CUSTOMS (ASSISTANCE IN VALUE DECLARATION OF IDENTIFIED IMPORTED GOODS) RULES, 2023

[DR.MARIAPPAN GOVINDARAJAN]

Section 14 of the Customs Act, 1962 deals with the valuation of the imported and exported goods. Section 14(1) provides that the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf: Section 156 of the Act gives powers to the Central Government to make rules in respect of valuation. The Central Government, vide Notification No. 03/2023- Customs (NT), dated 11.01.2023 made the ‘Customs (Assistance in value declaration of identified imported goods) Rules, 2023 which came into effect from 11.02.2023.

The clause (iv) to second proviso to Section 14(1) provides for the additional obligations of the importer in respect of any class of imported goods and the checks to be exercised, including the circumstances and manner of exercising thereof, as the Board may specify, where, the Board has reason to believe that the value of such goods may not be declared truthfully or accurately, having regard to the trend of declared value of such goods or any other relevant criteria.

Committees

The Rules provide for the establishment of two Committee – one is the Screening Committee and the other is the Evaluation Committee.

The Screening Committee shall consist of the following members-

• Director General of Valuation - Convenor of the Committee;
• Director General of Revenue Intelligence
• Director General of Analytics and Risk Management; and
• Conveners of National Assessment Centre constituted by the Board, if any, pertaining to the class of goods under consideration.

The Evaluation Committee shall consist the following members-

• Additional Director General of Valuation - Convenor of the Committee;
• Additional Director General (Headquarters) of Directorate General of Revenue Intelligence;
• Additional Director General (National Customs Targeting Centre – Cargo) of Directorate General of Analytics and Risk Management; and
• Members of Working Group on Valuation and related issues of the National Assessment Centre constituted by the Board, if any, pertaining to the class of goods under consideration.

The Directorate General of Valuation shall be the Secretariat of both the Screening Committee and evaluation Committee. The Screening Committee and Evaluation Committee shall hold its meetings regularly and as and when necessary for efficient conduct and timely discharge of its functions under these rules.

Identified goods

The Board, having regard to the trend of the declared value of such goods or any other relevant criteria, has reason to believe that such goods may not be declared at their truthful or accurate value but below it, the Board may, by an Order, specify such goods as identified goods in accordance with rule 10.

Sources

The Board shall rely upon a written reference made to it electronically by any person having reason or by an officer of Customs, namely a Commissioner or Additional Director General, or a person representing any other Government Department to believe that the value of any class of imported goods or a subset thereof may not be declared truthfully or accurately.

The said reference shall be accompanied with the following-

• disclosure of name, full address, mobile number, email and other contact details of the person, along with proof of identity and proof of address:
• complete description and the 8-digit HS Code of the imported goods, including, where appropriate, aspects such as technical literature, specifications, composition, quality, brand and model, along with the country of origin or ports of despatch;
• the manner in which or method by which value for such goods is declared below their truthful or accurate value by importers;
• information with attached documentary evidence, data and analysis bringing out the basis put forth in support of the claim made in the written reference;
• an approximate quantification of the extent of undervaluation;
• other sources of reliable information, if any, that may be considered while examining the reference; and
• suggestions, if any, of additional obligations and checks that may be considered while examining the reference.

Screening Committee

The written reference received under this rule shall be forwarded electronically by the Board for examination to the Screening Committee. The Screening Committee shall cause a preliminary examination of the reference forwarded to it to consider whether the part or full reference shall be taken for a detailed examination. The Committee shall scrutinize the contents and accompanying information with the written reference. It also considers material aspects along with the relevant trends of declared values or any other relevant criteria. The Screening Committee shall be signed by each member of the Screening Committee. The preliminary findings shall be completed preferably within fifteen days, but no later than 21 days from the date of forwarding of written reference by the Board.

If the Screening Committee found that the written reference is not suitable for detailed examination, the Screening Committee shall record the reasons thereof and close the said reference. If it is found suitable for detailed examination, the reference, or part thereof, as the case may be, shall be deemed to have been taken up for detailed examination on the date the preliminary findings were recorded.

Evaluation Committee

If the reference is found suitable for detailed examination the same shall be comprehensively examined by the Evaluation Committee to assess the likelihood, based on the preponderance of probabilities, whether the value of the relevant class of goods or a subset thereof may not be declared truthfully or accurately. The Evaluation Committee may undertake data analysis and take into account the following additional information such as –

• trend in international prices from relevant sources keeping in view quality and nature of goods;
• information received through stakeholder consultation or disclosures;
• reports or certificates of experts; academic papers; research papers; published reports; open-source intelligence; reports originating from source country or despatch ports, including reports of overseas enquiry or verification;
• disclosures made under applicable provisions of the Act, rules and regulations made thereunder or under any other law that may have relevance for the time being in force;
• costing in relation to manufacturing or assembly of the goods;
• additional information from the person who made the reference; and
• reliable information from any other source.

