DRAFT CUSTOMS VALUATION (DETERMINATION OF VALUE OF EXPORT GOODS) RULES, 2007 - Customs - F.No.459/15/2007-Cus.V

DRAFT NOTIFICATION (To elicit response / Comments only) Disclaimer:- This Draft Circular has been put up only to elicit public response. No final decision has been taken by Government/ Board. Government/ Board will proceed further in the matter only after due examination of the responses received. Responses to the draft notification may please be sent to : Director (ICD)/under Secretary (Cus.V) on fax 2309-3760, E-mail: [email protected] by 07.04.2007. Government of India Ministry of Finance Department of Revenue CBEC New Delhi ,__March 2007 Notification No. ### / 2007-Customs (N.T.) DRAFT CUSTOMS VALUATION (DETERMINATION OF VALUE OF EXPORT GOODS) RULES, 2007. In exercise of the powers conferred by section 156 of the Customs Act, 1962 (52 of 1962), read with Section 22 of the General Clauses Act, 1897 (10 of 1897), the Central Government hereby makes the following rules, namely, - Rule 1. Short title, commencement and application. - (1) Theses Rules may be called the Customs Valuation (Determination of Value of Export Goods) Rules 2007. (2) They shall come into force on the __________ (3) They shall apply to the export goods. Rule 2. Definitions. - (1) In these rules, unless the context otherwise requires, - (a) "computed value" means the value of the export goods determined in accordance with Rule 5 of these rules. (b) "goods of the same class or kind", means export goods that are within a group or range of export goods produced by a particular industry or industrial sector and includes goods of like kind and quality. (c) 'goods of like kind and quality' means export goods which are similar in physical characteristics, quality and reputation as the goods being valued, and perform the same functions or are commercially interchangeable with the goods being valued, produced by the same person or a different person. (d) "produced" includes grown, manufactured and mined, (e) "Sale under fully competitive conditions" means a sale in the ordinary course of international trade between a seller and a buyer where one has no interest in the business of the other, and where the price is the sole consideration. Rule 3. Determination of the method of valuation. - (i) For the purpose of Section 14(1), and subject to Rule 7, the value of the export goods shall be the transaction value, that is to say the price actually paid or payable for the goods when sold for export from India for delivery at the place of exportation provided the sale is under fully competitive conditions, and price is the sale consideration; (ii) if the value cannot be determined under the provisions of Clause (i) above, and for the purpose of Section 14(3), the value shall be determined by proceeding sequentially through Rules 4 to 6 of the rules. Rule 4. Determination of export value by comparison. - (1) The value of the export goods shall be based on the transaction value of goods of like kind and quality exported at or about the same time to other buyers in the same destination country of importation or in its absence another destination country of importation under competitive conditions, adjusted in accordance with the provisions of sub-rule (3) of this rule. (2) If the value cannot be determined under sub-rule (1), it may be based on the price at which such goods of like kind and quality are ordinarily sold under competitive conditions to the buyers in India, adjusted in accordance with the provisions of sub-rule (3) of this rule. (3) In determining the value of export goods under sub-rules (1) and (2) of this rule, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors, including: (i) the difference in the dates of exportation; (ii) the difference in commercial levels and quantity levels, (iii) difference in composition, quality, design, size, type of acking, stage of manufacture, fashion and design in items such as textiles and readymade garments, brand value, and other characteristics between the goods to be assessed and the goods with which they are being compared; (iv) difference in domestic freight and insurance charges, depending on the place of exportation; (v) in cases where sub-rule (2) of this rule applies, the amount of internal taxes levied in India from which the goods when exported are exempt or are relieved by means of refund, drawback or any other manner of neutralization of duties and taxes; (vi) Present Market Value (PMV) of the goods, which is an index of their local (wholesale/retail) price inclusive of Central Excise duty, Sales tax and other local taxes plus cost of transportation; (vii) The Maximum Retail Price (MRP) printed on such products as are required as per the Standards of Weight Measures Act, 1976; (viii) Local price of the products, indicated in the Manufacturers Printed Price List or Catalogue; (ix) Price indicated in the sale invoice of the manufacturer or authorized dealer; Rule 5. Computed Value Method. - If the value cannot be determined under Rule 4, it may be based on a computed value, which shall include inter alia the following : (a) the cost or value of materials and fabrication or other processing employed in producing the export goods; (b) the cost or value of fashion, design or brand value; (c) an amount for profit and general expenses equal to that is usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in India for export from India. (d) The cost or value of all other expenses as follows : (i) the cost of domestic transport of the export goods to the place of exportation. (ii) the loading, unloading and handling charges associated with the delivery of the export goods at the place of exportation, and (iii) the cost of insurance to the place of exportation, if any. Rule 6. Residual Method. - (1) Subject to the provisions of Rule 3 of these rules, where the value of the export goods cannot be determined under the provisions of any of the preceding rules, the value shall be determined on the basis of relevant materials using reasonable means consistent with the principles and general provisions of these rules; Provided that the value so determined shall not exceed the price at which such or like goods are sold or offered for sale for delivery at the place of exportation in the course of international trade, when the seller or buyer has no interest in the business of the other, and price is the sole consideration for the sale or offer for sale. (2) The relevant materials referred to in sub-rule (1) shall include, interalia - (i) Market Enquiry Report, including Present Market Value (PMV); (ii) Opinion of statutory organizations such as Silk Board, Spices Board, Tea Board, Coffee Board, All India Arts Handicrafts Board, Telecom Authority; (iii) Expert opinion of the particular Trade related to the export goods; (iv) Overseas enquiry report on various aspects including about the clearance of the goods at the port of importation, import value declared in the import documents filed at the port of importation for the subject export goods; Rule 7. Rejection of declared value. - (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any export goods on the basis of previously determined value or the present market value (PMV) of the goods of like kind and quality, he may ask the exporter of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such exporter, the proper officer still has reasonable doubt about the truth of accuracy of the value so declared, it shall be deemed that the transaction value of such export goods cannot be determined under the provisions of Rule 4. (2) At the request of an exporter, the proper officer, shall intimate the exporter in writing the ground for doubting the truth or accuracy of the value declared in relation to the export goods by such exporter and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1). Explanation : This rule by itself does not provide a method for determination of value; it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; the value shall be determined by proceeding sequentially through Rules 3 to 6 of the rules. This rule enables the proper officer to raise doubts on the declared value based on certain reasons which may include - a. significantly lower value at which goods of like kind and quality exported at or about the same time in comparable quantities in a comparable commercial transaction were assessed. b. Significantly higher value compared to the present market value (PMV) of goods of like kind and quality c. misdeclaration of goods in parameters such as description, quantity, year of manufacture or production. d. non declaration of parameters such as brand, grade, specifications that have relevance to value e. fraudulent or manipulated documents F.No.459/15/2007-Cus.V (S.P.RAO) UNDER SECRETARY TO THE GOVERNMENT OF INDIA