Cases where transaction value may be rejected - CBEC's Customs Manual 2023 - Customs

7. Cases where transaction value may be rejected: 7.1 The transaction value may not be accepted in the following categories of cases as provided in Rule 3(2) of the said Valuation Rules, 2007: (i) If there are restrictions on use or disposition of the goods by the buyer. However, the transaction value not to be rejected on this ground if restrictions: (a) Are imposed by law or public authorities in India; (b) Limit geographical area of resale; and (c) Do not affect the value of the goods substantially. (ii) If the sale or price is subject to a condition or consideration for which a value cannot be determined. However, conditions or considerations relating to production or marketing of the goods shall not result in rejection. (iii) If part of the proceeds of the subsequent resale, disposal or use of the goods accrues to the seller, unless an adjustment can be made as per valuation factors. (iv) Buyer and seller are related; unless it is established by the importer that: (a) The relationship has not influenced the price; and (b) The importer demonstrates that the price closely approximates one of the test values. 7.2 The transaction price declared can be rejected in terms of Rule 12 of the said Valuation Rules, 2007 , when the proper officer of Customs has reason to doubt the truth or accuracy of the value declared and if even after the importer furnishes further information/documents or other evidence, the proper officer is not satisfied and has reasonable doubts about the value declared. An Explanation to Rule 12 clarifies that this rule does not, as such, provide a method for determination of value, and that it merely provides a mechanism and procedure for rejection of declared value in certain cases. It also clarifies that where the proper officer is satisfied after consultation with the importer, the declared value shall be accepted. This Explanation also gives certain illustrative reasons that could form the basis for doubting the truth of accuracy of the declared value. 7.3 The interpretative notes are specified in the schedule of the said valuation rules and are to be applied for interpretation of the rules.