Finance Act 2007 – changes in customs valuation
Section 14 of the Customs Act, 1962 was further amended and the amended statute had come into effect from 11-05-2007(hopefully).
As per the latest amendment, the value of imported and exported goods :
Shall be the Transaction Value – the price actually paid or payable;
++ When sold for export to India;
++ For delivery at the time and place of importation;
++ The transaction to be between un-related persons;
++ price is to be the sole consideration for the sale subject to such other conditions as “may be specified in the rules” made in this behalf.
The transaction value - price in addition to the price paid or payable, shall include any amount paid or payable for costs and services including :
commissions and brokerage,
engineering,
design work,
royalties and license fees,
costs of transportation to the place of importation,
insurance,
loading, unloading and handling charges.
The significant amendments now made, when compared to the proposed amendments in the Finance Bill 2007 are that the important wording “for delivery at the time and place of importation”found its way back into the statute. The costs and services required to be included to the price actually paid or payable are exhaustive. One important component of “cost and services” that is found missing when compared to the Finance Bill 2007 proposal is “assists”. “Assists” are costs relating to those goods, materials or services which a purchaser provides, directly or indirectly, free of charge or at a reduced cost, for use in connection with the production of imported goods. The value of these "assists" must be included in the value of those imported goods when entered for Customs purposes. It is not known why the “assists” are left out in the list of costs and services.
“Loading” and “unloading” charges have also been included along with the “handling charges”. Are these “loading” and “unloading” charges not part of “handling charges”?
Another notable omission from the statute is that Sub-section 3 of the Section 14 is omitted. Since the proviso (ii) to the Section 14(1) specify that valuation rules may provide for “the manner of determination of value in respect of goods where there is no sale”