Page 159 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws

Notes 9.4 Valuation Rules for Imported Good

Valuation in Customs Act has to be done as per valuation rules. These rules are based on ‘WTO
Valuation Agreement’ (Earlier termed as GATT Valuation Code). These rules are only for
valuation of imported goods and not applicable to export goods.
The value of imported goods for purposes of assessment of duly is determined in accordance
with the provisions of Section 14 of 1962 and the Customs Valuation (Determination of Price of
Imported Goods) Rules, 1988, which were brought into force on 16th August, 1988 Rule 3(i) of
the Valuation Rules provides that the value of imported goods shall be the. ‘Transaction value’
under Rule 4 ‘Transaction value’ has been defined as the price actually paid or payable for the
goods when sold for export to India, adjusted in accordance with the provisions of Rule 9. The
adjustments under Rule 9 provide, inter alia, the addition in all cases, of freight and cost of
insurance to the ‘transaction value’ if not already included and also for the addition of loading,
unloading and handling charges for purposes of assessment. In other words, the assessable
value is the safe price of the imported goods plus the landing charges subject to any other
adjustment which may be necessary under the provisions of Rule. If the value cannot be
determined under Rule 3(i), the value is to be determined under Rules 5 to 8, which are required
to be in that order.

The rate of exchange applicable for conversion of foreign currency in Indian currency is the rate
in force on the date of presentation of the Bill Entry under Section 46. Such exchange rates are
notified by the Govt. from time to time by notifications issued under clause a (i) of Section 14(3).

Methods of Valuation for Customs

The Valuation Rules, 1988, based on WTO Valuation Agreement (earlier GATT Valuation Code);
consist of rules providing six methods of valuation.
The methods are:
(a) Transaction Value of Imported goods
(b) Transaction Value of Identical Goods
(c) Transaction Value of Similar Goods

(d) Deductive Value, which is based on identical or similar imported goods, sold in India.
(e) Computed value, which is based on cost of manufacture of goods plus profits
(f) Residual method based on reasonable means and data available.

These are to be applied in sequential order, i.e. if method one cannot be applied, then method
two comes into force and when method two also cannot be applied, method three should be
used and so on. The only exception is that the ‘computed value’ method may be used before
‘deductive value’ method, if the importer requests and Assessing Officer permits.

Self Assessment

Fill in the blanks:

9. The Valuation Rules, ........................, based on WTO Valuation Agreement (earlier GATT
Valuation Code); consist of rules providing six methods of valuation.
10. The adjustments under ............................ provide, inter alia, the addition in all cases, of
freight and cost of insurance to the ‘transaction value’ if not already included and also for
the addition of loading, unloading and handling charges for purposes of assessment.

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