Transcript for:
Customs Computation and Valuation

e e good evening students so I hope you all are doing well and also I'm sure your preparations are going good so today we are going to take up the Practical aspect of whatever we have studied in our subject and paper of Customs so let me just share the screen we'll first have a brief overview of whatever we have done so that you will get an idea mainly we will take up the pointers that are relevant for the Practical aspect because today's session I dedicated entirely to the Practical aspect there are small practical aspects in Chapter 2 that is relating to computation of Duty and then we have practical majorly from chapter 4 that is the valuation chapter which also includes again the computation of Duty so if you recall students this is the first important point when we are talking about computation of Duty that is the relevant date for determining the rate of Duty so which date rate of Duty will be applicable the answer is in case of import we are firstly talking about input it is the date on which you have filed the bill of entry for home consumption under 46 right or it is the date on which the entry in permission for the ship is received whichever is later this is very important so Bill of entry date entry inwards date whichever is later is our relevant date in case of UTS for warehouse Goods it is very simple for warehouse Goods it is the date of filing the second bill of Entry there is a bill of Entry which is also called as X of Entry which is filed for clearing the W so that is simple there is no problem of whichever is later here similarly when you come for exports what is the relevant date for deciding the rate of Duty that is on which date the rate would be applicable while Computing export so here there is no whichever is later rule it is simp the date on which the proper officer has made the order permitting the clearance and loading of goods so here there is no whichever is later rule like in case of UT it is simply the relevant date of passing of the order by the proper officer that is the custom officer allowing you to export your goods firstly I hope this point is clear as far as the relevant date for deciding the rate of Duties concerned anybody having any questions or doubts with this also I'll request students to kindly download the uh practical question set which I have uploaded on the portal this will be for your quick reference kindly download it so that even though I'll be showing it on the screen but I'll be swapping the screen between the sheet and also uh my writing pad so it may slightly create a problem so to avoid any such problem I'll recommend that you better download that so first point please keep in mind make a note relevant date for rate of Duty right that is as per section 15 as per section 16 now there is one more relevant date which is given in the valuation section that is section 14 this relevant date we studied this but now I'm being very specific we studied the whole valuation right now I'm not going to the whole valuation we'll go step by step so first I'm coming to the point of computation of tax only then when we'll go to valuation I'll take you to the revision of valuation also now when we have to compute tax one is the rate of Duty the other is the exchange rate now what does section 14 says section 14 says in its Proviso that for the purpose of rate of exchange see what is the relevant date of which the rate of exchange would be taken it would be the date of Bill of Entry under 46 so here there is only one date in case of import that is the date of filing of Bill of Entry correct and for export also it is the date of filing of shipping bill that is also called as Bill of export so for the purpose of exchange rate so don't mix earlier we studied in 15 and 16 the relevant date for deciding the rate of Duty so rate of Duty customs duty r that was 15 and 16 but now we are discussing rate of exchange for converting the foreign currency to Indian currency what is the relevant date rate of exchange so there is only one date for all cases of import it is the date of first bill of Entry which is presented under 46 why I'm saying first because in case of Warehouse Goods you file the second bill of Entry still even for that the rate of exchange will be taken for the first bill of Entry which is filed under 46 similarly for export it is the date of shipping bill that is the Bill of export so this is the relevant date when it comes to rate of exchange fine is this fine students anybody having any doubts or questions with this so Anila H mam jinnie vges so I hope this point you all will remember another very important point is what rate of exchange we have to consider because see at any given date you'll have multiple rates of exchange available one rate of exchange as per our stock market one rate of exchange as per RBI one rate of exchange which is as per the uh The Exchange brokers who are into the conversion of currency but we don't have to take any of these exchange rates we have to take the exchange rate which is given to you by the cbic that is the board or if the board is not itself fixing a rate it will give you the manner of rate means in that particular case the board will say that okay you take the RBI rate so we will take the RBI rate but by our own self we will not take the RBI rate or the banker rate or the market rate we will always take only the rate fixed by the board I'm talking about the rate of exchange fine students okay perfect technical team uh kindly uh approve that material on the portal because somebody's saying there is no material on the portal for downloading can you just check that see I've uploaded this practical sums J beta maybe uh you'll get it in a while okay so students I hope this background basic is clear to all right fine okay so now let me take you to the Practical sums that I wish to engage today with respect to the Customs chapter so today we are going to do exclusively the customs practicals and we will go step by step because here I'm covering the entire the subjects practical depending on whatever we have studied till date so I'll be step by step so first part we are going to discuss only the computation of Duty no valuation nothing so we'll go step by step as I said we'll start only with the computation of Duty there's some problem with my one note one second okay so in my first part we are only going to deal with computation of Duty fine okay so let me go to the question see just keep this format in mind this is the format so first you calculate assessible value now how to compute assessible value is our second part of question that will go with later so first you are only taking the assessible value given in the sum and you even get such sums for two to three marks so accessible value is given in the sum if required we will convert this accessible value from foreign currency to rupees as per the exchange rate which we just discussed now while Computing the customs duty first we will compute the basic custom duty now I just explain to you which date is relevant for deciding this rate in case of import it is whichever is later arrival of ship that is entry inverse or the filing of the first shipping bill under 46 whichever is later and in case of Warehouse Goods it is filing the second shipping bill so that is the relevant date of rate of D similarly in case of export what is the relevant date for rate of Duty it is the date of passing of order by the proper officer allowing you to export fine but for for conversion let us say from dollars or Euros or Pounds 2 rupees the relevant date for taking the rate of exchange is only one in case of import it is the first bill of Entry irrespective of whether the goods are cleared immediately or they are Warehouse the relevant date for exchange rate will be only one that is the first exchange uh first bill of entry date and in case of export it is only the date of shipping bill so please be clear these are the small small pointers which are tested in these sums now let us say the converted amount comes to rupees 10 lakhs for example and the rate of basic custom duty given is 20% so we take this as 20 20% of 10 lakhs which will come to 2 lakhs now you have to keep this in mind like how in case of income tax we know that the education and health says is 4% whether or not mentioned similarly here whether or not they mention this rate you have to always remember it is 10% and same like income tax it is 10% of what like over there also the 4% says is not on the income we don't mul mply the 4% with the amount of income we multiply the 4% with the amount of income tax that you have computed similarly here this 10% is computed by multiplying it by the basic custom duty which we just computed so in my example the basic custom duty was 2 lakhs 10% of this will be 20,000 now I'll take a total of this and this total is now coming to 12 lakh 20,000 now I have to compute my igst and maybe if required even the compensation s so let us say I'm assuming just for Simplicity of calculation the igst rate is 10% though we all know there is no such rate in GST as on Dat but just for Simplicity 10% of what it is 10% of this total this all we studied in the second chapter on types of Duties where we studied all types of Duties over there when we were discussing Customs Tara CTA various sections 3 4 5 6 7 over there this was explained so the integrated tax that is the igst which is applicable on the import that is computed on this total which is assessible value basic customs duty the welfare says you make a total of this on this total you compute the igst portion so if it is 10% it will come to 1ak 122,00 now let us say there is also compensation sets of GST and I'm again for Simplicity assuming it to be 20% now if you know in GST wherever there is compensation says it is computed on the value it is not computed on tax I hope this is clear because generally when we say says it is computed on tax here in case of GST the compensation says is computed on the value so this 20% will also be computed on this value so it will be 244 and now if they are asking you to find out the customs duty payable it will be the total of basic custom duty your social welfare SS your igst and if compensation says is applicable even compensation says so these four will make up your total customs duty I hope I have made this point clear to everyone anybody has any questions up to this point students yes better anybody any doubts any questions sir igst is different partner sir means means bet ma different part means uh sir here we compute igst so IG igst is different departmental uh tax and custom is different department tax so what is your question so come to the main we sir we calculated we added total value why so come to the question see I want you to come to the question what why what why you stopped at why what is that why you