Customs valuation - WCO manual
The WCO is going to issue a detailed CUSTOMS VALUATION CONTROL HANDBOOK to help customs officers to correctly value goods for levying customs duty.
The Indian Customs seems to be on the lines suggested by the WCO. For example, let us see the provisions for determination of value under the “fall back” method – what we call the Residual Method.
The WCO provisions and the proposed Indian provisions in the Draft Circular released in March 2007 may be compared. (Incidentally what happened to the circular? Has everyone forgotten about it?)
Proposed WCO provisions | Proposed Indian provisions |
|---|---|
Under the fall-back method, the Customs value must not be based on : | No value shall be determined under the provisions of' this rule on the basis of |
(a) the selling price of goods produced in the country of importation; | the selling price in India of the goods produced in India; |
(b) the higher of two alternative values; | a system which provides for the acceptance for customs purposes of the highest of the two alternative values; |
(c) the price of goods on the domestic market of the country of exportation | the price of the goods on the domestic market of the country of exportation; |
(d) the cost of production, except under the computed value method; | the cost of production other than computed values which have been determined for identical or similar goods in accordance with the provisions of rule 9; |
(e) the price of goods for export to a third country; | the price of the goods for the export to a country other than India |
(f) minimum Customs values; and | andminimum customs values; or |
(g) arbitrary or fictitious values | arbitrary or fictitious values. |
The Draft WCO Manual is learnt to have given some examples on arriving at the value based on this method.
(a) a trotting horse, imported by a buyer three years after its purchase in the country of export was valued by an expert at importation at two times the purchase price on the basis of expert evaluation;
(b) when there is no price actually paid or payable (and therefore no transaction value) for certain foreign-made components purchased as part of a system which also includes domestically-manufactured components, and there is no basis on which the price for the foreign components can be quantified, in the absence of an alternative basis of valuation, a method of valuation derived from computed value could be used to value the foreign components;
(c) transaction value may not be used to value merchandise imported pursuant to a lease agreement, with an option to buy. However, where other bases of valuation may also not be used, a value may be based on the transaction value approach using the "option-to-buy" price in the lease agreement, reasonably adjusted to arrive at a value;
(d) the Customs value of used machines could be determined on the basis of an expert's estimation of the value of the machines in the conditions as imported. No other methods were available in this case, as the machines were disassembled and used partly as spare parts by the importer in the country of importation;
(e) a series of second-hand machines and appliances for a specific treatment of metal surfaces are sold at a nominal price of 5 currency units on the condition that the buyer demolishes the machines, neutralizes and destroys the chemicals used in the process and carries away the machines and appliances. These activities are carried out in the country of importation. The machines have been used for 15 to 20 years and can be used only after a fundamental repair. The Customs value of this equipment could consist of the cost of demolishing the machines, neutralizing and destroying the chemicals, and transporting the machines to the place of importation;
(f) in the absence of data for the application of any other method, including the computed value method, the Customs value of video cassettes imported on hire terms for rehiring to private homes could be determined by applying flexibly the provisions for the transaction value of the goods imported. In that case the Customs value could be based on the amount of the royalties payable by the importer to the lessor during the hire period, including the cost of delivery of the cassettes to the place of importation;
(g) waste oil was collected by an importer from foreign service stations, industrial plants, etc. and transported to the country of importation to be used for heating the importer's greenhouses. There was no charge for the waste oil, and its transportation in the country of importation was effected using the importer's own vehicles. The Customs value was determined as composed of the cost of collecting the waste oil plus the cost of transportation to the place of importation.