9911796707
TMI BlogCUSTOMS VALUATION (DETERMINATION OF VALUE OF IMPORTED GOODS) RULES, 2007X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government hereby makes the following rules, namely: - 1. Short title, commencement and application. - (1) These rules may be called the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. (2) They shall come into force on the (3) They shall apply to imported goods 2. Definitions. — (1) In these rules, unless the context otherwise requires, — (a) "computed value" means the value of imported goods determined in accordance with Rule 9A of these rules; (aa) "deductive value" means the value determined in accordance with Rule 8 of these rules; (b) "goods of the same class or kind", means imported goods that are within a group or range of imported goods produced by a particular industry or industrial sector and includes identical goods or similar goods; (c) "identical goods" means imported goods - (i) which are same in all respects, including physical characteristics, quality and reputation as the goods being valued except for minor differences in appearance that do not affect the value of the goods; (ii) produced in the country in which the goods being valued were produced; and (iii) produced by the same person who produced the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... described, of the other shall be deemed to be related for the purpose of these rules, if they fall within the criteria of this sub-rule. 3. Determination of the method of valuation. (i) For the purpose of Section 14(1) of the Customs Act, 1962 and subject to Rules 11 and 13, the value of imported goods shall be the transaction value; (ii) if the value cannot be determined under the provisions of clause (i) above, and for the purpose of Section 14(3) of the Customs Act 1962, the value shall be determined by proceeding sequentially through Rules5 to 10 of these rules. 4. Transaction value. — (1) The transaction value of imported goods, referred to in Sections 14(1) of the Customs Act, 1962 shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 11 of these rules. (2) The transaction value of imported goods under sub-rule (1) above shall be accepted: Provided that - a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of this rule, is found, the transaction value of identical goods sold at a different commercial level or in different quantities or both, adjusted to take account of the difference attributable to commercial level or to the quantity or both, shall be used, provided that such adjustments shall be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustments, whether such adjustment leads to an increase or decrease in the value. (2) Where the costs and charges referred to in sub-rule (2) of Rule 9 of these rules are included in the transaction value of identical goods, an adjustment shall be made, if there are significant differences in such costs and charges between the goods being valued and the identical goods in question arising from differences in distances and means of transport. (3) In applying this rule, if more than one transaction value of identical goods is found; the lowest such value shall be used to determine the value of imported goods. 6. Transaction value of similar goods. — (1) Subject to the provisions of Rule 3 of these rules, the value of imported goods shall be the transaction value of similar goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entical nor similar imported goods are sold in India in the condition as imported, then, the value shall be based on the unit price at which the imported goods, after further processing, are sold in the greatest aggregate quantity to persons who are not related to the seller in India. (b) In such determination, due allowance shall be made for the value added by processing and the deductions provided for in items (i) to (iii) of sub-rule (1) of this rule. 9. Computed value. — Subject to the provisions of Rule 3, the value of imported goods shall be based on a computed value, which shall consist of the sum of:- (a) the cost or value of materials and fabrication or other processing employed in producing the imported goods; (b) an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to India; (c) the cost or value of all other expenses under sub-rule (2) of rule 9 of these rules. 10. Residual method. — (1) Subject to the provisions of Rule 3 of these rules, where the value of imported goods cannot be determined under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment, art work, design work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods; (c) royalties and licence fees related to the imported goods that the buyer is required to pay, directly or indirectly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable; (d) the value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues, directly or indirectly, to the seller; (e) all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller to the extent that such payments are not included in the price actually paid or payable. Explanation : Where the royalty, licence fee or any other payment for a process, whether patented or otherwise, is includible in terms of the clauses (c) and (e) above, such charges shall be added to the price actually paid or payable for the imported goods, notwithstanding the fact that such goods may be subjected to the said p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the imported goods except as provided for in this rule. 12. Declaration by the importer. — (1) The importer or his agent shall furnish - (a) a declaration disclosing full and accurate details relating to the value of imported goods; and (b) any other statement, information or document including an invoice of the manufacturer or producer of the imported goods where the goods are imported from or through a person other than the manufacturer or producer, as considered necessary by the proper officer for determination of the value of imported goods under these rules. (2) Nothing contained in these rules shall be construed as restricting or calling into question the right of the proper officer of customs to satisfy himself as to the truth or accuracy of any statement, information, document or declaration presented for valuation purposes. (3) The provisions of the Customs Act, 1962 (52 of 1962) relating to confiscation, penalty and prosecution shall apply to cases where wrong declaration, information, statement or documents are furnished under these rules. 13. Rejection of declared value. — (1) When the proper officer has reason to doubt the truth or accuracy of the value dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow the assets and liabilities and changes in them should be measured, what information should be disclosed and how it should be disclosed and which financial statements should be prepared. These standards may be broad guidelines of general application as well as detailed practices and procedures. Notes to Rules Note to Rule 2 In Rule 2(2)(v), for the purposes of these rules, one person shall be deemed to control another when the former is legally or operationally in a position to exercise restraint or direction over the latter. Note to Rule 4 Price actually paid or payable The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods. The payment need not necessarily take the form of a transfer of money. Payment may be made by way of letters of credit or negotiable instruments. Payment may be made directly or indirectly. An example of an indirect payment would be the settlement by the buyer, whether in whole or in part, of a debt owed by the seller. Activities undertaken by the buyer on his own account, other than those for which an adjustment is provided in Rule 11, are not considered to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a shall not result in rejection of the transaction value for the purposes of Rule 4. Likewise, if the buyer undertakes on his own account, even though by agreement with the seller, activities relating to the marketing of the imported goods, the value of these activities is not part of the value of imported goods nor shall such activities result in rejection of the transaction value. Rule 4(3) 1. Rule 4(3)(a) and Rule 4(3)(b) provide different means of establishing the acceptability of a transaction value. 