Page 161 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws

Notes 9.5 Summary

 When the transaction value is not accepted by Customs, the Agreement lays down five
methods for establishing value.

 In determining value on the basis of these methods, Customs is required to consult the
importers and take their views into account.

 The detailed WTO rules on the valuation of goods for customs purposes are contained in
the Agreement on Customs Valuation (full title: Agreement on Implementation of Article
VII of GATT 1994).
 The Agreement’s valuation system is based on simple and equitable criteria that take
commercial practices into account.

 As a general rule, the Agreement visualizes that where a transaction value is not accepted,
the value should be determined by using the above standards on the basis of the
information available within the country of importation.

 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).

 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).

9.6 Keywords

Computed Value: It is determined by adding to the cost of producing the goods being valued “an
amount for profit and general expenses equal to that usually reflected in sales of goods of the
same class or kind as the goods being valued which are made by producers in the country of
exportation for export to the country of importation.

Customs Duty: It is payable as a percentage of ‘Value’ often called ‘Assessable Value’ or ‘Customs
Value’.
Deductive Value: It is determined on the basis of the unit sales price in the domestic market of
the imported goods being valued or of identical or similar goods after making deductions for
such elements as profits, customs duties.
Tariff: A tariff is a tax on imports or exports. Money collected under a tariff is called a duty or
customs duty.

9.7 Review Questions

1. Discuss the rules of the Agreement on Customs Valuation.
2. “Prior to 1 January 1995, only 11 countries were applying the Agreement’s valuation
system.” Elaborate this statement.
3. What are the Methods of Valuation for Customs?
4 What do you mean by Valuation Rules for imported good?

5 How valuation of goods can be done?

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