are asking that custom custom duty payable uhuh custom duty toal correct this is your question so please understand this is a very important question students why this GST or igst is added when we are finding out our total customs duty because m is right this is a different law it is the GST law and the basic custom Duty and all these other compens sorry not compensation says social welfare says and all types of protective duties anti dumping duties they are all part of Customs law now if you are being asked to pay or find out the customs duty mam has a very valid question why do we add igst so please everybody pay attention this is a very interesting question he why igst is included or termed as customs duty this is what is M's question I'll try to answer so for this you have to recall igst act and in igst you have to go to section five CH I'll do one thing I'll open from my records the igst so that I can explain this particular point now you all are final students so I'm sure it will be easy for me to explain this concept to you all yes now see I opened the wrong that yes so now see I'm on the charging section of the igst act right now in cgst sgst the charging section is nine but in igst the charging section is five now what does charging section says that you have to pay igst on all Interstate supplies correct so igst Interstate supplies and Interstate supplies includes import we all know correct but what is interesting to not is this part the Proviso what it says provided that now we all know Proviso means that par which creates an exception so M that is having some exception what it says the integrated tax it means the igst on Goods which are imported into India now the main interesting point starts so now we are talking about igst only and we are talking about igst on the imported goods what it says it shall be levied and collected both as per the provision of Customs act also not only Levy and collection it further says even the valuation will not be done as per the GST law now I'm sure you all would remember GST under GST section 15 is dealing with valuation but we are not going to apply section 15 of the cgst ACT we are going to apply valuation of the said act said act means the Customs act so Mam and everybody please understand this our igst act itself has shifted the levy The Collection the valuation now let me take you forward even the time of Supply see Point what we call as time of Supply in GST because in GST tax you have to pay whenever there is time of Supply now here also so at what point the tax will be levied it says it will be the same when the goods are leved to customers so everything Levy collection valuation time of Supply everything is shifted to customs and then when we go to customs stact which we studied in our chapter 2 we found that Customs stact says that you have to pay basic custom duty and you have to pay additional custom duty which is GST that is igst so igst has become part of the customs in the form of additional custom duty when you read section 51 provisor of the igst Act and the relevant sections of the Customs Act and the Customs terria M but did you get the answer the technical answer and I hope everybody else also understood anybody still has a question beta M understood sir perfect but it was a good question so student please you should ask you should rather read the law because see we are at final level now after this you are going to become everything in taxation both direct and indirect so let us try to now go to the intricacies of the subject so that you also enjoy reading and understanding the law it may be technical it may be uh very uh uh hot pod and confusing but that is the beauty and that is where we stand out from others right okay so so coming back to this so now this is the format which we will be following now in this I would like to add one more thing actually this format I have taken from module itself I did not want to disturb that because if you refer module you should not find something different so I kept the module format just I'm adding the pointers which I feel is relevant now maybe in certain sum you may be given anti-dumping Duty now we studied all this in our second chapter in types of Duties you may be given a safeguard Duty you may be given the counterveiling duty now all these are called as protective duties which are levied by the customs and they are aimed at protecting protecting our domestic Industries our domestic market now if any of these Duties are given let us say here this duty is given as 25% basic Duty was 20% this is 10% now the question is how do you compute so 10 lakhs was my assessible value correct now if 10 lakhs is my assessible value 20% is on 10 lakhs I explained to you now whenever this Safeguard duty anti-dumping duty counterveiling duty for subsidized articles is given which is commonly called as protective Duty how will this be computed again remember student this is on the assessible value so if your assessible value is now just one more Point anti- dumping is calculated as per The Dumping margin this again we studied now if the dumping margin is given as rupes 40 per piece then you'll multiply 40 by the number of pieces you'll get this duty but wherever it is given as a percentage the percentage will be multiplied by the assessible value again this 10% social social welfare says I already mentioned it is on the basic Duty only now even though you have one more Duty that is the additional duty the counterveiling duty something your cess is not computed on that so cess if 10% is there it will be still computed on the basic custom duty so it will come to 20,000 only we'll make a total of all this so now this total would be 14 lakh 70,000 and this integrated tax assuming it to be 10% will be on this total and this total includes basic it includes your this protective duty of any of the type it includes the welfare SS and on this you compute your IG correct so I made one more addition in this format that is about the protective duty if it is given in the question that protective Duty will also be computed on the assessible value so like how you compute the basic custom duty on assessible value protective duty if given as a percent of value it will be computed on the assessible value if it is directly given as per unit then you simply multiply by the unit you'll get the protective Duty and most important the welfare SS would still continue to be computed only on the basic custom duty you will not compute it on this protective Duty and then adding all these customs duties you get this total on this total you will compute your igst and if compensation says is given that is also computed on this total fine students so this is the complete point about this now vges has a question sir is igst on such good required as ICT yes yes yes 100% if you read the GST law the GST law makes it very clear that even though now I now this is a good follow-up question he I just answered the previous question of Mamta saying that this is part of Customs law now so it is part of customs duty so vges has a follow-up question if this is part of customs duty are you still eligible for igst answer is yes because when you go to our section 16 and the relevant rules which deals with the ITC part please go and read the rules today B you will find that they have given a list of duties of which they are allowing Credit in that they have said duties of cgst sgst igst and they have separately given the Customs portion that is the igst paid on imported goods now this is also interesting to note had it been part of your original custom uh original GST Duty uh sorry GST tax they need not have given it separately why they have given it separately because they wanted to make it clear that even though it is part of Customs but we want to allow you credit so VES B if you read section 16 and the relevant rols are the 37 and all rules you will find a list of Duties given of which credit is allowed and in that they have specifically separately given the igst paid on import so they are also recognizing this fact that it is is considered as part of Customs but we want to allow that Duty so it is separately listed in the list of Duties which are eligible for ITC fine with all good today I'm enjoying we are having very good discussion today CH so now let us uh take few practice sums now this as I said initial first part of the question you know no need to do any type of valuation only we need to do the computation of Duty so what it says determine the customs duties payable under the custom Sherif act including Safeguard Duty so there is a safeguard duty of 30% here with the following details available on hand so as I said if you get a question only on competition of Duty which will be a two or three marks question they would start with the assessible value and if they want you to compute the value also then the sum will go to 6 to eight marks and you you start with valuation first and after valuation you go to the D fine now what it says assessible value of sodium nitrate imported from a developing country now this is interesting how it is interesting we will see between this period Bo is inclusive it makes no difference for us whether it is inclusive or not is rupees 30 lakhs so if I start with my computation so computation of customs duty I start with accessible value luckily they have given it in rupees had they given it in some foreign currency I my first step would be converting it into Indian currency but right now it is already there now what they say now you have imported this from developing country now why this is important students because again you have to go to chapter two where we studied different types of Duties now whenever any type of protective duty is levied and one of the protective duties is Safeguard Duty the other is that anti-dumping Duty the other one is that counterveiling Duty on subsidized articles all these protective duties will be levied with an exception that if you are importing from developing country there is some exception whereby you do not impose these protective duties when the import is from developing countries by chance anybody remembers this what is the rule that if you are importing from developing countries when or to what extent uh you will include or not means you will Levy or not this customs duty anybody can tell me anybody recalls anything relating to this we discussed it is actually too much expecting because I'm sure you all have not learned it yet but just maybe by chance if anybody can recall the answer is over there the exception is if you import from one single one single developing countries up to 3% you will not Levy this Duty and if you are importing from more than one developing countries then your total import from all developing countries combined should not exceed nine so if import import from one developing count is up to 3% 3% of your total