Valuation - Customs Valuation (Determination of Price of Imported Goods) Amendment Rules, 1995.

Document Text

Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 Notification No. 26/95-Cus. (N.T.), dated 24-4-1995 In exercise of the powers conferred by section 156 of the Customs Act, 1962 (52 of 1962), the Central Government hereby makes the following rules further to amend the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, namely:- 1. (1) These rules may be called the Customs Valuation (Determination of Price of Imported Goods) Amendment Rules, 1995. (2) They shall come into force on the date of their publication in the Official Gazette. 2. In rule 2 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (hereinafter referred to as the said Rules), in sub-rule (1), for clause (a), the following clauses shall be substituted, namely:- “(a) ”C o m p u ted valu e" m ean s th e valu e o f im p o rted g o o d s determined in accordance with rule 7A of these rules. (aa) “d ed u ctive valu e” m ean s th e valu e d eterm in ed in acco rd an ce with rule 7 of these rules"; 3. In rule 4 of the said rules, in sub-rule (3) in clause (b), after sub-clause (ii), the following sub-clause shall be inserted, namely:- “(iii) th e co m p u ted valu e fo r id en tical g o o d s o r sim ilar g o o d s:”. 4. After rule 6 of the said rules, the following rule shall be inserted, namely:- “6A. Determination of value when transaction value is not available. - If the value of imported goods cannot be determined under the provisions of rules 4, 5 and 6, the value shall be determined under the provisions of rule 7 or, when the value cannot be determined under that rule, under rule 7A: Provided that at the request of the importer, and with the approval of the proper officer, the order of application of ru les 7 an d 7 A sh a ll b e reversed .” 5. After rule 7 of the said rules, the following rule shall be inserted, namely:- “7A. Computed value. - Subject to the provisions of rule 3, the value of imported goods shall be based on a computed value, which shall consist of the sum of:- (a) the cost or value of materials and fabrication or other processing employed in producing the imported goods; (b) 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 India; (c) the cost or value of all other expenses under sub-rule (2) of rule 9 of these rules.". 6. In rule 8 of the said rules, in sub-rule (2) after clause (iii), the following clause shall be inserted, namely:- “(iii a ) th e co st of production other than computed values which have been determined for identical or similar goods in accordance with th e p ro visio n s o f ru le 7 A .”. 7. In the Schedule to said rules, - (a) after the Note to rule 7, the following Note shall be inserted, namely:- “N o te to R u le 7 A 1. As a general rule, value of imported goods is determined under these rules on the basis of information readily available in India. In order to determine a computed value, however, it may be necessary to examine the costs of producing the goods being valued and other information which has to be obtained from outside India. Furthermore, in most cases, the producer of goods will be outside the jurisdiction of the proper officer. The use of the computed value method will generally be limited to those cases where the buyer and seller are related, and the producer is prepared to supply to the proper officer the necessary costings and to provide facilities for any subsequent verification which may be necessary. 2 . T h e “co st or valu e” referred to in clause (a) of rule 7A is to be determined on the basis of information relating to the production of the goods being valued supplied by or on behalf of the producer. It is to be based upon the commercial accounts of the producer, provided that such accounts are consistent with the generally accepted accounting principles applied in the country where the goods are produced. 3. Th e “co st o r valu e” sh all in clu d e th e co st o f elem en ts sp ecified in clauses (1)(a)(ii) and (1)(a)(iii) of rule 9. It shall also include the value, apportioned as appropriate under the provisions of the relevant note to rule 9, of any element specified in rule 9(1)(b) which has been supplied directly or indirectly by the buyer for use in connection with the production of the imported goods. The value of the elements specified in rule 9(1)(b)(iv) which are undertaken in India shall be included only to the extent that such elements are charged to the producer. It is to be understood that no cost or value of the elements referred to in this paragraph shall be counted twice in determining the computed value. 4. Th e “am o u n t fo r p ro fit an d g en eral exp en ses” referred to in clau se (b) of rule 7A is to be determined on the basis of information supplied by or on behalf of the producer unless th e p ro d u cer’s figures are inconsistent with those 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 India. 5. It should be noted in this context th at th e “am o u n t fo r p ro fit an d g en eral exp en ses” h as to b e taken as a w h o le. It fo llo w s th at if, in an y p articu lar case, th e p ro d u cer’s p ro fit fig u re is lo w an d h is g en eral exp en ses are h ig h , th e p ro d u cer’s p ro fit an d g en eral expenses taken together may nevertheless be consistent with that usually reflected in sales of goods of the same class or kind. Such a situation might occur, for example, if a product were being launched in India and the producer accepted a nil or low profit to offset high general expenses associated with the launch. Where the producer can demonstrate a low profit on his sales of the imported goods because of particular commercial circumstances, his actual profit figures should be taken into account provided that he has valid commercial reasons to justify them and his pricing policy reflects usual pricing policies in the branch of industry concerned. Such a situation might occur for example, where producers have been temporarily because of an unforeseeable drop in demand, or where they sell goods to complement a range of goods being produced in India and accept a lo w p ro fit to m ain tain co m p etitively. W h ere th e p ro d u cer’s o w n figures for profit and general expenses are not consistent with those usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the lower prices forced to country of exportation for export to India, the amount for profit and general expenses may be based upon relevant information other than that supplied by or on behalf of the producer of the goods. 6. Th e “g en eral exp en ses” referred to in clau se (b ) o f ru le 7 A co vers th e direct and indirect costs of producing and selling the goods for export which are not included under clause (a) of rule 7A. 7. Whether certain g o o d s are “o f th e sam e class o r kin d ” as o th er g oo d s must be determined on a case-by-case basis with reference to the circumstances involved. In determining the usual profits and general expenses under the provisions of rule 7A, sales for export to India of the narrowest group or range of goods, which includes the goods being valued, for which the necessary information can be p ro vid ed , sh o u ld b e exam in ed . Fo r th e p u rp o se o f ru le 7 A “g o o d s o f th e sam e class o r kin d ” m u st b e fro m th e sam e co u n try as th e goods being valued."; (b) In the Note to rule 8, - (i) In th e p arag rap h 2 , fo r th e w ord s an d fig u res “ru les 4 to 7 ", th e words and figures ”ru les 4 to 7 A " sh all b e su b stitu ted ; (ii) n paragraph 3, in sub-paragraph (a) and (b), for the words and fig u res “ru le 7 ", w h erever th ey o ccu r, th e w o rd s an d fig u res ”ru les 7 and 7A" shall be substituted. [Notification No. 26/95-Cus. (N.T.), dated 24-4-1995]

HS Codes Referenced

Need the current duty rate?

Calculate the full duty cascade — BCD, SWS, IGST and trade remedies — for any HS code, free.