‘Artha-sastra' a source of inspiration for GATT Definition of Value of imported merchandise
VALUATION often causes considerable headaches for both Customs and traders. Article VII of GATT prescribes that the value of imported merchandise for Customs purposes should be based on the actual value of the imported merchandise. It further defines “actual value” as the price at which, at a time and place determined by the legislation of the country of importation, such or like merchandise is sold or offered for sale in the ordinary course of trade under fully competitive conditions.
It is interesting to note that the spirit of GATT Article VII is already found in the Indian classic treatise on government and economic policy, ‘Artha-sastra'. The treatise was written by Chanakya (or Kautilya) who was educated in Taxila and became the mentor/counsellor of Emperor Chandragupta Maurya (reign: 321 – 397 B.C.). From the relevant passage in the “Artha-sastra” we can see clearly how Customs valuation was conducted in India in ancient times:
“The merchandise being placed near the flag of the toll-house, the merchants shall declare its quantity and price, cry out thrice, “Who will purchase this quantity of merchandise for this price?” and hand over the same to those who demand it for that price. When purchasers happen to bid for it, the enhanced amount of the price together with the toll on the merchandise shall be paid into the King's treasury. When, under the fear of having to pay a heavy toll, the quantity or the price of merchandise is lowered, the excess shall be taken by the King, or the merchants shall be made to pay eight times the toll.”
The Indian valuation practice described in the ‘Artha-sastra' written more than 2,000 years ago was based on a real actual value and could be regarded as a source of inspiration for the spirit of Article VII of GATT.
[This interesting article appeared in the October 1992 edition of CCC News... and is carried in the WCO brochure created on the occasion of the 30 th anniversary of the GATT/WTO Valuation Agreement on 13 th April 2010]