Reg the lading cost method
This query is : Resolved
26 September 2014
How to Calculate the lading cost for import of materials.
27 September 2014
Tamil! seems like you are talking about Landing cost not lading cost?
If this is the case,then you can compute it like this :
PART 1 : considering cost of exporter's country -
a) Value of materials(price at which they are taken out of factory)
b)origin charges of exporter's country being carriage ,freight,insurance depends upon sea or air mode of transportation.
c)Loading charges of cargo on ship from exporter's country.
d)value of any good or tools supplied by buyer.
Result of Part 1 is your FOB value from exporter's end which you as an importer will bear.Now,adjustments have to be made for certain expenses if not included in value of materials in Part 1 ,so that CIF value can be computed.
Part 2 : adjust in FOB value the remaining expenses like :
a) commission and brokerage (except buying commission-as this is personally borne by importer)
b)Packing cost(exclude durable and returnable packing cost as this will be reused further for other shipments)
c)Engineering,development,planning/sketchincost only if this was done outside India) d)inspection,if strictly stated in contract
e)Freight( as specified else 20% FOB value as per law)
e) Insurance(specified else 1.125% FOB)
* THERE MAY BE OTHER ADJUSTMENTS AS WELL,I am giving you common adjustments.
* REMEMBER Fright is to be restricted to 20% FOB for AIR mode.
NOW ,make a subtotal when you are done with all this adjustments ,now
f) DEDUCT duties and taxes,errection charges which has been paid in India,as this has nothing to do with import.
ONCe done it will be your CIF value.
PART 3 : now in this CIF value
a) Consider Loading and unloading charges which is 1% of landing cost as per standard rate.
This will be your Assessable value of imported goods, upon which you will pay import duty.
Now comes the role of taxes on import for which add 10% BCD( to provide effect of excise duty on similar goods had they produced in India.In the collective value of BCD and AV apply CVD 3(1)/3(3) duty,to this collectively apply cess of 3 %
Finally apply CVD 3(5).
This will be your final value.
Make sure to practice questions in practice manual which will give you more clarity.
If this is the case,then you can compute it like this :
PART 1 : considering cost of exporter's country -
a) Value of materials(price at which they are taken out of factory)
b)origin charges of exporter's country being carriage ,freight,insurance depends upon sea or air mode of transportation.
c)Loading charges of cargo on ship from exporter's country.
d)value of any good or tools supplied by buyer.
Result of Part 1 is your FOB value from exporter's end which you as an importer will bear.Now,adjustments have to be made for certain expenses if not included in value of materials in Part 1 ,so that CIF value can be computed.
Part 2 : adjust in FOB value the remaining expenses like :
a) commission and brokerage (except buying commission-as this is personally borne by importer)
b)Packing cost(exclude durable and returnable packing cost as this will be reused further for other shipments)
c)Engineering,development,planning/sketchincost only if this was done outside India) d)inspection,if strictly stated in contract
e)Freight( as specified else 20% FOB value as per law)
e) Insurance(specified else 1.125% FOB)
* THERE MAY BE OTHER ADJUSTMENTS AS WELL,I am giving you common adjustments.
* REMEMBER Fright is to be restricted to 20% FOB for AIR mode.
NOW ,make a subtotal when you are done with all this adjustments ,now
f) DEDUCT duties and taxes,errection charges which has been paid in India,as this has nothing to do with import.
ONCe done it will be your CIF value.
PART 3 : now in this CIF value
a) Consider Loading and unloading charges which is 1% of landing cost as per standard rate.
This will be your Assessable value of imported goods, upon which you will pay import duty.
Now comes the role of taxes on import for which add 10% BCD( to provide effect of excise duty on similar goods had they produced in India.In the collective value of BCD and AV apply CVD 3(1)/3(3) duty,to this collectively apply cess of 3 %
Finally apply CVD 3(5).
This will be your final value.
Make sure to practice questions in practice manual which will give you more clarity.
27 September 2014
Part 3 a) minor correction :its 1 % of CIF not landing cost
Message likes :
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28 September 2014
Thank You so much mam.
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