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Unit 9: Valuation of Custom Goods

that the criteria employed are consistent with Article ........................ of the General Notes
Agreement.

9.2 Developing Countries and the Agreement

Prior to 1 January 1995, only 11 countries were applying the Agreement’s valuation system.
When the Agreement was being negotiated, it was recognized that the majority of developing
countries (which based their valuation systems on the Brussels Definition of Value, a definition
entirely different from that followed by the Agreement) would need some time to adopt the
legislative and institutional framework and train the officials required for its implementation.
The Agreement therefore gave a delay period of five years to developing countries which
considered that an immediate change to the new system would be difficult for them.

A number of developing countries have now become members of the Agreement. However,
about 50 countries (including some LDCs) have invoked the provisions on the delay period.
This period will expire for all countries by early or mid 2000. In order to facilitate adoption of
the system by the target date, the WTO and WCO Secretariats have stepped up their technical
assistance in training officials in the methods of the Agreement. A request to extend the delay
period of five years may be made to the Committee on Customs Valuation, which has been
established under the Agreement. The developing country making the request must demonstrate
the difficulties it is encountering in adopting the system. Any extension must be approved by
the Committee.
9.3 Valuation of Goods

Customs duty is payable as a percentage of ‘Value’ often called ‘Assessable Value’ or ‘Customs
Value’. The Value may be either (a) ‘Value’ as defined in section 14 (1) of Customs Act or (b)
Tariff value prescribed under section 14 (2) of Customs Act.
Tariff Value: Tariff Value can be fixed by CBE&C (Board) for any class of imported goods or
export goods. Government should consider trend of value of such or like goods while fixing
tariff value. Once so fixed, duty is payable as percentage of this value. (The percentage applicable
is as prescribed in Customs Tariff Act).
Customs value - Customs Value fixed as per section 14 (1) is the ‘Value’ normally used for
calculating customs duty payable (often called ‘customs value’ or ‘Assessable Value’.)

Section 14 (1) provide following criteria for deciding ‘Value’ for purpose of Customs Duty:
 Price at which such or like goods are ordinarily sold or offered for sale
 Price for delivery at the time and place of importation or exportation
 Price should be in course of International Trade

 Seller and buyer have no interest in the business of each other or one of them has no
interest in the other
 Price should be sole consideration for sale or offer for sale

 Rate of exchange as on date of presentation of Bill of Entry as fixed by CBE&C (Board) by
Notification should be considered
This criterion is fully applicable for valuing export goods. However, in case of imported goods,
valuation is required to be done according to valuation rules Valuation has to be on the basis of
condition at the time of import – (a) CVD should be levied on goods in the stage in which they

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