import let us say the sodium nitrate is imported in X quantity and the quantity that you are importing from this particular country is below 3% of this x quantity you will not Levy any type of protective Duty be it Safeguard be it anti-dumping be it the other one right and if you are importing from two three developing countries then the total import from these developing countries combined should not exceed N9 if this happens it is below three below 9 I will not Levy the Safeguard Duty or the anti-dumping duty as the case may be however here here they have specifically mentioned that the share of imports from this particular country is 4% so the share of import from the developing country that this particular developing country out of my total Imports is 4% so it is exceeding this 3% it means I will be living this Safeguard D had this percentage been given up to three or below three we would have not uh included or computed this Duty by giving a note most important thing let us say this is not given in the sum then what there is a possibility they don't give this then you will have an answer based on assumption that is why you will find that in many of these questions and many questions at your final level they always say make suitable assumptions why because there are these small small points which can defer the answer so had this percentage not been given you should first mention the assumption that it is below 3% or above 3% and accordingly you will compute now in such a case advises you should assume it is above 3% so that you can also show the computation so I will have basic custom duty anyways this is going to be there now will also have my Safeguard D correct then I will have my social welfare sear charge then I will get a total and on this total I will have igst and if compensation says is there we will also have compensation says however they have specifically said ignore compensation says ignore agriculture infr say again agriculture infra say is again another says like your social welfare search charge but it is applicable only on very limited Goods hence generally in most of the sums it is not given if it is given it will be computed same like your social welfare s fine students now rates are given basic is 10% Safeguard is 30% social welfare is 10% and it is 10% of basa please be clear so it is 10% % of PCD and both these are 10% and 30% of accessible value so 10% comes to 3 lakhs this uh will come to 9 lakh 10% of 3 lakhs will come to 30,000 so it will be 42 lakh 30,000 the total then I go to igst which is 12% so 12% of 423,000 into 12% so it comes to 5 lak 7,600 yes I'm also getting the same figure on my Kelsey 5 lakh 7,600 compensation sayest is not given so this is my total import value that is the price at which uh I got the goods with all duties and taxes comp mind so this is again for your accounting and all purposes and total customs duty will be 1 2 3 and four total right so 5 lakhs plus 1230 so it is 1737 my total customs duty payable is 17 7600 yes perfect is it uh clear students anybody having any questions doubts this is the best question I found on computation of Duty which has all the elements of computation whatever you can expect right this is comparatively a simpler sum so assessible value is 1 lakh basic customs duties 10% igst 12% social Ware 10% compute the amount of customs duties and igst so it is very simple so AV is in rupees which is 1 lakh BCD 10% 10,000 uh social welfare S charge is also 10% and it is 10% of BCD so it is 1,000 my total of these three is 1 lak 11,000 and then my igst is at the rate of 12% so 1 lak 111,000 into 12% is coming to 13, 320 yes so this is my igst now again I find out the total import value which is 124 320 and toal customs duty which is 24 4 320 yes is this clear to everyone students anybody having any doubts questions please uh let me know we can discuss before I proceed so these are the two workings anybody wants to ask something you can ask Anila says it is clear vesh was anyway solving with me jinie also says clear okay let us proceed then right so we proceed okay Amant also says clear now we move on to the second category of sums where you need to apply some Provisions relating to the valuation plus also now you may be given multiple exchange rates in the sum so you have to also decide out of this which exchange rate has to be taken that is on the basis of what we are studying in section 14 we just saw exchange rate con similarly when multiple uh basic Duty custom duty rate would be given again you have to take a call you have to decide out of that which custom duty rate will be app aable correct so for all this now since we have to find out or understand the valuation adjustments also let me take you to valuation we'll do a small quick revision of valuation so that it will be easy for you to even understand that now section 14 deals with valuation if you all remember I explained you from this bar Act only because be Act is the best thing and it says that whenever you are doing valuation for the purpose of Customs what will be the value the value in case of import Goods or export goods shall be the transaction value so it is always the transaction value and what is transaction value that is also defined it is the price actually paid or payable for the goods so it is your actual transaction price same like in GST right and then they are putting the condition when sold for export to India that is it has to be a price in the course of international trade only domestic price is either of the foreign country or of Indian country is not allowed and most important the price should be for delivery at the time of import and at the place of import on this if you all remember we had a discussion also and then I linked it with another provision when somebody asked me question relating to that and I uh combined two Provisions to explain you this particular point when we were discussing in the valuation chapter so the price is the price for delivery at the time and place of UT and this is what forms the basis for certain calculations further it says that again in case of imported goods whatever transaction value you are taking there would be certain additions and these additions would be for certain cost and for certain services so there would be additions for certain cost and for certain Services again let me link it with GST because I'm sure at inter level you have studied GST validation again in final we'll study after we complete the Customs portion so in your uh GST also we add certain expenses which are part of this Supply to find out the assessible value of GST on similar lines our customs also says that you have to make addition for certain expenses and certain cost now what are these expenses and cost what it says it will include Commission it will include brokerage engineering design work etc etc etc but what is to be included and to what extent it says it will be specified now whenever remember students it says in the manner prescribed it means you have to go to the rules so we have the custom valuation rules and on the basis of these rules we find out what are these additions so now let me take you to the valuation rules now in valuation rules at the start we have all the valuation rules and mainly the valuation rule which is given or the main valuation rule is the value has to be always your transaction value so this is clear whatever value you have to take it has to be the transaction value only however this value has to be adjusted for the various expenses and cost given in rule 10 which was also mentioned in the section so let me take you to rule 10 directly because this is the most important adjustment that you will find now there are two parts Part A which is for certain expenses brokerage commission packing but we'll come to that later on because for that I've have taken separate category of sums let me come to firstly second sub rule two which says that you need to add Transportation you need to add loading unloading and you need to add insurance however this is now not required to be added so we will ignore this so two things that have to be added in your transaction value always is the cost of Transport which you can call as Freight and it is the cost of insurance now relating to this cost of transport and Freight what is very important is what if this cost of Transport is not given in the sum very important if it is not given in the sum then you will take 20% of fob so if not given it will be 20% of fob similarly if this cost of insurance is not given it will be taken as 1.25% of fob if not given please remember this so if it is given no problem if not given then only you will take 1.25% of fob very important now importantly if you trans transportation is by air then further they say if the transportation is by air then even though you know the actual Freight you have to compare both 20% of fob and the actual Freight given in the sum and you have to take whichever is lower now this rule of taking lower is applicable only where the transport is by air now see broadly there are two major mediums of Transport there is third also number two is commonly used most common is sea that is ocean we call it as ocean freak and the other one is there we call it as air freak and the third option which is there but it is for very limited countries and landlock countries that is the land transport which we normally called as our GTA or the truck break now this particular rule of whichever is a lower is applicable only for Air Freight charges so where Air Freight or your transportation given the question is by Way by air medium you have to find out 20% of fob and actual Freight compared and out of that you have to take whichever is lower for sea or land the rule is you take actual Freight whatever it is and where actual Freight is missing then you take 20% of fob so I hope students this is clear this one which I just explained Air Freight whichever is lower see it is given here provided further that where Goods are imported by air where cost referred to in Clause a clause a was what Clause a was transport that is Freight so they are talking about Freight air fright is assertable so you know the freight so even where it is ascertainable such cost cannot exceed 20% of f so for Air Freight even where actual Freight is known you compare it with 20% and whichever is lower is your answer so I hope students this is clear to you all any questions on this because now I'll take sums only with adjustments of rate and insurance first we'll not go to the total valuation at one go so we'll go step by step so we first understood Computing only duty now I'm taking you to valuation with only one adjustment that is prate and insurance after this is done yes H we'll come to that what if CIF is given H has a good question sir what if CIF is given I'll tell you what to do we will will come to that himym our