Indirect Tax Laws (GST & Customs)SubjectiveQuestion 5848 of 504
All Questions

Apex Impex Ltd. imported chemical equipment from Japan. The relevant particulars are given below: 1. FOB value of equipment: JPY 10,000,000 2. Ocean freight charges: JPY 1,500,000 3. Insurance charges: Actuals not ascertainable 4. Commission paid to local broker who arranged the deal in India: ₹50,000 5. Designing and development charges paid to a Japanese firm: JPY 500,000 6. Applicable Basic Customs Duty (BCD): 10% 7. Social Welfare Surcharge (SWS): 10% 8. Integrated Goods and Services Tax (IGST) under Section 3(7) of CTA: 18% 9. CBIC notified exchange rate: 1 JPY = ₹0.60 Compute the Assessable Value in Indian Rupees and the Total Customs Duty payable by Apex Impex Ltd.

For any discrepancies in this question, email contact@cadada.in

Detailed Solution & Explanation

### **Step 1: Computation of Assessable Value under Customs Act, 1962**

1. **FOB Value**: JPY 10,000,000
2. **Additions under Rule 10(1) of Customs Valuation Rules, 2007**:
- Design & development charges outside India: **JPY 500,000**
- Local brokerage paid in India: Post-importation/local charges, NOT includible.
Adjusted FOB Value=10,000,000+500,000=JPY 10,500,000Adjusted FOB Value=10\displaystyle \text{Adjusted FOB Value} = 10,000,000 + 500,000 = JPY \displaystyle \text{JPY } 10,500,000
3. **Additions under Rule 10(2)**:
- Ocean Freight: Actual JPY 1,500,000. (Since $20\% ×\displaystyle \times 10,500,000 = JPY \displaystyle \text{JPY } 2,100,000$, actual freight JPY 1,500,000 is taken).
- Insurance: Where actual insurance is not ascertainable, it is calculated as **1.125% of FOB Value**:
Insurance=1.125%×10,500,000=JPY 118,125Insurance=1\displaystyle \text{Insurance} = 1.125\% ×\displaystyle \times 10,500,000 = JPY \displaystyle \text{JPY } 118,125
4. **CIF Value in JPY**:
CIF Value=10,500,000+1,500,000+118,125=JPY 12,118,125CIF Value=10\displaystyle \text{CIF Value} = 10,500,000 + 1,500,000 + 118,125 = JPY \displaystyle \text{JPY } 12,118,125
5. **Conversion to Indian Rupees (CBIC rate 1 JPY = ₹0.60)**:
Assessable Value (AV)=12,118,125×0.60=₹72,70,875Assessable Value (AV)=12\displaystyle \text{Assessable Value (AV)} = 12,118,125 ×\displaystyle \times 0.60 = ₹72,70,875

### **Step 2: Computation of Customs Duty Payable**

ParticularsRate (%)Amount (₹)
Assessable Value (AV)-72,70,875
Basic Customs Duty (BCD) on AV10%7,27,088
Social Welfare Surcharge (SWS) on BCD10% of BCD72,709
Sub-Total for IGST base-80,70,672
Integrated GST (IGST) under Sec 3(7) on Sub-Total18%14,52,721
Total Customs Duty Payable-22,52,518

**Conclusion**: Total customs duty payable is **₹22,52,518** (BCD: ₹7,27,088 + SWS: ₹72,709 + IGST: ₹14,52,721).

More Questions from Indirect Tax Laws (GST & Customs)

Alpha Ltd., a registered person in Maharashtra, supplies goods to its distinct person Beta Ltd. in Gujarat without consideration. Beta Ltd. is eligible for full Input Tax Credit (ITC). The open market value of the goods is ₹5,00,000, and the cost of production is ₹4,00,000. Alpha Ltd. declares a value of ₹3,50,000 in the tax invoice. What is the value of supply under Rule 28 of the CGST Rules, 2017?

Which of the following Input Tax Credits (ITC) is ELIGIBLE to be availed by Zeta Ltd., a manufacturing company, under Section 17(5) of the CGST Act, 2017?

Delta Consultants completed a management consultancy assignment on 15th July. The invoice was issued on 28th August. Payment was credited to Delta Consultants' bank account on 20th August, though entered in the books of account on 22nd August. What is the Time of Supply under Section 13(2) of the CGST Act, 2017?

Zenith Marketing Ltd., located in Mumbai, acts as an intermediary / broker connecting foreign software buyers located in London with software developers in Bengaluru. For arranging the supply, Zenith receives a 10% commission in convertible foreign exchange from the London client. What is the Place of Supply and GST liability for Zenith Marketing Ltd.?

Under Rule 89(5) of the CGST Rules, 2017, for computing the maximum refund amount under the Inverted Duty Structure, which of the following Input Tax Credits is included in 'Net ITC'?

An importer imported machinery from Germany with FOB price of €1,00,000. In addition, the importer paid €5,000 to an independent buying agent in Germany for representing him abroad, and €10,000 to the German seller as engineering and design charges incurred in Germany necessary for production. Ocean freight was €8,000 and actual insurance was €1,200. What is the Custom Assessable Value if the exchange rate notified by CBIC is 1 € = ₹90?

Ready to Master Indirect Tax Laws (GST & Customs)?

Practice all 504 questions with instant feedback, earn XP, track your streaks, and ace your CA Final exam.

Start Practicing — It's Free