Customs Circular No-38/2007-CUS.
Dated 9.10.2007
Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 –
Instructions – reg.
Your attention is invited to section 95 of the Finance Act, 2007 which
substitutes the existing section 14 of the Customs Act, 1962. The new section 14
of the Customs Act, 1962 shall come into force with effect from 10-10-2007 in
terms of Notification No 93/2007-Customs (NT) dated 13th September, 2007. The
new Import Valuation Rules, i.e., Customs Valuation (Determination of Value of
Imported Goods) Rules, 2007 made under the provisions of section 14 of the
Customs Act, 1962, have been notified vide Notification No 94/2007-Customs (NT)
dated 13-9-2007 and the same shall also come into force on 10-10-2007.
2. The clarifications with regard to the major changes in the new Valuation
Rules for imported goods are given below for proper application of the Valuation
Rules, i.e., Customs Valuation (Determination of Value of Imported Goods) Rules,
2007:-
(i) Transaction Value has been defined to mean the value referred to in
sub-section (1) of section 14 of the Customs Act, 1962.
(ii) A ‘proviso’ has been added to Rules 4(1)(a) and 5(1) concerning identical
goods and similar goods respectively, to the effect that the value of the goods
provisionally assessed under Section 18 of the Customs Act, 1962, shall not be
the basis for determining the value of any other goods.
(iii) In the residual method of Valuation, which has been renumbered as Rule 9
(erstwhile Rule 8), a proviso has been added with a view to keeping Rule 9 in
line with Article 7 of the WTO Valuation Agreement which corresponds to the said
Rules and refers to the provisions of Article VII of the GATT.
(iv) An ‘Explanation’ has been added to Rule 10(1) (erstwhile Rule 9(1)) to
clarify that the royalty, licence fee or any other payment for using a process,
when they are otherwise includible in terms of Clause (c) or (e) of Rule 10(1),
shall be added to the price actually paid or payable, notwithstanding the fact
that such goods may be subjected to the said process after their importation. At
times, royalty, license fee or any other payment for a process to be paid by the
importer, may be linked to post–importation activity like running of the
machine/ plant, when the process is put to use. This Explanation has been added
in the context of the Supreme Court judgement in the case of J.K. Corporation
Ltd. Versus Commissioner of Customs (Port) Kolkata [2007 (208) ELT 485 (SC)] so
as to clarify that such royalty, license fee, etc., if otherwise includible in
terms of clauses (c) or (e) of Rule 10, will be includible in the value of the
goods irrespective of the fact that such royalty, licence fee, etc., relates to
a process which is made operational during the running of the machines, i.e.,
after importation of the goods.
(v) An ‘Explanation’ has been added to Rule 10(2) clarifying that the cost of
transport of the imported goods includes ship demurrage charges on chartered
vessels, lighterage charges or barge charges. This Explanation is to take care
of cases of imports by time chartered vessels or bulk carriers discharging goods
on high seas needing additional expenditure for delivery of the goods at the
“Place of Importation” mentioned in Rule 10(2)(a). The ‘place of importation’,
as observed by the Supreme Court in the case of Garden Silk Mills Ltd Versus
Union of India [1993 (113) E.L.T.358(S.C)] means the place where the imported
goods reach the landmass of India in the Customs area of the port, airport or
land customs station, or if they are consumed before reaching the landmass of
India, the place of consumption. Therefore, in cases where ship demurrage
charges are paid by the importer for detention of the ship in the harbour before
touching the landmass at the docks or at the place of consumption, these charges
would be includible in the cost of transportation. Similarly, in cases where the
big mother vessels cannot enter the harbour for any reason and goods are brought
to the docks by smaller vessels like barges, small boats, etc., the cost
incurred by the importer for bringing the goods to the landmass or place of
consumption, such as lighterage charges, barge charges will also be included in
the cost of transportation.
(vi) An ‘Explanation’ has been added to Rule 12 (erstwhile Rule 10A), which
relates to rejection of declared value, to bring more clarity and objectivity in
exercising the authority for rejection of declared value. The Explanation
clarifies that this rule as such does not provide a method for determination of
value, and that it merely provides a mechanism and procedure for rejection of
declared value in certain cases. It also clarifies that where the proper officer
is satisfied after consultation with the importer, the declared value shall be
accepted. This Explanation also gives certain illustrative reasons which could
form the basis for having doubt about the truth or accuracy of the declared
value.
3. The contents of this Circular may be brought to the notice of the field
formations and the Trade under your jurisdictions.
4. Difficulties faced, if any, in implementation of the Circular may please be
brought to the notice of the Board at an early date.
5. Please acknowledge receipt.
6. Hindi version follows.
F. No. 467/35/2007-CusV Yours faithfully
(M. K. Singh)
Director (ICD)
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