I think very recent frequent first second sum itself is on that right okay anybody has any question should I proceed then with the sums so so if this is clear let me take you to the Practical sums now what is my first sum so material was imported by air correct so as hmon was Keen I have taken in my first sum itself air and in air also I have taken CIF so hon would be happy so material is imported by air CIF value is given which is sorry now the CIF value given $5,000 prade given $1,500 Insurance given correct now they say Banker realized payment from importer at exchange rate of 71 per doar so shouldn't this marking actually uh it is my dollar sign but somehow it has not got converted when I did PDF so this is whenever you get this this is rupee sign sorry not dollar it is the rupee simple somehow not converted in PDF so uh the bank is exchanging ing this per dollar at the rate of rupe 71 and most important the cbic board has notified the rate as rupes 70 per dollar now I'm sure you all know what is the answer as per section 14 Proviso whenever exchange rate has to be decided it is to be always the rate fixed by the board so this rate is no this is our relevant rate fine now in this particular question I am given CIF which is in dollars which was 5,000 correct now actually I could have proceeded from here because CF means what fob plus prate plus insurance so in fact this is what we want we always have to add PR and insurance as per uh rule 10 bracket two of valuation rules however since it is a fre there is a limitation of 20% Which I need to check and to check that 20% I need to find out fob as rightly pointed out by himon so I need to First find out fob how will I find out fob I will deduct the freight and the insurance given in the sum so CIF minus Freight insurance will give me fov so what is the freight given 1,500 what is the insurance given 500 so 3,000 is my fob now again I add air fre but it is subject to maximum how much 20% of fob I'm using note one for this now in my note one I will say s per custom valuation rule 10 bracket 2 in case of Air transport the air fright to be added is lower of actual rate which is how much $500 or 20% of fob which comes to 3,000 into 20% correct now so which one will I consider here students lower of this is six right any questions with the students yes anybody having any doubts or questions on this yes better jinnie sir please explain once again this uh fob calculation you have done the minus air fret and insurance from the CIF see better first understand this is the rule fob Plus freight Plus Insurance is CF see what is CF C is this that is your cost which is FOB I is Insurance f is Freight okay so if I want to find fob from CIF I have to go backward correct now yes yes sir yes sir underst understood sir thank you sir yes others anybody has any question questions or doubts students others any doubts should should we proceed then yes super yes H you're right so now here I'll take 600 Insurance anyways there is no maximum limit restriction 500 so my C C in dollars comes to 4, 100 correct is this right now I convert this CIF which is also my accessible value now into Rupees again note two what is note to as per section 14 of Customs act exchange rate notified by cbic is to be adopted so for converting this into Rupees I'll take 4,100 and the rate was 70 so 4100 into 70 it comes to 287 so I've converted the dollar into rupee and this is my assist accessible value right now we have already studied how to compute Duty the same format continues below this BCD if any Safeguard or some dut is given that will come all your social welfare surcharge will come you will have total on this total the igst and if compensation says is there that will come so point the value of material for living Duty so there is no Duty computation it is only the valuation computation is this fine CH let us go to the next sum again this sum is not fully on valuation it is again on competition of Duty by including whatever Provisions we have discussed studied and revised till now so compute the total Duty igst under the Customs law on imported equipment based on the following information accessible value given is dollar this much now please read the wordings whether it is CIF whether it is FOB so when they assessible value it means it is already fob plus spr plus insurance so I need not do those workings that is ready now what new thing you find in this sum they have given you date of Bill of Entry which is 25th April on which date the custom duty rate was 10% and the exchange rate was rupees 65 per dollar and the rate as per cbic another date given is date of Entry inwards which is 21st of April on which date the basic custom duty rate is 20% rate given by cbic for exchanges rupees 70 per dollar igst is given welfare assess rate is given and make suitable assumptions wherever required show relevant workings round off to nearest one rupe ignore s fine so in this some only value was right now already accessible value is given so I need not take efforts on value only the thing is that it is in dollars I need to convert it into Rupees the value given is 10,100 now I need to convert this accessible value that is a into rupes note one so notes one so what will be the exchange rate taken students means which date exchange rate is to be taken as as per section 14 of the Customs act exchange rate notified by cbic is taken correct as on date of filing bill of Entry under Section 46 so for exchange rate there is only one date there is no whichever is later rule that is for the rate of Duty that is our second point to be understood now what is our bill of entry date it is 25th of April and the exchange rate is rupes 65 per dollar so that is 25th of April and it is rupees how much it was 65 for a dollar so using this I'll [Music] convert 6 lakh 56,500 so this becomes my accessible value in rupees now basic customs duty Safeguard duty if given in the sum if not social welfare sub charge total of all this igst compensation s given which is not but again for BC I have note number two why because two dates are given now as per section 15 again of the cems at rate of Duty to be applied shall be later off so it is whichever is later so later off date of Entry inverse granted to the ship or the aircraft and the date of Bill of Entry under Section 46 now this date I know is 25th April what is the date of entry in wordss it is 21st of April it is 21st of April now we have to take whichever is later so we'll be taking this and what is the exchange rate not exchange rate sorry rate of Duty it is 10% so the rate of Duty right students so 66500 to 10% it is 65 650 this is 65 650 into 10% so it is 6565 total is it 794 365 is it right 794 I'm getting but I not I don't think it is correct should be 7 20 how much 28 7 75 okay 728 75 okay what is the igst rate given 12% 12% of this 728 7 5 into 12% is 874 87 445 so we can round it off they have already mentioned has to be rounded off to nearest rupees so it7 446 this will be your toal import value and you can also find out the total customs duty [Music] payable 656 661 so this is my total Customs Dy pable right students every anybody this anybody having any doubts or questions with this yes anybody wants any clarification understanding should we proed then [Music] sh I all you all five minutes I'm giving you all five minutes make your own workings CH start working [Music] e e e e e e so now see what are the important points in this students again we need to select the correct date for taking all these figures so date of presentation of Bill of Entry is 20th of June arrival of the aircraft is 30th of June now this is going to be interesting first if I talk about the rate of Duty for which section 15 applies it says whichever is later so here my rate of Duty is this but when I go to the rate of exchange it says we don't have to do anything with whichever is later rule we will only take the exchange rate on the date of Bill of entry and that also given by the cbic so it will be this so see basically this sum is more about selecting the right values now the calculations as you all have seen are formatted so that is the best part of this chapter the calculations are all formatted only we need to take the right figures again interesting is this is Air transport now if it is Air transport again we have to do the same adjustment now interestingly again for hon they have given the CIF value so we will go back we will find out the fob I'm just doing calculations here so that we don't have to shift the screens which may slightly create some challenges while understanding so simply I'll find out fob like this gen fob will be CIF minus Insurance minus spright so it will come to 1,400 now 20% of, 1400 which is the maximum limit allowed for Freight now actual Freight is 500 but 20% of this will come to 280 so again as per the rule out of this whichever is lower I will take the freight like this right so just here itself I'll make the working so that is easy for everyone to understand so from CIF I reduced Insurance Freight to get fob which I got ,400 this all is in dollars to this now I add freight by whichever is lower rule so it is coming to now 280 I add the actual Insurance because for insurance there is no challenge so it is 100 right I get my CIF again but this is the accessible value CIF and this is still in dollars so it is 16 it is 1780 now I convert this accessible value from dollar to rupees applying the rate of exchange of 70 so it comes to 7 1880 into 70 which is 124 600 so it is 124 600 fine students then we start Computing tax BCD which rate was applicable 10% social welfare surcharge anyways is 10% we find total value on this I will compute IG G St yes igst rate was given 12% okay fine so BCD is this much this is this much so 493 okay good it is coming to how much 138306 on this I will be Computing 12% which come to 167 downed correct me students and then adding this will give me my toal import value and total customs duty I will find out correct 124 600 and 3303 right yes all clear students any questions any doubts with whatever we have done till now anybody having any challenges please let me know we can discuss we can find out because now we will be going on to the next part which will be requiring some more going deeper into the topic but before that is this clear to all yes students no doubts super now you will be having sums which will be ranging from six to eight marks where you need to make adjustments for some more things which is part of valuation rules so now let us go to the validation rules in validation rules you have two parts sub rule two deals with these rate and insurance cost and sub rule One deals with some items which we need to add now what are these items the following to the extent they are incurred by the buyer most important so expenses are paid by the buyer and they are for the time being not