 1,151,021.00 | ||
| (B) | Customs Duty | 20 | 230,204.20 | |
| (C) | Sub-total for calculating CVD (A+B) | 1,381,225.20 | ||
| (D) | CVD as % of C | 16 | 220,996.03 | |
| (E) | Education cess of excise - 2% of 'D' | 2 | 4,419.92 | |
| (F) | Sub-total for calculating Edu Cess (B+D+E) | 455,620.15 | ||
| (G) | Education Cess of Customs (2% of 'F') | 2 | 9,112.40 | |
| (H) | Sub-total for Special CVD (C+D+E+G) | 1,615,753.55 | ||
| (I) | Special CVD (4% of 'H') | 4 | 64,630.14 | |
| (J) | Total Duty Rs B+D+E+G | 529,362.69 | ||
| (K) | Total duty (rounded) |
529,363.00 |
||
my doubt is regarding CIF value....
CIF value=FOB+FREIGHT+INSURANCE
Landing Charges=1% of CIF...
but above the adjustments are made BEFORE calculating the cif value only...why cant it be solved in the below manner
FOB *****
FREIGHT ******
INSURANCE ******
---------------------------------
TOTAL(CIF)= *********
LANDING CHARGES @ 1% ******
----------------------------------------------------
TOTAL= ************
ADD : Expenditure for improving design *******
Add - Agents Commission [Rule 9(1)(i)] **********
------------------------------------------------------------------------------------
TOTAL=ASSESSABLE VALUE **************
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