The Evaluation Report for its findings shall record the reasons. The Report shall be signed by all the members of the Committee. The report shall be completed within 30 days from the date from which the detailed examination started. If the report could not be completed beyond the control of the Committees a further time of 30 days shall be given.

On completion of the report the Evaluation Committee shall transfer the same to the Screening Committee for filing. If the detailed examination report concludes the likelihood that the value of the relevant class of goods or a subset thereof may not be declared truthfully or accurately, the report shall specify, –

1. complete description of the class of imported goods, or a subset thereof, with 8-digit HS Code;
2. the brands, if any, which have been noticed in connection with the said likelihood;
3. the precautionary unit value expressed in terms of items (d) and (e) which may be used by the Customs Automated System to require the fulfilment of additional obligations by the importer and the checks to be exercised, where the declared value is less than the precautionary unit value;
4. the particular Unique Quantity Code which shall be necessarily used by the importer to declare the value in the bill of entry;
5. the technical or other specifications related to the value of the goods necessary to be declared in the bill of entry such as make, model, brand, grade, size, quality, composition (percentage of ingredients) and quantity declared in the specified Unique Quantity Code;
6. other additional obligations of the importer for demonstrating the truthfulness and accuracy of the declared value;
7. the checks to be exercised with respect to the imported goods, including the circumstances and manner of exercising them; and
8. the duration, not below one year and not exceeding two years in the first instance, for which the said additional obligations and the additional checks shall be applied.

Recommendations

The Screening Committee shall confirm that the report of the Evaluation Committee is complete in terms of these rules and for this purpose shall rectify deficiencies, if any, therein. It shall recommend to the Board upon the report as having been confirmed to be complete in terms of these rules. This recommendation shall be made within fifteen days of the report of the Evaluation Committee

Board to consider recommendations

The Board shall consider the recommendation made by the Screening Committee. If it is satisfied that the recommended report should be accepted, it may issue Order as below-

• complete description of the identified goods with 8-digit HS Code;
• the particular Unique Quantity Code which shall be necessarily used by the importer to declare the value in the bill of entry;
• the technical or other specifications necessary to be declared in the bill of entry;
• other obligations of the importer, if any;
• the checks to be exercised with respect to the imported goods, including the circumstances and manner of exercising them; and
• the duration, not below one year and not exceeding two years in the first instance, for which the said Order shall be valid.

Procedure for identified goods

An importer of identified goods shall be required to declare inter alia the value of goods using the Unique Quantity Code specified in the Order. The importer of identified goods shall also fulfill the specified additional obligations required by the Customs Automated System. the assessment of goods or the goods themselves shall be subjected to specified checks so as to enable and assist the importer to demonstrate the truthfulness and accuracy of the declared value. If such obligations have not been fulfilled the proper officer shall give 10 days’ time to fulfill the obligations. The proper officer may ask for further information and documents from the importer to examine the truthfulness and accuracy of the declared value. On the request of the importer, the proper officer may provisionally assess and clear the goods, subject to importer furnishing appropriate security. If the proper officer is satisfied with the truthfulness and accuracy of the declared value, he shall accept the declared value for the purpose of these rules. If he is not satisfied further proceedings shall be taken in accordance with rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

Review

The Screening Committee shall, on the expiry of half of the validity period of the Order initiate a mid-term review to assess whether the identified goods may be de-specified either before the expiry of the validity period or not, or the validity period needs to be extended. The Screening Committee may conduct a review before mid-term, or as and when needed apart from the mid-term review. The Screening Committee, based on the revie report, shall make a reasoned report with recommendations to the Board to withdraw or extend the Order related to the identified goods or to alter or delete any of the parameters specified by the Board while specifying the identified goods. This report shall be made to the Board at least thirty days prior to the expiry of validity period of the Order.

Exceptions

These rules shall not applicable to the following-

• imports not involving duty;
• goods for which tariff value has been fixed by the Board in terms of section 14 (2) of the Act;
• goods which attract import duty on specific rate basis;
• imports made in terms of authorization or license issued under duty exemption scheme of the Foreign Trade (Development and Regulation) Act, 199) in which the inputs imported prior to export are physically contained in the export product;
• imports where buyer and seller are related and an investigation on relationship has already been contemplated or finalized;
• Project imports;
• imports by Government, Public Sector Undertakings;
• imports made in non-commercial quantities;
• goods imported for the purpose of re-export; or
• imports specified by the Board.

Digital record keeping

The process specified in these rules shall be enabled and processed on an electronic application, set up and maintained by the Directorate General of Valuation from the date notified by the Board.