yet included in the price and that is why you have to add it right so you as an importer buyer means you as an importer have incurred this and it is not yet included in the price so in short where the supplier is either charging you these amounts you have to pay to the supplier or you have to pay it outside and it is relating to this import it will be included so first is commission or brokerage but not buying commission so it should not be the commission paid for hiring such a person who will help you only identify the supplier if that commission is there we will not hide it but yes if it is a commission which is payable like how you hire an agent and he charges on every import Consignment that is what is includable then cost of containers if they are charged cost of packing if they are charged now these figures whole will be taken now certain figures will be taken on proportionate basis now why they have to be proportionated because these items may not be consumed fully like tools and dice best example so one tool may be required for manufacturing one lakh pieces today you have imported only 10,000 out of it so if tool cost is given and the total usage of tool is for one lakh pieces and today you are importing only 10,000 pieces so you'll proportionate it similarly if there is any raw material any component parts which are supplied now maybe you have supplied as an importer the components part which is in lumsum which is is let us say 110 however only half of that is used today for this particular import so you will take only half of the value that is why on the top they have mentioned you have to take the values which will be proportionated depending upon how much is the use of these items in the present import similarly any consumables these have to be proportionate now besides this what else can be there engineering cost development cost Etc so for making this particular product some design work is required you have hired some technician some person will do the technical drawing and on the basis of those drawings this particular product is made now most important is these drawing design should have been taken elsewhere than in India it means if any design or artwork is taken in India it will not be included similarly law royalty license fees again related to the imported goods that the buyer is required to pay directly indirectly as a condition of sale Etc then if the Importer after importing is going to resale the product later on and out of the resale some part of the proceeds he has to pay back to the seller so let us say importer is importing for 100 he's going to sell for 500 and out of 500 he has to give 50 rupees to the seller so seller is putting a condition that whenever you are reselling these Goods in India in future you have to give me some portion of that sale proceeds that will also be added and then a generic point all other payments actually made as a condition of sale so this is the general point that if any other payment is made which is again the obligation of the seller but which is paid by the uh buyer that is the Importer all this will be includable so so these are certain points that you have to keep in mind I'll tell you in simple words just remember one thing whatever expenses are related to this particular import till the point of import that is very important if any expenses are incurred later on like after these Goods reach India you are transporting it to your factory you are incurring the cost of unloading loading of these Goods after they are imported that will not be covered all expenses before the goods land in IND and related to this particular input have to be considered keep this in mind now with this background in mind let us go to those sums which are slightly bigger but before that let us just take a small 10 minutes break I'll also just have a small 10 minutes refreshment so we will meet exactly at 7:40 right students so let us catch up in 10 minutes then maybe if somebody wants you can try this some e e e e e e e e e e e e e e e e e e e e e e e e okay now what are the details cost of the machine at the factory of the exporter so this is the X Factory price right now transport charges from his Factory to the port of Shipment has to be included handling charges for loading the machine in the ship has to be included buying Commission Now if you remember the law specifically says that if the commission is a buying commission we will not include it so we will not include this prate charges we will include and it is not mentioned that it is a rate so we need not check the 20% limit insurance is is not ascertainable we already studied where it is not ascertainable you'll take okay so rate of exchange is there fine so I think everything is there we can go ahead [Music] assess well so we start with the X Factory price to this we add freight up to Port we add handling buying commission I'm writing but we won't add I'll put a note now I'll add freight no not Freight I I want to First find out fob so let me check okay all other expenses are done so when I consider all these expenses I reach fob to which I will add rate to which I will add insurance this will give me the CIF which will also be assessible value for the time being which will be in dollars again I'll convert this CIF and my assessible value from dollar to rupees so all these things are there so 10,550 so notes first as per custom valuation rule 10 bracket 1 and if I'm not wrong it was Clause a clause a sub Clause one Clause a sub Clause one commission and brokerage commission and brokerage except buying commission is to be included right so since this is a buying commission I'm not including it the rate is 1,000 I need not check the limit because this is not a rate and for this again I'll take note two as per custom valuation rule 10 bracket 2 and for Freight it is one and for insurance it is three where actual cost of insurance is not assertable we shall consider 1.25% of fob now my fob comes to this much and 1.1 125% of this much is 11 18. 68 something correct [Music] Z no it is 1 1 6 68. 6875 in dollar and then the exchange rate given if I'm not wrong is 70 right 70 how much it comes to 816 808 just cross check students if this is getting right yes anybody has any inputs on this or wish we can proceed students anybody has any inputs is this perfect fine okay now this is going to be interesting this is something different slightly out of the box but I'm sure now you all will be able to handle this what does the question say a consignment of 800 metric tons of edible oil of Malaysian origin was imported by a charitable organization in India okay for being distributed free to people below poverty line etc etc now this being a special transaction a nominal price of only $10 was charged and it is there only to cover Freight insurance so it means they have not given you the actual price so the actual price is missing now students I'm sure you'll understand this that where actual price is missing you will have to go to custom valuation rules directly because we do not have our transaction value and if transaction value is not there then we will not be able to find out the answer without going to the valuation rules so before that let me just check what else is given the custom house found that at or about the same time the importation of this gift Consignment were following import so at the same time when we imported this at free the other Imports were at or about the same time this much now the exchange rate is fine basic custom duty rate is given ignore igst so no igst no SS compute the duty payable on the consignment and also they have said that wherever require you may make assumptions right so now this is going to be interesting so let us start now now we go to the validation rules further so what was my first validation rule the first valuation rule was that you take the transaction value adjusted for the cost and this is subject to the condition that there is a value now if the person has given you this particular Consignment free so they have not charged any value and if there is no value charged the question is Rule three doesn't apply to me because I'm not having any value in the first place now if rule three doesn't apply I have to go ahead and you have to apply the rule sequentially from 4 to 9 only you can change the sequence of in between rule that is the computed and the deductive rule but other than that we have to apply these rules sequentially now where we have to apply these r rules sequentially then comes the interesting part so pay attention now what is this interesting part what does rule 4 says that subject to provisions of rule three which we checked which is not applicable in our case why because there is no price in the first case what will be the value of imported goods it will be the transaction value of same to same Goods now identical is what it is same to same so what you have imported the same thing somebody else has imported Ed what are the conditions the conditions are it should be imported at or about the same time so when you are importing at the same time these Goods should have been imported fine further what it what it says while applying this rule you have to take the transaction value which is in sale at the same commercial level and also at the same quantity level so the price that you are taking of identical Goods you have to ensure certain things matches commercial level what is commercial level so if your import or your purchase is from a manufacturer the other option that you are getting is also from manufacturer that is the same commercial level quantity level means if you are importing in, quantity the other should be either th000 or near to 1,000 fine so this is what it means now if you have understood this then we can proceed with the further part where it further says if by chance you don't find the sale which is in the same quantity level same commercial level then it may be slightly adjusted so where the transaction value of identical sold is at different commercial level or different quantity level you can take the Same by making adjustment on account of this difference and then further it says you also have to add the cost and charges which we studied in rule 10 bracket 2 that is for Freight insurance that has to be added and while adding that again adjustment is required in case there are significant differences for what for either the means of Transport you have brought it by sea the other people have brought it by air or because of distance because your import is coming at Bombay the other import is coming at Chennai so there could be difference of distance so for these also you need to make proper adjustments now with this all things in mind we have to go ahead and find out the answer now what are the things that are given in the data we will see what it says the custom house found out that at or about