CA Siddhesh Valimbe | FT Tests
Module 4 Test
Time Allotted: 1 Hr 30 Min
Marks: 45 M
Part I: MCQs
Question 1: Stores means goods for use in a vessel or a vehicle and includes fuel and spare parts and other
articles of equipment, whether or not for immediate fitting.
a) True
b) False
Question 2: Sunil Exports Ltd. sent certain goods abroad for repairs. Sunil Exports Ltd. has been advised by
their consultants that they will have to pay customs duty (i.e. basic customs duty, IGST & GST compensation
cess) only on fair cost of repairs, cost of materials used in repairs (whether such costs are actually incurred or
not), freight and insurance charges, both ways, on re-import of exported goods provided they fulfil following
conditions:
i) The re-importation is done within 3 years from date of export or, if time is extended, within 5 years.
ii) In case of Bhutan, the time limit is 7 years, which can be further extended up to 3 years for machinery and
equipment exported.
iii) The exported and re-imported goods are the same.
iv) The ownership of goods should not have changed.
Which of the above mentioned conditions is/are correct? Choose the most appropriate option.
a) i) and ii)
b) ii), iii) and iv)
c) i), iii) and iv)
d) all of the above
Question 3: Choose the correct option w.r.t selection of Rate of Exchange for valuation of imported goods in
case of warehoused goods being cleared for home consumption.
a) CBIC Rate of Exchange – as on date of filing BOE for home consumption
b) CBIC Rate of Exchange – as on date of filing BOE for Warehousing
c) CBIC Rate of Exchange – as on date of deposit of goods into warehouse
d) RBI Rate of Exchange – as on date of filing BOE for Warehousing
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Question 4: Bond Amount in case of warehousing if the bond is a consignment bond?
a) Duty Involved x 3
b) Duty Involved x 2
c) As the PO may determine
d) Duty Involved
Question 5: Richa Exports is a 4 star status holder under FTP. It’s minimum likely turnover last year?
a) 50 Million USD
b) 200 Million INR
c) 250 Million USD
d) 200 Million USD
Question 6: Which of the following options is/are correct?
(i) Indian customs waters extend up to 12 nautical miles from the base line.
(ii) Indian customs waters extend up to 24 nautical miles from the base line.
(iii) Indian customs waters extend up to exclusive economic zone of India.
(iv) Indian customs waters include territorial waters and extend up to 200 nautical miles from the base line.
Choose the most appropriate option.
(a) Only (ii)
(b) (iii) and (iv)
(c) (ii) and (iv)
(d) Only (iv)
Question 7: Which of the following duties are excluded while computing social welfare surcharge (SWS)?
(i) Safeguard duty
(ii) Countervailing duty
(iii) Social welfare surcharge itself
(iv) Anti-dumping duty to protect domestic industry
Choose the most appropriate option.
(a) (i), (ii), (iii) and (iv)
(b) (i), (ii) and (iv)
(c) (i), (iii) and (iv)
(d) (i), (ii) and (iii)
Question 8: Outline the stepwise procedure of import of goods into India.
(i) Grant of entry inwards to vessel
(ii) Filing of Import General Manifest
(iii) Unloading of goods
(iv) Assessment of goods
(v) Filing of Bill of Entry
CA Siddhesh Valimbe | FT Tests
(vi) Payment of duty
Choose the most appropriate option.
(a) (i), (ii), (iii), (iv), (v), and (vi)
(b) (ii), (iii), (i), (iv), (v), and (vi)
(c) (iii), (ii), (i), (vi), (v), and (iv)
(d) (ii), (i), (iii), (v), (iv) and (vi)
Part II: Descriptive
Question 1:
Kankan Corp had imported a machine from USA for ₹ 365 lakh on payment of appropriate customs duty in
February. However, in July, the machine had to be sent back to the supplier for repair (not amounting to
manufacture) from the factory of Kankan Corp. This machine was repaired and thereafter, re-imported by
Kankan Corp in November next year. The supplier has agreed to provide discount of 60% of the fair cost of
repairs, resulting in Kankan Corp paying USD 12,000.
Following further particulars are available:
Particulars Date Rate of Inter Bank Exchange Rate notified by CBEC
Duty rate
Bill of Entry 21st February 12% 61.40 62
th
Aircraft arrival 26 February 15% 62.50 63.25
Integrated tax is leviable @ 12%.
