However, the provision of fixing tariff values has been retained. In the case of alcoholic liquors, the additional duty at present is chargeable at a uniform rate as specified by the Central Government irrespective of varying rates in force in the States. Calculation of Customs duty depends on the determination of assessable value in case of items for which the duty is levied ad valorem. The assessable value is often the transaction value or the value assessed in accordance with Brussels definition. India is an active member of the World Customs Organisation and has adopted various international customs conventions and procedures, including the Harmonised Classification System and the General Agreement on Tariffs and Trade based Valuation System.

Rule 3 of the Customs Valuation Rules, 2007 determines the value of goods. Value is the actual value of the goods when they are shipped. As duties are calculated based on the CIF value, they must be calculated correctly. How much amount is to be added as insurance as rules say as per Insurance certificate. In that it is the policy amount or the amount of one premium chargeable or total amount paid as premium.

More Under Custom Duty

As it will be rather cumbersome to do so, the investigation done once and an SVB order issued is normally applied for imports for a period of three years assuming that in all these years, the price is not affected by the relationship. Both the SVB orders issued in this case clearly indicate that they are subject to occasional review and also a final review after three years. Otherwise, an unscrupulous importer can import on invoices which are not influenced by the relationship until an order is passed by the SVB and then start importing on invoices with much lower prices from the related party. If this happens, nothing stops the department from examining the valuation in such cases.

What is relevant is the invoice price and if there is any additional consideration flowing from the importer to the foreign supplier so that the correct transaction value can be determined. For instance, if the importer is being invoiced for and is paying Rs. 100 to the foreign supplier and the importer is separately transferring Rs. 10 to the foreign supplier, it needs to be seen if this Rs. 10 is meant to be consideration for the sale of the goods. In this case, the True Up payments are flowing not from the appellant to the foreign supplier but the other way round. Therefore, if these are reckoned to arrive at the transaction value, the invoice value will have to lowered which does not advance the case of the Revenue at all. True Up is an arrangement between the appellant and the parent company. No law requires such a payment nor can it influence the transaction prices.

Customs Tariff of India

Hi Sounder, You can amend commercial invoice before filing import documents to customs of importing country. However, such reduction of value in invoice should not be an abnormal value of market price of same product in importing country. Only actual cost incurred by ultimate buyer is to be considered. Inclusion of 2% notional commission cannot be done after 2007 amendment – Indian Farmers Fertilisers Coop Ltd. v. PCC 373 ELT 530 . Transaction value is not acceptable if buyer and seller are ‘related’. Definition of ‘related person’ is identical in rule 2 of Customs Valuation Rules, 2007 and rule 2 of Customs Valuation Rules, 2007.

Wish you should always be writing on each and every term and condition of exports and imports. Your articles are really beneficially not only for beginners but for experienced also. Price to include value of intellectual property contained in it – A software cannot be valued on basis of price of CD.

• TDS is applicable on the net amount mentioned in the invoice, excluding GST.
• Before start, you need to under what is the total customs duty and what is included in the total customs duty.
• Both the appeal against the assessment by the assessee and the demand by the department are subject to limitation of time after which neither can an appeal be filed by the assessee nor can the department raise a demand.
• In the light of the submissions made and judgments cited by the importer, I hold that the importer operating at higher commercial level, i.e., distributor and purchasing in bulk quantity”.
• Valuation Rules if transaction value is not determinable – If there is no sale or buyer or seller are related or price is not the sole consideration, value of the goods will be determined as per Valuation Rules [Clause of second proviso to section 14].
• Convert this CIF amount to local currency by using frequent notifications from the customs department.

The foreign supplier is also independently selling the goods to embassies, etc. and there is nothing on record to show that the appellant has incurred any expenses to promote such sales. The prices at which the cars were sold the embassies were approximately 33% higher. An in-depth analysis of the amount charged for the extra features needed to have been done.