the same time when we imported these items there were import of falling edible oil of Malaysian origin only now what is the definition of identical Goods identical Goods means Goods which are same in all respect so your goods and their goods are same in all respect with small differences small differences in appearance or something which does not affect the value so anyways any of such thing is not given so we are presuming that our goods and the goods which these custom people have found out are same to same this has to be our assumption and anyways the question says make necessary assumptions so we are assuming that these goods are satisfying all the conditions of being identical Goods fine now once these are identical Goods The Next Step that we have to do is we have to now satisfy the other conditions that these Goods should have been imported at or about the same time this we need not assume because they have already mentioned that these Imports that they have identified the custom people are about the same time so this condition is satisfied so import at same time is satisfied now the third condition was or the third requirement is it should be at the same commercial level now here I'm not finding any reference of commercial level so again this I will put in assumption that I'm assuming it is at the same commercial level and the last requirement was it is in the same quantity now the same quantity parameter we'll have to check we have imported 800 so I'll check what is uh matching over 800 this is not matching this is not matching this is not matching this you can say is around 800 this is not matching this also is around 800 so I can rely on these two which are near to 800 not exactly 800 but yes you can take values which are near to because it is very difficult to find Value which is exactly matching with it so no problem I can take these values because they are near to my values okay but now the challenge is I'm having two values if I have to be very r jid I will say I will even reject this I will take this because this is the closest but generally this doesn't happen because you cannot say that 780 is very closest so we'll take that value also because 900 and 800 are also considered as nearest figures now if these are also considered as nearest now then the point will come is we will have to select between these two now when you have more than two values what you will do answer is here if in a applying this rule more than one transaction value is identified then you take lowest of the values so I'll apply this Rule and I will say both these I consider as nearest to my 800 quantity so both are eligible out of this I finally select this which is nearest so this is how the valuation is done so here now I'm applying a valuation rule please understand this right and this answer more than prac iCal would be more like a theory answer but is not a theory answer it is a case study answer right so how I'll present my answer so fifth part how I'll answer since the import is free well I'm saying free because they have not charged for the goods only $10 something which they mention is for the freight and Etc hence there is no transaction value rule three fails so we proceed to rule 4 which is transaction [Music] value of identical Goods now here they have already mentioned that these goods are imported from Malaysia they are edible oil imported from Malaysia and anyways they have been identified by the Customs so I will say as per the data given in the sum we can safely presume that these goods are identical Goods now see if somebody says sir no if I don't want to assume identical no problem had this rule failed we could have gone to the other rule which is valuation as per similar good now definitely if these goods are not identical means they are not same to same Goods but if they are similar like my edal oil and some other brand edible oil they are always similar Goods so in that case also my validation would have been done exactly as what we discussed about because here in rule five they say that subject to rule three you will take the transaction value of similar Goods fine and while doing this you will apply all the provisions that we studied in rule 4 mutatis mut and this so anyways what we discussed about in rule 4 it should be at same commercial level at or about the same time same quantity level etc etc will be same so whether I apply rule four or rule five my answer will be same but as per the data given anyways I have to even assume it is similar if if I say that it is not identical so let us assume something so I'm assuming it is identical because the answer remains same even if I assume similar so we can safely assume that these goods are ENT hence rule 4 applies now the Imports are at are about same time as the imported goods in question so this condition is anyway satisfied that these identical goods are imported at or about the same time as our imported goods so this is satisfied now the next assumption is since nothing is mentioned about commercial level we presume the goods are at same commercial level Goods means the Imports now what is the same commercial level I explained that if I have imported from manufacturer all the other options or all the other uh Alternatives given are also imported from manufacturer so they are at the same commercial level this is again a presumption now the last requirement is the import should be in same quantity levels now for this we will apply our brains and on this basis we will say we have identified two things which are similar to our we are importing 800 metric tons all these are in metric tons and we will say that the fourth and the sixth Consignment of these different inputs are nearest to our quantity levels so the fourth quantity of 900 metric tons and 6th quantity of 780 mric T are nearest to our Imports of 800 mric tons so now we have identified two the 900 metric tons option and the 780 metric tons option but both are having different prices so again what we'll do we'll apply the custom valuation rules which says that if more than one price or value is found you will take the lowest so now I am applying this sub rule 3 since both these have different prices we apply sub ruu 3 which says we have to adopt what lowest of the two prices that is so this is 175 this is 160 so my final answer will be 160 60 That is1 160 correct so my assessible value we'll take 800 into 160 conversion rate will be at the rate of 70 BCD is 10% metric tons into 160 this is in dollars I convert this assessible value into rupees correct BCD was how much 10% so this will be my final computation yes anybody has any questions students yes any questions students this was purely based on application of the validation rule excellent so it is like we writing answers in exam very much enjoying yes but I'm trying to uh make it very practical and how we have to attempt so that you get an example how to handle your exam questions also right so let us proceed so foreign trade international has imported one machine from England it has given following particulars so price is £8,000 rate again it is air okay design commission payable 2% and Rupees is Indian so we have to keep this in mind now date of Bill of Entry arrival 24th October 20th October now for rate of Duty we have to take whichever is later correct so rate of Duty is whichever is later so out of this later is 10% but exchange rate is always the exchange rate on the date of Bill of Entry only so that I will take which will be 100 rupees per pound and it is a cbic rate so not a problem so igst rate given is 12% insurance has been paid but details are not available so for insurance details not available so we know what is to be done perfect okay so we can now find out the answer this is 8,000 this is 500 computation of customs duty so price of the machine it is 8,000 and this is in pounds correct next we have the designing charges 500 total correct now I have to convert this total from pounds to rupees and for this I apply this exchange rate which is 100 rupees so it becomes 8 five to this I will add the commission now this commission is not given as buying commission so it will be considered it is how much 2% of price of machine price of machine was 8,000 converted at the rate of 100 correct so 2% of 8 lakhs would be 16,000 just please crosschecking students uh certain calculations I'm making oral and I'm confident on my calculations but still I'm not going to my calculator for every workings so I'll just request that you all just keep crosschecking just to avoid any uh cuttings and changes at the later point right now this becomes my fob so it is 866 breit and insurance now Air Freight given is 2500 UK pounds notes one one note at a time first note is for this second note is for this correct just keep crosschecking students so exchange rate to be taken is the rate no ified by cpic as on the date of filing bill of Entry under Section 46 second second notice for airr as per custom valuation rule 10 bracket 2 1 in case of air PR the amount to be added is lower off actual rate 20% of fob actual Freight is 2500 into 100 correct so 2,500 into 100 100 is the conversion rate because 2,500 is in pounds so it is 250,000 20% of fob is 866 [Music] 17300 so I'll consider this yes thank you so it is 17 23200 now Insurance again note as per Customs validation rule 102 3 in case insurance cost is not ascertainable we shall consider 1.25% on fob so 866 1.125 yes correct so this is my CIF so my accessible Value Plus 66 was near 1 48 942 yes now BCD again note number four S SWS [Music] 10% again I'll write a note for BCD what is the note as per section 15 of Customs act rate of Duty shall be considered for date of Entry inverse and date of Bill of Entry under Section 46 whichever is later so that is how I get 10% 0 4894 25 1048 9.425 so this becomes my final answer import value make a total how much it comes to okay so I'm getting the total as 1 1 6 4 3 2 I think now we can round it off right 32 6 fine and then igst 12% so how much it comes to 12% it is coming to 139 719 correct so this gives me my total import value and also I can find out total customs duty right students I hope you're getting the answers you're understanding what we are doing if there is any doubt please feel free to ask right good let us proceed okay again the same type of sum right now imported or some charity table purpose right let's see but here I think there is value so 15,000 Cales were imported for charitable distribution India by XY trust trust did not pay the O which was born by the supplier custom officer competed fob at $20,000 okay so there is FOB given fine which was accepted by the trust so fine so our fob is ready here we need not apply any valuation rule because the valuation of fob is done by the custom officer itself which we have accepted so we start with this now we have to go for the other adjustments