Customs Valuation Rule IOA - Rejection of Declared Value
Circular No.13/1998 date 9/3/98Sub: Introduction of a new rule - Rule IOA in the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.
A new rule. Rule IOA has been added to the existing Customs Valuation Rules, 1988 to give effect to the decision taken by the Ministers of the Countries which the signatories to GATT, 1994, (copy enclo.sed). The rule IOA reads as foUows:-
""1OA. Rejection of declared value:- (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer ofifcch goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the value of-such imported goods cannot be determined under the provisions of sub- rule (1) of Rule 4.
(2) At the request of an importer, the proper officer, shall intimate the importer in writing, the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule(1).""
2. As you are aware, as per rule 4 of the Customs Valuation Rules, the transaction value, i.e. the price actually paid or payable for the goods when sold for export to India, as adjusted, in accordance with the provisions of rule 9, has to be accepted, except where situations as provided in Rule 4(2) and 4(3) exist. If none of these circumstances prevail, the rules do not permit the rejection of declared value, if such a value is supported by an invoice from the seller.
3. Several instances have been brought to the notice of the Board, wherein the invoices produced in support of the declared values have been found to be manipulated but on the face of it the transaction value (i.e. the invoice price) is projected to be true and correct. In some cases even manufacturer's invoices have been found to be substantially lower than the prevailing international market price.
4. In a recent-study conducted by the Dte. of Valuation on the import of Tinplate & Tinplate waste, it was seen that if the computed value of Tinplate price is worked out, then the minimum price of Tinplate from Europe & America should not be lower then US$ 750-800 PMT, whereas declared values have ranged from US$ 607 to 642 PMT; US$ 728 to 781; US$ 712 to 862 PMT (GIF) etc. at various ports, at different points of time. It was also observed that, the declared value of tinplate waste was US$ 300-310 PMT (GIF) whereas the prices of HR coil itself was in the range of US$ 340-350 PMT. Similar underinvoicing has also been noticed in regard to imports of ball bearings, plastic raw materials etc.
5. In the absence of any specific evidence to reject the declared value, at times, these values have had to be accepted. Even where, the transaction value was rejected based on international prices and the assessable value was fixed at a higher level, disputes have been raised by the importers, leading to prolonged litigation.
6. Thus, in order to enable a fair determination of the Customs Value of imported goods and in consideration of these practices which have been found to be prevalent with reference to some commodities which underscores the need to provide a ground for rejection of the declared value based on the existence of ""reason to doubt"", and to give effect to the Ministerial decision referred to above, the new rule 1OA has been added to the Customs Valuation Rules, 1988.
7. The new rule IOA has been introduced vide Notification No.10/98(NT)Cus dt.19/2/98, GSR No. 77 dated 19.2.98.
8. Any further clarifications/comments in the matter may be sent to the undersigned.
Sd/-
(P.R.V.Ramanan)
Joint Secretary (Customs)
[F.N0.467/114/97-Cus. V]
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