Outwards (Amt. in ₹) Inwards (Amt. in ₹)
Insurance 23,000 27,000
Air Freight 93,500 1,06,500
Determine total duty payable with appropriate notes for your computation assuming that Kankan Corp is not
an EOU. [4 Marks]
Question 2:
Determine the customs duty payable under the Customs Tariff Act, 1975 including the safeguard duty of 30%
under section 8B of the said Act with the following details available on hand:
Assessable value of Sodium Nitrite imported from a developing country from 26 thAugust, 30,00,000
2022 to 25th August, 2023 (both days inclusive)
Share of imports of Sodium Nitrite from the developing country against total imports of 4%
Sodium Nitrite to India
Basic custom duty 10%
Integrated tax 12%
Social welfare surcharge 10%
CA Siddhesh Valimbe | FT Tests
Note: Ignore GST compensation cess and Agriculture infrastructure and development cess. [4 Marks]
Question 3
KIP Chemical, Ahmedabad, Gujarat supplies goods to ACCP, Bharuch, situated in Dahez SEZ (Gujarat).
Examine with reference to decided case law, whether such supply is chargeable to export duty under the
provisions of Customs Act, 1962. [4 Marks]
Question 4
Jolly overseas Ltd. of Hyderabad has imported a machine from U.K (England) through the sea route by a
vessel. The details of the import transaction are as follows:
Sl. Particulars Amount in U.K.
No. (£)
(i) Cost of the machine at the factory of the exporter 20,000
(ii) Transport charges from the factory of exporter to the port for shipment 600
(iii) Handling charges paid for loading the machine on the ship at the port of exportation 500
(iv) License fee relating to the imported goods payable by the importer as a condition 900
of sale
(v) Actual Freight charges from the port of export to the port of import are not -
ascertainable
(vi) Actual insurance charges paid 200
(vii) Landing charges paid at the place of importation are not ascertainable
-
(viii) Handling charges associated with the delivery of the imported goods at the place of 15,000
importation
1 Bill of entry: Dated 21.01.2018
Exchange rate on that day:-
(a) Notified by CBEC 1 UK £ = ` 101
(b) prescribed by RBI 1 UK £ = ` 100
2 Entry Dated 26.01.2018
inward:
Exchange rate on that day:-
(a) Notified by CBEC 1 UK £ = ` 102
(b) prescribed by RBI 1 UK £ = ` 103
Compute the assessable value of the machine (in rupees) for the purpose of levy of Customs Duty. [8 Marks]
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Question 5
Mission Life, an NGO, from Indore, M.P. has imported 800 MT of food products from Australia for free
distribution to needy people in backward area of Sagar, M.P. under a Central Government scheme.
Exporter from Australia has charged only US$ 20 per MT to cover costs towards freight, insurance etc. and
none towards cost of food products. Customs Department found that at or about the same time of importation,
following imports of said food products of Australian origin have been made:
S. No Quantity imported in MT Unit CIF price in US$
1. 40 270
2. 100 220
3. 500 200
4. 900 180
5. 400 190
6. 760 160
Discuss the various principles to determine the transaction value of aforesaid transaction under the Customs
Act, 1962 and determine the CIF price that can be considered for assessment in this case. [4 Marks]
Question 6
Kiara of Indian origin, came to India on tour with her baby of 1 year. She brought following goods:
1. Personal effects 50,000
2. Used personal effects of infant 10,000
3. New camera 45,000
4. Mobile phone 12,500
5. Cigarette sticks 70 1,000
6. Wine - 2 litres 18,000
7. Travel souvenirs 5,000
8. Laptop 90,000
Indicate the taxability or taxable value in respect of each item in the table and calculate customs duty payable
rounded off to the nearest rupee in accordance with law. There is no need for any notes to support the
conclusions regarding taxability or taxable amount. [4 Marks]
Question 7
Ravi’, an importer, imported some goods and deposited them in the warehouse on 12th April. These goods
were re-exported without payment of duty on 15th August. With reference to the Customs Act, 1962, discuss
whether any interest under section 61 of the Customs Act, 1962 is payable by ‘Ravi’? [4 Marks]
CA Siddhesh Valimbe | FT Tests
Question 8
DEF Ltd. imported a packaging machine from USA. DEF Ltd. paid Rs. 56,000 as charges for
development activities for work done in India with respect to the imported machine.
Further, the following particulars are furnished and you are required to compute the assessable value
for the purpose of customs duty payable:
S. No. Particulars Amount ($)
1. Price of the machine 20,000
2. Freight (Air) 5,000
3. Design charges paid to a firm in USA 300
4. Licence fee relating to imported goods payable by the buyer as a 10% of Price
condition of sale of Machine
5. Buying commission paid by the buyer to his agent in USA 200
Amount (Rs.)
6. Materials and components supplied by the buyer free of cost 50,000
7. Insurance paid to the insurer in India 6,000
Other Particulars:
(i) The commission payable with respect to sales to the local agent of the exporter is 5% of cost of the
machine.
(ii) Materials and components supplied by the buyer free of cost are valued at Rs. 50,000.
(iii) Inter-bank exchange rate as arrived by the authorized dealer is Rs. 82.50 per $.
(iv) CBIC had notified for purpose of Section 14 of the Customs Act, 1962, exchange rate of 83 per $.
[5 Marks]