What is confirming commission and how is it to be treated for valuation purposes?
Ans: A seller may lack confidence in the letter of credit raised by the buyer on the buyer’s bank for the payment to be made for the goods sold. He/she may, therefore, seek confirmation of the letter of credit from his/her bank or from a confirming house (a specialized commercial house which offers such services) who provide guarantees to the seller against the commercial risk of non-payment by the buyer or his/her bank. The fee charged for such services is called confirming commission. Amounts towards such commission may have been directly included by the seller in the invoice price. There may be cases where the seller separately invoices the buyer for the confirming commission or the confirming institution itself directly sends an invoice to the buyer. In such cases, confirming commissions paid by the buyer to the seller or to a third party have to be added to the price actually paid or payable for determining the customs value. In some cases, a buyer may undertake on his/her own acc
