Transcript
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VALUATION IN CUSTOMS ACT
Divyasom MalhanCA Final
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Section 14
Value of Imported goods shall be the TRANSACTION VALUE of such goods
TRANSACTION VALUE Price actually PAID or payable,
at the TIME & place of import/export
where buyer & seller are NOT RELATED
and price is the SOLE CONSIDERATION.
Transaction value shall include
cost of services (commission, brokerage, engineering, design work, royalties)
cost of transportation (till place of importation)
insurance, loading, unloading and handling charges
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Custom Valuation (Determination of Price
of Imported Goods) Rules, 2007RULE 1
Following rules shall comeinto force on the 10th Day
of October, 2007
They shall apply toImported Goods.
Rule 3
VALUE of imported goodsshall be the
TRANSACTIONVALUEadjusted in accordance
with provisions ofRULE 10.
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Cost and Services (Rule 10)
Value of Imported Goods = Value of Goods for delivery at the time and
place of importation
+
Transport cost up to place of importation
+
Handling charges
+
Cost of Insurance
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Rule 10
Notional Amounts
Where following costs are NOT Ascertainable, they should be taken as
Transport Cost = 20% of FOB Value
Insurance Cost = 1.125% of FOB Value
AND
Handling charges = 1% ofCIF Value
Coromandal Fertilizers Ltd. (SC) 1% covers all aspects of landing charges
and custom authorities cannot add any amount to it.
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Rule 10 (Misc Issues)
Maximum transportation for import by air
In case of goods imported by air, where transportation cost is
ASC
ERTAINAB
LE, such cost shall not exceed 20% of FOB
V
alue.
Clearance for Inland Container Depot
Cost of transportation from port of entry to ICD shall not be included in costof transportation.
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Examples
By Air
Price paid = 80,000
Air freight = 16,000
(actual = 20,000)
Insurance = 900
CIFVALUE = 96,900
Landing Charges = 969
By Sea
Price paid = 80,000
Freight = 20,000
(actual = 20,000)
Insurance = 900
CIFVALUE = 1,00,900
Landing Charges = 1,009
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Rule 10 (Transaction Value)
Advanced Issues
While determining TV,
add following to the price PAID or Payable
Commissions and brokerage (except buying commission)
Cost ofcontainers and packing (both labour and materials)
Value of following goods and services
apportioned appropriately
Supplied by buyer for use In connection with production
Materials, components, parts incorporated in imported goods
Tools, dies, moulds and similar items used in production
Engineering, development, design work etc. undertaken out ofIndia and necessary for theproduction of Imported goods.
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Guidelines for Apportionment of value
of componentssupplied by buyer
Option 1 Value might be apportioned to the first shipment if the importer
wishes to pay duty on the entire value at the same time.
Option 2 Importer may request to apportion the value over the number of
units produced up to the time of first shipment.
Option 3 Importer may request that value be apportioned over the entire
anticipated production, where contracts or firm agreements existfor that purpose.
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Rule 10 Contd
Royalties and license fees required to be paid
as condition of the sale of imported goods
shall be included in TV
. All other payments made by the buyer to
seller or to third party as a condition of sale
shall also be included in TV.
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Miscellaneous Issues
Cost of Durable containers shall NOT be added if importer EXECUTES abond to Re-export within six months.
Interest charged on deferred payments is NOT to be added to theassessable value
If interest charges are shown separately in the invoice Price declared is price actually paid or payable
Interest has not influenced the price payable
Following costs shall NOT be included in assessable value, if they aredistinguished from the price of the goods
Charges for construction, erection assembly or maintenance undertaken afterimportation
cost of transportation after importation
Duties and taxes in India
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Rule 4: Transaction Value of
IDENTICAL Goods TransactionValue of identical goods imported at or
about the same time when the goods being valued wereimported, shall be treated to be the assessable value.
Value of Identical goods at same commercial level shallbe taken to value the goods imported.
When no sale is found at same commercial level thentake the value of goods at different commercial levelafter proper adjustment.
If more than one transaction value of identical goods isfound, the lowestof such value shall be used.
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Rule 5: Transaction Value of
Similar Goods TV of similar goods imported at or about the
same time, shall be treated to be the
assessable value of imported goods. Remaining provision of Rule 4 shall apply
mutatis mutandis.
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Identical Goods & Similar Goods
Identical Goods
Same as goods being valued inall respects except minordifferences in appearance that
do not affect value of goods. Produced in same country in
which the goods being valuedwere produced.
Produced by same person orwhere no such goods areavailable, goods produced by adifferent person.
Similar Goods
NOT alike in all respects buthave like characteristics andmaterial and are commercially
interchangeable. Produced in same country in
which the goods being valuedwere produced.
Produced by same person orwhere no such goods areavailable, goods produced by adifferent person.
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Rule 7: Deductive Value
The value shall be based on
Unit price at which goods are sold in greatest
aggregate quantity in India Up to 90 days after importation
Subject to following deductions
Commission usually paid or agreed to be paid
Value added by processing and sale expenses Transport and insurance cost incurred in India
Custom duties and taxes payable in India
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Rule 8: Computed Value
Value of Imported Goods shall be
Cost of materials and other processing charges
and Profit and general expenses equal to that usually
made by exporters in the country of exportationfor export to India and
All other expenses referred to in rule 10(2)
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Rule 9: Residual Method
Best Judgment Assessment
If the value cannot be determined under
preceding rules Value shall be determined
Using reasonable means
Consistent with the principles of any preceding
rules and Section 14(1)
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MethodsNOT acceptable for Best
Judgment Assessment Minimum Customs value
A system, which provides for acceptance ofhighest oftwo alternatives
Arbitrary or fictitious values Selling price of goods produced in India
Price of goods for export to a country other than India
Price of goods in the domestic market of the country ofexportation
Cost of production except as per rule 8
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Thank You
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dsmalhan@gmail.com
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