2. Rule 4(3)(a) provides that where the buyer and the seller are related, the circumstances surrounding the sale shall be examined and the transaction value shall be accepted as the value of imported goods provided that the relationship did not influence the price. It is not intended that there should be an examination of the circumstances in all cases where the buyer and the seller are related. Such examination will only be required where there are doubts about the acceptability of the price. Where the proper officer of customs has no doubts about the acceptability of the price, it should be accepted without requesting further information from the importer. For example, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the test can be met. In Rule 4(3)(b) the term "unrelated buyers" means buyers who are not related to the seller in any particular case. Rule 4(3)(b) A number of factors must be taken into consideration in determining whether one value "closely approximates" to another value. These factors include the nature of the imported goods, the nature of the industry itself, the season in which the goods are imported, and whether the difference in values is commercially significant. Since these factors may vary from case to case, it would be impossible to apply a uniform standard such as a fixed percentage, in each case. For example, a small difference in value in a case involving one type of goods could be unacceptable while a large difference in a case involving another type of goods might be acceptable in determining whether the transaction value closely approximates to the "test" values set forth in Rule 4(3)(b). Notes to Rule 5 1. In applying rule 5, the proper officer of customs shall, wherever possible, use a sale of identical goods at the same commercial level and in substantially the same quantities as the goods being valued. Where no such sale is found, a sale of identical go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. Note to Rule 8 1. The term "unit/price at which ... goods are sold in the greatest aggregate quantity" means the price at which the greatest number of units is sold in sales to persons who are not related to the persons from whom they buy such goods at the first commercial level after importation at which such sales take place. 2. As an example of this, goods are sold from a price list which grants favourable unit prices for purchases made in larger quantities. Sale quantity Unit price Number of sales Total quantity sold at each price 1-10 units 100 10 sales of 5 units, 5 sales of 3 units 65 11-25 units Over 25 units 95 5 sales of 11 units 55 90 1 sale of 30 units, 1 sale of 50 units 80 The greatest number of units sold at a price is 80, therefore, the unit price in the greatest aggregate quantity is 90. 3.As another example of this, two sales occur. In the first sale 500 units are sold at a price of 95 currency units each. In the second sale 400 units are sold at a price of 90 currency units each. in this example, the greatest number of units sold at a particular price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided, should be examined. For the purposes of Rule 8 goods of the same class or kind" includes goods imported from the same country as the goods being valued as well as goods imported from other countries. 10. For the purposes of rule 8(2) the "earliest date" shall be the date by which sales of the imported goods or of identical or similar imported, goods are made in sufficient quantity to establish the unit price. 11. Where the method in rule 8(3) is used, deductions made for the value added by further processing shall be based on objective and quantifiable data relating to the cost of such work. Accepted industry formulas, recipes, methods of construction, and other industry practices would form the basis of the calculations. 12. It is recognized that the method of valuation provided for in rule 8(3) would normally not be applicable when, as a result of the further processing, the imported goods lose their identity. However there can be instances where, although the identity of the imported goods is lost, the value added by the processing can be determined accurately without unreasonable difficulty. On the other hand, there can also be instances where the imported goods m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gures are inconsistent with those usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to India. 5. It should be noted in this context that the "amount for profit and general expenses" has to be taken as a whole. It follows that if, in any particular case, producer's profit figure is low and his general expenses are high, the producer's profit and general expenses taken together may nevertheless be consistent with that usually reflected in sales of goods of the same class or kind. Such a situation might occur, for example, if a product were being launched in India and the producer accepted a nil or low profit to offset high general expenses associated with the launch. Where the producer can demonstrate a low profit on his sales of the imported goods because of particular commercial circumstances, his actual profit figures should be taken into account provided that he has valid commercial reasons to justify them and his pricing policy reflects usual pricing policies in the branch of industry concerned. Such a situation might occur for example, where producers have been forced to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued could be flexibly interpreted; similar imported goods produced in a country other than the country of exportation of the goods being valued could be the basis for customs valuation; customs values of similar imported goods already determined under the provisions of rules 8 and 9 could be used. (c) Deductive method. - The requirement that the goods shall have been sold in the "condition as imported" in rule 8(1) could be flexibly interpreted; the ninety days requirement could be administered flexibly. Note to Rule 11 In rule 9(l)(a)(i), the term "buying commissions" means fees paid by an importer to his agent for the service of representing him abroad in the purchase of the goods being valued. Rule 11(l)(b)(ii) 1. There are two factors involved in the apportionment of the elements specified in rule 11(l)(b)(ii) to the imported goods - the value of the element itself and the way in which that value is to be apportioned to the imported goods. The apportionment of these elements should be made in a reasonable manner appropriate to the circumstances and in accordance with generally accepted accounting principles. 2. Concerning the value of the element, if the importer ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctice, as well as its accounting methods. 4. For example, it is possible that a firm which imports a variety of products from several countries maintains the records of its design centre outside the country of importation in such a way as to show accurately the costs attributable to a given product. In such cases, a direct adjustment may appropriately be made under the provisions of rule 11. 5. In another case, a firm may carry the cost of the design centre outside the country of importation as a general overhead expense without allocation to specific products. In this instance, an appropriate adjustment could be made under the provisions of rule 11 with respect to the imported goods by apportioning total design centre costs over total production benefiting from the design centre and adding such apportioned cost on a unit basis to imports. 6. Variations in the above circumstances will, of course, require different factors to be considered in determining the proper method of allocation. 7. In cases where the production of the element in question involves a number of countries and over a period of time, the adjustment should be limited to the value actually added to that element ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
