How assessable value is calculated by customs for imports?

Method of calculating Assessable Value under import of goods in India.

In simple terms, 1% added to CIF value of imports is assessable value.

Let me explain the method of calculating assessable value by customs department with a simple example to make you easily understand. You have imported goods worth USD 1000.00 FOB value. If any design and development charges involved, the same cost is added – say USD 100.00. In order to find CIF value, the freight and insurance cost are to be added. 20% of FOB value is taken as freight. Means USD 200.00. Insurance is calculated as 1.125% - USD 13.00 (rounded off). The total amount of CIF value works out to USD 1313.00. If any local agency commission involved, the same also is added on CIF value of goods - say 2% on FOB – USD 20.00. So the total amount works out to USD 1333.00. The said CIF value of USD 1333.00 is converted in to local currency. The exchange rate of foreign currencies is decided time to time by customs and issues notification frequently. Once after adding up 1% on the said amount you will get assessable value. The import duty amount is calculated on the said assessable value.

Please note, I have given the above example on an import under FOB terms of delivery. The above example is only a basic structure adopted by Customs department. Means, if no design and development charges or no agency commission involved, such information can be omitted to calculate Assessable value.

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