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TMI BlogCalculations of Royalties and deduction of buying commission, in the Valuation of goods under the Customs Valuation Rules, 1988X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the GATT Valuation Agreement and the Valuation rules (Rules 9(1)(c)) royalties and licence fee are to be added to the invoice value only if they relate to the imported goods and are paid as a condition of sale of the goods. It is possible to identify such royalties on verification of the contracts. In majority of the cases it could be quantified and allocated to individual consignments or per unit of the imported goods for addition to invoice value. If it is not quantifiable, then the provisions of Rule 9(3) will operate, which says that addition to the price of imported goods under this rule, which is part of Rule 4, shall be made on the basis of objective and quantifiable data. When the royalty or licence fee meant for addition under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, if the invoice is raised by the agent then the agent becomes the seller of the goods and the agent's invoice value should be regarded as the transaction value. Buying commissions are usually billed separately by the agents independent of the invoice and the same is not to be added for valuation. 5. The Board desires that the above clarification may be brought to the notice of all officers for guidance. OFFICE OF THE COLLECTOR OF CUSTOMS : CUSTOMS HOUSE : MADRAS-600001. S.MISC. 54/88-SVB From The Addl. Collector of Customs, Custom House, Madras-1. To, Shri N. Sasidharan, Deputy Secretary, Central Board of Excise Customs, New Delhi. Sir, Subject : Difficulties in the implementation of GATT Valuation Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that sometimes invoice value is less than what it should have been and that compensatory payments are made by way of royalty payments. In all such cases because of the exclusiveness of the agreement it is difficult to obtain "test values" for establishing transacion value under Rule 4 and make suitable additions under Rule 8 read with Rule 9 of the new Valuation Rules, 1988. The position is made more complex in view of the interpretative note to Rule 9(1)(c). As per the said interpretative note, payment made towards the right to reproduce the imported goods should not be added to the price actually paid. It is difficult to pinpoint whether the royalty payment is made towards the right to reproduce or as a condition of sale of the import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een decided in the conference that no deduction will be allowed from the invoice value towards buying commission and that the person who has raised invoice cannot be accepted as "buying agent". It may be pointed out here that in most of the transactions involving a buying agent abroad, it is the buying agent who raises the invoice. As per Rule 9(1)(a)(i) of the New Valuation Rules buying commissions are specifically excluded from computing the transaction value. In view of this Board may kindly clarify whether deductions shown in the invoice towards buying Commission (subject to a maximum limit as approved by RBI) be allowed in arriving at assessable value. Date : 25-4-1989 States of Madras Yours faithfully Sd/- (J. Gopinath) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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