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Customs Valuation

Customs - CBEC s Customs Manual 2015 - 06 - Chapter 6 1. Introduction: 1.1 The rates of Customs duties leviable on imported goods and export goods are either specific or on ad valorem basis or at times on specific cum ad valorem basis. When Customs duties are levied at ad valorem rates, i.e., based on the value of the goods, it becomes essential to lay down in the law itself the broad guidelines for such valuation to avoid arbitrariness and to ensure that there is uniformity in approach at diffe .....

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e tariff values may be fixed for any class of imported or export goods having regard to the trend of value of such or like goods and the same have to be notified in the official gazette. Tariff values have presently been fixed in respect of import of Crude Palm Oil, RBD Palm Oil, Other Palm Oils, Crude Palmolein, RBD Palmolein, Other Palmoleins, Crude Soyabean Oil, Brass Scrap (all grades) and Poppy Seeds. [Refer Notification No.36/2001-Cus. (NT), dated 3-8-2001] 3. Valuation of imported/export .....

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e, 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 . It is also provided that in the case of imported goods such transaction value shall include in addition...any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties a .....

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re is no sale, or the buyer and the seller are related, or price is not the sole consideration for thesale or in any other case; and (iii) The manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purpose of this section. 3.3 The price paid or payable shall be calculated with reference to the rate of exchange as in force on the date o .....

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to value on account of cost and services. Some provisions deleted from the earlier Section 14 include: (i) Reference to such or like goods. Thus, the value (transaction value) shall be the price actually paid or payable for the goods under consideration. (ii) The reference to price of the goods ordinarily sold or offered for sale. (iii) The price of the goods when sold for export to India is to be considered and not the price in the course of international trade. 3.5 As provided in Section 14(1 .....

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therein are of a hierarchical (sequential) order. 3.7 The importer is required to truthfully declare the value in the import declaration and also provide a copy of the invoice and file a valuation declaration in the prescribed form to facilitate correct and expeditious determination of value for assessment purposes. 4. Methods of valuation of imported goods: 4.1 According to the (Determination of Value of Imported Goods) Rules, 2007, the Customs Value should be the Transaction Value , i.e., the .....

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he total payment made or to be made by the buyer to the seller or for the benefit of the seller for the imported goods. It includes all payments 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. 5.3 If objective and quantifiable data do not exist with regard to the valuation factors, if the valuation conditions are not fulfilled, or if Customs authorities have doubts concerning the truth or accura .....

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cation and profit in country of production (Rule 8); and (v) Fallback Method - Based on earlier methods with greater flexibility (Rule 9). 6. Valuation factors: 6.1 Valuation factors are the various elements which must be taken into account by addition (factors by addition) to the extent these are not already included in the price actually paid or payable or by deduction (factors by deduction) from the total price incurred in determining the Customs value, for assessment purposes. 6.2 Factors by .....

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d goods, to the extent that such value has not been included in the price actually paid or payable: (a) Material, components, parts and similar items incorporated in the imported goods; (b) Tools, dies, moulds and similar items used in the production of the imported goods; (c) Materials consumed in the imported goods; and (v) Engineering, developing, artwork, design work, and plans and sketches undertaken elsewhere than in the importing country and necessary for the production of imported goods; .....

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including the ship demurrage charges on charted vessels, lighterage or barge charges; (x) Loading, unloading and handling charges associated with transporting the goods; and (xi) Insurance. 6.3 As regards (v) and (vi) above, an Explanation to Rule 10 (1) clarifies that the royalty, licence fee or any other payment for using a process, whether patented or otherwise, when they are otherwise includible referred in terms of clause (c) or (e) of Rule 10(1), shall be added to the price actually paid .....

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g country. 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 go .....

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he 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 abo .....

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the declared value. 7.3 The interpretative notes are specified in the schedule to the interpretative rules. 8. Provisional clearance of imported goods: 8.1 Section 18 of the Customs Act, 1962 read with the Customs (Provisional Duty Assessment) Regulations, 1963 allow an importer to provisionally clear the imported goods from Customs pending final determination of value by giving a guarantee in the form of surety, security deposit or bank guarantee. Rules 4(1)(a) and 5(1) of the Rules, 2007 conce .....

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can be termed as related only if they fall within the criteria of this sub-rule. Further, Rule 3(3) provides that where buyer and seller are related, the transaction value can be accepted if the examination of circumstances of the sale of the imported goods indicate that the relationship did not influence the price or if the importer demonstrates that the declared value of the goods being valued, closely approximately to one of the test values namely transaction value of identical/similar goods .....

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alisation of provisional assessments is expedited. 9.3. With effect from 1-1-2013, the functional and supervisory control over the SVBs has been vested with the Directorate General of Valuation (DGOV). DGOV would monitor the functioning of SVBs and be responsible for their quality control. [Refer Circulars No.11/2001-Cus, dated 23-2-2001 and No. 29/2012-Cus., dated 7-12-2012] 10. Methods of valuation of export goods: 10.1 The provisions of Section 14(1) of the Customs Act, 1962 specifically cove .....

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