Custom Valuation

Statement showing computation of assessable value for imported goods.

1. Value of Material (At Ex-Factory Price) XXX
2. Carriage, Freight, Insurance  upto the Port of Shipment in the Exporter’s
Country. XXX
3.Charges for Loading on to the ship at the shipping Port  in the exporter’s 
Country. XXX
4. Value of Goods and tooling supplied by the buyer . XXX
FOB (Free on Board) XXXX

ADD: If not included in the above.

1.Commission and brokerage(except  buying commission)   XXX
2.Packing Cost ( except cost of durable and returnable packing)            XXX
3. Cost of engineering, development and plan or sketches                XXX
(Undertaken outside India)
4.Royalties and Licences fees    XXX
5.Value of subsequent resale (if payable to foreign supplier)    XXX
6.Cost of freight and Insurance upto the place of importation    XXX
• Cost of Freight – If not specified : @ 20% of FOB 
(Cost of Actual Air Freight  Exceeds @ 20% FOB, only @ 20% FOB Price will be 
• Insurance : If not Specified  @ 1.125% fob 
7. Ship Demurrage charges on chartered vessels, Lighterage or Barge charges    XXX
LESS: If Included in the above:
1.Duties and Taxes in  India XXX
2.Cost of Erection Charges in India XXX
CIF  Value(Cost Insurance Freight)           XXXX
ADD: Loading and Unloading Charges @ 1% on cif  XX
ASSESSABLE VALUE (AV)                          XXXXX
1. Buying Commission : Fees paid by an importer to his agent for the service of – Representing him  abroad in the purchase of goods being valued .
2.Any expenditure like right to reproduce the imported goods in India  – Not to be added .
3. Apportioning the cost of  tools are not immediately consumed by the importer 
4. Demurrage charges payable to port trust authorities for delay in clearing of goods – not to be added to the transaction value.
5. Exchange Rate : 
Considered the Exchange rate of  ‘ CBE & C’  for finding the assessable value in Indian Rupees .
Exchange Rate
a. Exchange rate of CBE&C         b.More than one  CBE &C                                                                      Exchange rate of CBE & C as on the date of                                   Submission of   Bill of Entry.6. Rate of determination of Basic Customs Duty.

Basic Customs Duty u/s 12
a. Rate of Duty at the time of Submission  
b. Rate of Duty at the time of   Bill of entry. entry inwards granted to  the vessel.
whichever is LATER.

Eligibility of CENVAT credit :

a. If the importer is Manufacturer :
Eligible to avail the CENVAT credit of the following 
1. Additional Customs Duty ( CVD)
2. Special Additional Customs Duty(SPCVD)
b. If the importer is service provide
Additional Customs Duty (CVD)
c. If the importer is trader – who sells imported goods in India  after charging VAT 
Special  Additional Customs Duty ( SPCVD)

Rule 10 : Cost of services
The following Shall be added to the invoice price  ( i.e FOB value) to determine the transaction value of imported goods. 
1. Commission and Brokerage  ( except buying commission)
2. Packing Cost ( Except Cost of durable and returnable packing)
3. Cost of engineering,  development and plan or sketches (undertaken outside India)
4.Royalties and Licence fees 
5. Cost of subsequent re-sale if payable to foreign supplier 
6. Cost of freight and insurance upto the place of  importation
Cost of freight  – if not specified @ 20% of FOB
Insurance  – If not specified @ 1.125% of FOB
7. Ship demurrage charges on chartered vessels, Lighterage or Barge Charges.
—————-    XXXXX

The following  shall not be added to the Invoice price (i.e FOB  value) to determine the transaction value for imported goods.
1. Duties and Taxes  in India.
2. Cost of Erection Charges in India .
3. Cost of Transport and Insurance from port to factory of importer in India.
4. Cost of development Charges in connection with imported machinery.
5. Post demurrage charges and unloading charges in India.
6. Any other charges incurred after importation ( post shipment charges unless such  post shipment charges are precondition  for  importation).

