customs valuation divyasom

8/9/2019 Customs Valuation Divyasom

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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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