Page 141 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes Post-importation charges (e.g. inland transportation charges, installation or erection
charges, etc.);

Duties and taxes payable in India.
Transaction value method not applicable to certain cases
The Transaction value method cannot be applied in cases where the transactions do not comply
with the definition under Rule 4 (1). Thus, if there is no sale for export to India in respect of any
importation, such as gifts and consignment imports for subsequent sale, there is no transaction
value and hence the method is not applicable.
The conditions referred to under Sub-Rule 4(2) are also required to be satisfied for applying the
transaction value method. These are:
The sale is in the ordinary course of trade under fully competitive conditions;
The sale does not involve any abnormal discount or reduction from the ordinary
competitive price;
The sale does not involve special discounts limited to exclusive agents;
Objective and quantifiable data exist with regard to the adjustments to be made under
Rule 9;

There are no restrictions concerning the disposition or use of the goods by the buyer
(subject to certain exceptions);
The sale or price is not subject to some condition or consideration;

No part of the proceeds of the goods (by resale, disposal or use) after importation accrues
to the seller;
Buyer and seller are not related, and if related, the relationship should not have influenced
the price.

Transaction value method also does not apply to situations where valuation fraud (under
valuation, wrong description, misdeclaration of quantity, grade, specifications, etc.) are shown
to have taken place. These are cases where Customs do have adequate evidence to establish the
fraud. In cases of suspected fraud, Rule 10 A could be applied to reject the declared value and the
transaction value method.

Related Party transactions

The transaction value method cannot be applied in cases where the buyer and seller are
related and the relationship has influenced the price. The scope of relationship is defined in
Sub-rule 2 (2) of the Customs Valuation Rules. In such cases the burden of proof shifts to the
importer, who should satisfy the Customs that the declared price closely approximates to the
test values prescribed in sub-rule 4(4). If the importer fails to discharge this responsibility, the
declared value could be rejected and valuation done under any of the subsequent methods
applied in hierarchical order.

6.4 The Harmonized System

The Harmonized Commodity Description and Coding System generally referred to as
“Harmonized System” or simply “HS” is a multipurpose international product nomenclature
developed by the World Customs Organization (WCO).
It comprises about 5,000 commodity groups; each identified by a six digit code, arranged in a
legal and logical structure and is supported by well-defined rules to achieve uniform classification.

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