Assessable value, CIF and the customs exchange rate

Customs duty is charged on the assessable value. Section 14 of the Customs Act says this is the transaction value: the price actually paid or payable for the goods when sold for export to India, where buyer and seller are not related and the price is the only consideration for the sale.

The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 give the detail. Rule 3 says customs accepts the transaction value, adjusted under rule 10, unless something stands in the way: for example, a condition on the sale that cannot be valued, or a relationship between buyer and seller that influenced the price.

Rule 10 adds costs you bear that are not already in the price. The main ones:

• Commissions and brokerage, except buying commission.
• Containers and the cost of packing.
• Materials, parts, tools, moulds or design work you gave the seller free or cheaply for making the goods.
• Royalties and licence fees you must pay as a condition of the sale.
• Any part of your resale proceeds that goes back to the seller.
• Transport, loading, unloading and handling up to the Indian port or airport of import, and insurance up to that place.

That is why customs works on CIF. If you buy FOB or ex-works, you add the transport and insurance to India yourself; if you buy CIF, they are already in the price. Costs after the goods reach the place of import, such as trucking to your warehouse, are not added.

Rule 10(2) says what customs adds when a cost cannot be worked out from your papers. As published on CBIC's Tax Information Portal on 15 October 2026, last changed by notification 91/2017-Customs (N.T.):

• Freight and handling not known: 20% of the FOB value.
• Insurance not known: 1.125% of the FOB value.
• By air, even when the freight is known, the amount added for it cannot be more than 20% of the FOB value.
• For goods transhipped to another Indian customs station, the costs of that onward leg are left out.

Customs does not use your bank's rate. Section 14 says the price is converted at the rate in force on the day your bill of entry is presented, or for an export, your shipping bill. This is the customs exchange rate.

• CBIC used to issue these rates by notification. Since 4 July 2024, under Circular 07/2024-Customs, they are published on ICEGATE through the Exchange Rate Automation Module (ERAM).
• Rates are published at 6 p.m. on the 1st and 3rd Thursday of each month and take effect from midnight. If a currency moves more than 5% from its published rate, its rate is revised from the next day.
• Each currency has one rate for imports and another for exports.
• Past rates stay on ICEGATE, so you can check the rate for an earlier date.

The filing day matters: the same invoice can give a different rupee value, and so different duty, if you file after a new rate takes effect.