TMI BlogComputation of Value Addition where some Materials are Supplied Free of Cost – Determination of Drawback under Rule 6 or Rule 7 of Drawback RulesX X X X Extracts X X X X X X X X Extracts X X X X ..... F.NO.602/9/2005-DBK Government of india MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE CUSTOMS 19th September, 2006 Sub: Computation of Value Addition where some Materials are Supplied Free of Cost - Determination of Drawback under Rule 6 or Rule 7 of Drawback Rules - Reg. I am directed to invite your attention to the above mentioned subject and to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of exports sometimes the main raw material is supplied 'free of cost' by the overseas buyer for maintaining the quality of the final product. In such cases the notional value of the 'free of cost' material is declared to Customs only for the purpose of payment of duty and the same is not included in the export value (FOB value) of the product, the reason being that no realization t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The matter has been examined by the Ministry. It has been observed that for the sake of equity the value of the 'free of cost' material should be added both to the FOB value of goods and CIF value of materials or this value should not be added to the FOB and CIF values at all. If this is done, the value addition in most of the cases would be positive, entitling the exporters to avail of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date. Receipt of the Circular may kindly be acknowledged. ( M. Subramanyam ) Deputy Secretary (DBK) Telefax: 23360581 - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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