Air Freight is given designing now we need not consider this because they have said that this value is including designing now including designing so now I need not consider this separately right now because if they have considered or cover designing there is no need for me to again consider it so I will directly take 20,000 which will be my final answer right commission payable to agent in India is this in rupees yes this is in rupees this will also be added because it is not said that this is buying commission now again I have to decide on certain things exchange rate notified by cbic and rate of basic duties as follows date of Bill of Entry 8th September on which these are the rates arrival is 30th September these are the rates bank rate anyways is of no use now for rate of Duty again as per section 15 we have to take which Duty rate whichever is later so this will be the duty rate but for rate of exchange it is always one date that is the date of Bill of Entry which is this right students so I hope this is clear no doubts with this igst given is 12% welfare says not given I know it is 10% suitable assumptions okay so 20,000 is total now not of per unit now yes it is total calculation or customs duty fine fob given by the uh officer which we are accepting is 20,000 but this is not the final fob because still this cost has to be added to get the fob for our purposes so we start from here and now I converted into rupes by multiplying it by our exchange rate of 70 so I'll say fob as per custom officer this is not it final this is in dollars let me convert this fob2 rupees by correct again y70 I'll write a note so it is 14 14 lakhs so in notes my first note is as per section 14 of Customs act rate of exchange shall be the rate not ified by cbic on the date of filing of Bill of Entry under Section 46 so this is the only date which we consider when we are talking about rate of exchange plus commission payable in India which is 12,500 this is my final fob right for all further purposes so it is 14 lakh 12,500 now in this I will add rate which is again air frit so note insurance which I think is not given so again note as per Customs valuation rule 10 braet 2 Clause [Music] 1 in case of air rate we shall add lowest of the following first is actual Freight and the second is 20% of f 4,500 USD into 70 so how much it comes to 350 yes 3 1 15 and 20% of this fobs 280 to 500 so again I consider whichever is lower it is 280 to 500 again note three as per custom valuation rule 10 2 CL 3 where cost of insurance is not ascertainable we shall consider 1.1 125% of fob 15890 correct 15890 1 let us not get into the decimals so so this gives me my CIF which is also my accessible value on which I will compute the BCD again Note S WS total on which I'll compute igst so what is this total 171 0891 correct yes 17 10891 what was our BCD 10% [Music] correct now or there is something wrong 171 yes it is 089 and here 171 09 now this is correct so what is note number four as per section 15 of Customs act the rate of [Music] Duty rate of basic custom duty shall be taken as latest of date of Entry inverse and date of [Music] filing bill of Entry under Section 46 fine so what is my total yes 18 9989 now am I given igst yes 12% so how much is 12% Genie has given 227 891 yes and the total of the two [Music] 21 26 6 9 80 good so what is the total custom Judy it is 4 [Music] 16 416 okay 0 8 n somebody has given this in the answer okay understood students anybody having any questions man which is purchased from the same country identical Goods definition it is in all respect or it should be condition purchased in the same country same similar Goods comput value or dedu value thank you sir he is asking sir if we don't write the rule numbers H usts it is compulsory I will say that you should write the rule numbers because to rule number plays a role so TOA you have to take efforts him to learn the rule numbers right CH yes yes you're right so if you keep on writing the notes again and again rules rule number okay next question is import of machine from UK fob value of machine let us do it this way now I'm sure I give you some time to do this CH let us give this a try be honest don't refer any previous sum answers try to solve it on your own then only it will have value e Shanti say say for e e e e e e e e e e Genie has given one answer e e CH let us just cross check so fob is 10,000 license fees the buyer was required to pay so that will be added 400 so this will be 10,400 to be converted using exchange rate of the date of Bill of Entry which is 99 per pound so 10400 to 99 10 29600 10 29600 to this I will add but this is buying commission so this won't be added correct now air rate is 3,000 which we can consider maximum 20% So 20% of this amount is 25,9 20 and 3,000 into 99 is 297 so I'll take 20% Which is lower 20% off fob Insurance not available 1.1 [Music] 125% so [Music] 10 29600 to 1.125 comes to 11583 just confirm if these are correct is this correct 2 [Music] 47103 yes now out of the two dates I will take whichever is later so 25th May 20th May so this is whichever is later so my BCD rate would be 10% 1 Z s sws1 12471 total I added Now Beta 400 I added now here hon hon is asking about license fees but him I already added it now that is why this is my 10,000 400 now 138 4284 igst H I hope you have understood Freight should be 10,000 how better him Freight 10,000 better fob of machine is 10,000 how can Freight be 10,000 him bet what are you working on but Freight is not on 10,000 10,000 is only the machine price Freight is on fob which includes besides the value of machine all expenses incurred till the goods reach India sorry not India till the goods are loaded on the uh ship at the exporter sport so which will include license fees also in our previous sums we have already done like this yes 12% 16614 so I get the answers correct everybody understood H I hope your doubts are cleared bam Anila Mamta vges everybody so final answer 20442 is customs duty 20 4142 is it right I'm having so many answers on the screen out of this which one is right give me the final answer student what is the total customs duty now 303 3 295 this is the final answer of customs duty yes correct 1550 398 correct good now let me take you to one sum on export also though exports are very rarely asked because there is no Duty on exports but still we need to be prepared for export also now for export also the rule is same the only difference is in in case of export we don't find out CIF why because again go back to section 14 where we read we want the price at the time and place of import as well as export so let me take you back so will appreciate what I'm trying to say so for the purpose of Customs tariff act or any other law for the timing for the value of import goods and export goods shall be the transaction value so even for export goods the value has to be transaction value which is to say the price paid or payable for the goods when sold for export to India for delivery at the diamond place of exportation now for export from India for delivery and at the time and place of exportation exportation place is India and in India the value is FOB here I will not add insurance and Freight because if I add insurance and Freight it will become the value at the Port of my buyer who is sitting outside India please understand in case of import we were taking CIF because we wanted the value at the place of import which is India so fob is the value at the Port of the foreign exporter in that I add insurance in that I add freight the goods reach my port it is CIF so for import it is CIF but for export when you want the same answer you want the price for delivery at the time and place of exportation place of exportation is India so we want the price at our Port which will be the fob price only so students keep this in mind whenever it comes to export we don't add freight insurance I hope this is clear you'll remember this correct now now section 15 dealing with rate of Duty what it says in case of export sorry not 15 16 15 was for import so in case of export the rate of Duty is the rate on the date on which the proper officer makes order permitting export it is simply the date of passing of order by the prop officer not whichever is later like how we had in case of imports so that rule to take whichever is later date date of Entry inwards or date of filing bill of Entry whichever is later is applicable only for imports for exports there is only one date for the purpose of rate of Duty and the date is the date of passing of order by the custom officer allowing you clearance I hope this is clear right now with all this at the back so first fob is this this is what I want now shipping Bill presented electronically on 26th of April proper officer pass order permitting clearance on four so for me for the rate of Duty it is going to be 4th of May that is a date of passing of order so the rate of export duty is 8% right I hope this this point is clear HH correct now we have to still check the rate of exchange the exchange rate will be again only one date the one date is the exchange rate will be the date of filing the bill of Entry here it is the shipping bill so as far as the rate of exchange is concerned rate of exchange is only one that is the rate of exchange on the date of filing of shipping bill and the shipping bill is filed on 26th so the rate of exchange that I'm going to consider is this I hope students this is clear right now good so [Music] computation of exort Duty in dollars no need to add insurance Freight how much is FOB 1 lakh and the rate of exchange is 170 which is also your assessible value at the rate of 70 so it comes to 70 lakhs but notes as per section 14 of Customs act the rate of exchange shall be notified by cbic on the date of filing of shipping bill or you can also also call it as billof export like how here we have uh bill of entry in case of export it is Bill of export or shipping bill under Section 50 so that is how I took 70 and 70 multiplied by 1 lakh is 70 now export Duty now as per section 16 it shall be taken as on the date of passing of order by proper officer for clearance of goods correct the proper officer pass order permitting clearance except on 4th May 4th May the rate is 8% and here there is no s SWS so there is no S charge so my export duty at the rate of 8% will be 7 8 are 56 right students so this is how you'll compute value in case of export which will be only fob no need to add any insurance Freight exchange rate will be the date of filing of shipping Bill only and Expo Duty rate will be the date of passing of order only so these two are only one one dates but the dates are different you need to remember this so that your answers will never be wrong right great so we completed all the sums after covered all variety so that you get a practical experience of different types of sums right