1. Where the cost of insurance and cost of transportation are not ascertainable 
a. Cost of transportation is not ascertainable  – 20% of FOB  value .
b. Cost of insurance is not ascertainable  – 1.125% of FOB Value.
c. Landing Charges  – 1% of CIF  Value.
d. Cost of Freight  if the goods are imported by AIR – Restricted to 20% of FOB  Value 
i.e. Actual Air Freight  OR  20% of FOB  Value
Whichever is less.
2. Cost of  Freight  in case of goods imported by SEA 
Incase of goods imported by sea , stuffed in a container for clearance in  ICD (Inland Container Depot) or container Freight station ( CFS) – Cost of Freight from the port of entry to ICD / CFS / Shall not be included in the cost of transport.
 Cost at the factory of exporter 
 Carriage /Freight /Insurance upto the port of shipment in the exporter’s Country 
 Charges for loading onto the ship at the shipping port.
4. Exchange rate of CBE&C is relevant.
if this rate is not given  – Take the Govt of India rate 
5. Charges for bringing the goods from outer anchorage to jetty is known as – Barging / Lighterage  or Barge charges  – Included in the Assessable Value.
6.Ship demurrage on Charted vessels.
Demurrage Charges is payable when ship was not unloaded within the specified time – Included in the Assessable Value.
7. Cost of Post shipment expenditure 
a. Precondition for such import b. Not precondition for Importation 
Addable to the Assessable Value           Not addable to AV
8.Transportation of goods from port of entry to inland container depot ( ICD)  – Not addable to AV.
9.Importer imports machinery as well as accessories: 
Classified under two different headings with  different rate of duties.
a. Accessories are essential for Machinery.    b. accessories are not essential for operation  machinery.
Rate of Duty Applicable for machinery Rate of duties applies separately as is also applicable to the accessories. applicable to them.      
Note: Common expenditure  – Apportion in the ration of value of accessories and machinery. 
10. Additional Customs Duty ( CVD) 
Any article imported into India  – Liable to duty ( In addition to BCD  )  equal to the EXCISE  duty for the time being  leviable  on the like article if production or manufacture in India.
CVD – cannot be levied , if exemption from CED is based on 
a. Goods manufactured by SSI  Unit or 
b.Goods manufactured without aid of power.
• CVD  can be levied  – only when the imported manufactured goods .
• it means CVD  can be levied  – only if goods are obtained by a process of manufacture. 
• If the goods manufactured in India  – are exempt from EXCISE Duty  – No CVD.
• W.E.F  17.03.2012 CVD is equal to Basic Excise Duty ( Excluding Excise Duty ) 
• If imported goods attract Excise duty in India as per Section 4A of Central Excise Act  – CVD will be calculated as per MRP  Basis only.
11. Persons shall be deemed to be “Related” , If one of them directly or indirectly controls the other.
Control : is Established when one enterprise holds  atleast 51% of the equity share holding of the other company.
12.According to explanation to Rule 10(1)  – Any Royalties / Licence fees / any other payment made for a process  – which carried out on the imported goods after importation there off  – Shall be included in the AV of imported goods 
a. If the same is related to the imported goods and  it is  paid as condition of sale.
13. Additional Customs Duty :
Excise duty payable as per tariff is 14% 
There is an excise exemption  notification which exempts the duty as in excess of 10%  – Excise Duty rate has to be considered after considering excise exemption  notification  i.e. Rate of CVD   = 10%.
14. Where FOB  Value  , Cost of Insurance and Cost  of Transportation  are not ascertainable: 
a. Cost of Transport ( i.e. Freight  not known ) 
= 20% X (FOB Value + Cost of Insurance )
Remarks : CIF  Value  X 20/120.
b. Insurance  ( Not Known)
= 1.125% X (FOB Value + Cost of Transport)
Remarks: CIF Value  X 1.125/101.125
c. FOB Value = CIF Value  – Cost of Transport  – Cost of  Insurance .
15. U/S 15 date for Determination of the rate of duty and tariff valuation of imported goods.
a. Goods entered for ” Home consumption ” u/s 46  – Dated on which bill of entry in respect  of such goods is presented under that section.
b. Goods cleared form a warehouse u/s 68 – Dated on which a bill of entry in respect of such goods is presented under that section.
c. Any other goods  – Dated of payment of duty .