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The premium for the additional features and customisation is decided by the manufacturer and paid for by those independent customers. The difference between sale in retail and sale in bulk also must be accounted for. There is nothing in the impugned order that the Commissioner has come to prima facie conclusion based calculation of assessable value on some data that the additional features and the difference in quantities do not account for the price difference. It is not also indicated how the original authority is expected to achieve this quantification. We, therefore, find no substance in such a direction in the impugned order for re-examination.

When the appellant suffers any losses, the foreign supplier, who is also the parent company, pays the appellants to make up for the losses which are called True Up payments. According to the appellant, these are in the nature of capital subvention by the parent company and they have nothing to do with the invoice values of the cars which they import. The Department‟s case is that these are in the nature of transfer of funds from the parent company to the appellant and it does not matter whether they are recorded under capital receipts or revenue receipts. It should have been https://1investing.in/ seen by the original authority as to how much loss was incurred by the appellant and how much was paid by the foreign supplier as True up payments and if these payments affected the invoice price of the imported goods. In the light of the submissions made and judgments cited by the importer, I hold that the importer operating at higher commercial level, i.e., distributor and purchasing in bulk quantity”. The appellant argued that as a bulk buyer and distributor, they need to take responsibility for their own stocks and they also need to promote sales for their own business.

1) Payment of a commission or general expenses 2) Transportation and insurance costs. Items being valued, plus a profit and general expenses, which are frequently represented in sales of goods of the same class or sort from the country of exportation to the country of importation. Now a days it has become very difficult to justify import values specially when it is from China. Indian customes assess values almost two to three times higher.

I’m not an accounting expert, I think you need to check with any other person who is an expert in the account. If you get FOB value and want to calculate CIF value then you need to consider freight as 20% of FOB value and Insurance as 1.125% of FOB value. What is the scope of change in assessable value calculation in the future. Carefully check the calculation provided in this article, If you have any queries please ask in the comment box. Dear all , Anyone could you please tell me the HS code and Import duty for Rose Bud protective sleeve nets.

Customs Administration

Products are given an identification code known as the Harmonized System Code for the purpose of assessment of Customs duty. This code has been evolved and assigned by the World Customs Organization based in Brussels. Introduction of HS Code in 1990s has largely replaced the earlier Standard International Trade Classification , though SITC still remains in use for statistical purposes. In drawing up the national tariff, the revenue departments often specify the rate of Customs duty with reference to the HS Code of the product.

Duty calculation in Advance filing of Bill of Entry in INDIA

C) The adjudicating authority has compared the prices of cars sold to the importer (i.e., the appellant herein) and the prices at which similar cars but with extra features were sold to unrelated buyers, viz., embassies in India. An in-depth analysis of the amount charged for the extra features needs to have been done. All registered persons must pay the difference of GST on sales and GST on purchases done in a month.

However, such assessment does not bind either the assessee or the department with respect to any future imports. If, for instance, excess duty was paid due to wrong classification of goods, erroneous computation of value or by not claiming an eligible exemption notification, etc. it does not mean that the assessee has to continue to pay excess duty in all his future imports. Conversely, if duty is short paid and the department failed to issue a notice within time, it does not mean that the department is estopped from making correct assessments of future Bills of Entry and collecting the correct amount of duty. Otherwise, it would lead to anomalous situation where the duty leviable will be based not on the correct legal position but on the past practices including erroneous ones. Further, in the same custom house, for the same goods, if one importer is charged erroneously less and another is charged properly, there will be two different laws for them. The principle of Res Judicata applies only to the extent of the assessment of the particular Bill of Entry at the particular level attaining finality.

Moreover, if the consignment is on CFR, CIF, DAP, DDU, DDP or any other Inco Terms, you can declare the actual freight amount and insurance amount. However, such amount of freight and insurance should not be an abnormal amount than market value. These value is mentioned electronically when filing Bill of Entry with customs for import clearance procedure by importer or his Customs House Agent.