now just for the purpose of your recalling if by chance you all have forgotten what were the valuation rules rule three which said that subject to rule 12 and what was rule 12 rule 12 gave the power to the custom officer to reject your value so despite of you satisfying all the conditions the custom officer has powers to reject your value in that case your transaction value Val will be rejected and the value will be taken by the custom officer that value will be adopted for that we again have separate rules how that particular value will be adopted by custom officer and how or when he can reject your value for that you have detailed rules now subject to rule 12 the value of imported goods firstly is a transaction value of your goods only and it has to be adjusted for all cost in rule 10 that we discuss at the start today then it further says that the value of imported goods under this Ru shall be accepted provided now they have given conditions for acceptance now your value will be accepted when one there is no restriction as to how you will use these Goods however certain restrictions are allowed one restrictions which are imposed by law or by authorities in India itself so there is no problem if your own country authorities are restricting the use of these Goods or the exporter has imposed restriction on you regarding the limit geographical limit in in which you may resell the goods that is correct so that you do not compete with him in some other market and also any such restriction which is having no effect on the value so such restrictions can be put besides that there should be no restriction this is the first condition then the price should not have such a condition for which value cannot be ascertained so if I'm putting such a condition for which valuation cannot be done obviously your value will be rejected because you have kept such a price which cannot be converted into money then further what it says no parts of the proceed from subsequent resale so if I am as an important subsequently reselling the goods in India then I should be able to compute the value or the part of this resale price which I have to pay to you if I am not able to compute this part of the proceeds out of my subsequent resale then again our value will be rejected this will be accepted only when proper adjustments can be made if the proper adjustments cannot be made the value will be rejected then buyer and seller are not related however the same rule says we will accept your value even where buyer and seller are related if following conditions are satisfied what are these conditions first the most important condition is you have to prove that the relationship has no impact on the price the price is not influenced by the relationship this has to be proven now how this can be proven for this I as an importer has to demonstrate demonstrate means give examples or give some proofs that the value which is declared by me is very close to the following values what are these values these are the values that you are going to get in the further valuation rules one it is very close to the value of identical Goods or the value of similar Goods which are sold to unrelated buyers or it is similar to the deductive value which we are going to find or it is similar to the computed value if all this is then our value even though we are related will be accepted then sub rule four says that in case you cannot take the value of your goods that is your transaction Val is rejected then you will find Value by proceeding with the further rule sequentially 4 to9 in this rule four we discuss value of identical Goods which means same Goods imported at or about the same time at same commercial level same quantity level however where same commercial or quantity level is not available you need to make adjustments and also you need to adjust for all the cost and charges that we studied in rule 10 bracket 2 and if there are any differences in the distance in the means of Transport that has to be adjusted where more than one values are found of identical Goods you'll take lowest now see you'll understand these rules much better now because we have just solved a practical sum on this then if identical Goods are not available then check if similar goods are available what are similar similar goods are not the same Goods which you have imported the same Goods which you have imported are identical similar goods are competing Goods so I may have imported of one brand you are importing of some other brand but both our goods are exchangeable exchangeable means if my brand is not available people are ready to buy your brand means our goods are same like in the market when you go to buy bread bread you may find off two three different manufacturers or two three different uh persons but more or less the bread is same so far as let us you are buying the bread of the same category that is whole wheat bread or multigrain bread or the normal bread so let us say whole wheed bread you are buying either of X or Y or Zed for you it is same so these are similar Goods now for similar Goods also what it says the transaction value of the similar Goods shall be accepted provided they are imported at or about the same time as your goods and again it says all the restrictions conditions which we studied above for identical good shall apply here now rule six says that till now you proceeded in 3 4 5 three was your value four is identical Goods value five is similar Goods value now if this could not be done then the next two rule sequence may not be sequentially you may reverse them so either I can take seven first or I can take eight first now what is seven seven is deductive value which means you find out the price so once I import the goods I have to find find out the price at which these Goods get sold in India so I have to find out the price of these Goods at which they get sold in India now I want to find out the unit price at which these goods are sold in India they have said that find out the unit price at which the greatest aggregate quantity is sold but this is the price at which they are sold in India so this price is not taken as it is it will be adjusted by making some deductions what are they first deduction is for they are using the word commission I'll say use the word profit it is easy to understand so whatever profit margin is added on these Goods after import that has to be deducted also we add some share for expenses that has to be deducted all expenses like transport Insurance Etc which are incurred after their Imports in India and the custom duty which we add in our value all this is to be deducted so mathematically you are going backward from the price at which the goods are sold in India after importation to the value of these Goods at the time of importation so you take Indian price and you go backward by deducting all these profit margin expenses that were added post importation so mathematically you reach the price of the goods at the time of importation which we want that is the deductive value what is the computed value it is exactly opposite of deductive value in deductive value you went backward so from the Indian price you went backward to find out the import price now in computed value you go to the foreign person from whom these goods are purchased you get the cost details you get the price of material you find out direct wages you find out direct expenses you add share of overheads you add his profit margin that becomes the xfactory price to add you all to that you add all the cost the cost of Transport up to the port then loading on the ship then Transportation up to India then Insurance everything you add so by computation or here I say by costing you find out this value that is what is the computed Value method so you do costing by adding material all fabrication means charges for conversion then charges for adding profit margin and general expenses all these are added and all cost mentioned in 102 are to be added and if this also doesn't work then they say then there is no option but you have to be judgmental so we say a best judgment so that that that is the uh method given so you have to apply the other rules only so you have to go by the preceding rules only take the uh what you can say the principles from the preceding rules and using these principles and also the general Provisions whatever you have studied in this particular rule do some KY of that try to make out a value applying the Logics of these rules now basically when the law is saying like this the law does not allow you to take any arbitrary value does not allow you to take assume value practically how this rule is applied I go back to the above rules now I had rejected the above rules because of some reason like I rejected transaction value because some of the condition were not satisfied I rejected uh deducted Value method because something was not happening I rejected the computed Value method because something was not happening now in this rules you go back to the above rules and now you start ignoring those conditions because of which those rules were uh rejected you just make some adjustment for those exceptions and you find out the value which is near to the correct value anyways in this rule you'll never find the perfect value that is why I said this is the best judgment rule so these are the valuation rules I'm sure students today this would have made more sense to you this would have connected more to you as compared to the time when we studied this but this is how things happen so when you go from Theory to practical and then come back to Theory it makes more sense yes Genie you can use Bara but the problem is for certain chapters be acts may not help because they may not be given in proper sequence but yes I have tried to go by the be acts only wherever possible so yes I will accept what you are saying wherever possible you can also refer bar acts for act and board yes so this is the end of this so we have completed the entire practical part students I'm sure uh you all would be now confident with the Practical part uh heon I'm downloading these bar acts uh uh from website you can simply Google you'll find it it is some India legal India some website you'll find them or even if you go to our cbic website you'll find all these acts so you may download it from there the latest versions so students thank you very much today's lecture I enjoyed a lot with all your inputs and all your support in calculation so uh let us bet gen I have already uploaded these questions maybe uh something at the end of our technical team like aural or something maybe pending they will do it so you'll find the uh sheet on the portal you may download it tomorrow fine so thank you very much keep studying and let us catch up again for the further chapters thank you good night take care bye-bye thank you technical team take care good night e for