CAAR Mumbai ruled that export commissions exceeding 12.5% are excluded from "accepted value" for duty exemption benefits. The threshold applies to DFS and RoSCTL schemes.
Export Commission Above 12.5% Affects Incentive Base
The Customs Advance Rulings Authority (CAAR), Mumbai, has ruled that export agency commissions exceeding 12.5% of the transaction value are not included in "accepted transaction value" under the Customs Valuation Rules. This impacts entitlement to benefits under duty exemption schemes like RoSCTL and DFIA.
The issue arose when an exporter claimed benefits inclusive of a 15% commission. CAAR held that the 12.5% threshold, issued under Rule 10 of the Foreign Trade Policy, serves to prevent undervaluation and channeling of incentives through inflated commissions.
"The accepted value excludes commission beyond 12.5% for determining net FOB value,"the Authority stated.
The ruling clarifies a key operational issue in export incentives. Exporters must structure agency agreements within the cap to maximize benefit eligibility. The decision may prompt review of commission models in sectors reliant on export incentives.
Citations
- M/s. Ocean Exports v. CAAR (2026) CAAR Mumbai
