CUSTOMS ACT,

1962

LEARNING
OUTCOME
Understanding and using the
Valuation methods and practices

Valuation u/s 14

Tariff Value
U/s 14(2)

Imported Goods
Goods

Custom Value
U/s 14(1)

Exported

As per Customs Valuation Rules, 1988

Valuation of imported goods

Transaction value (Rule 3)
Comparative Value Method
- Transaction value of identical goods
(Rule 4)
- Transaction value of similar goods (Rule
5)
Deductive value (Rule 7)
Computed Value (Rule 8)
Residual method (Rule 9)

Valuation u/s 14 (1)

VALUATION OF IMPORTED/ EXPORTED
GOODS
For the purpose of Customs Tariff Act,
1975 or any other Law for the time
being in force.
Rate of exchange: When bill of
entry is presented, rate in force

Valuation under specific cases

Sale or purchase on high sea basis:
Value shall be last transaction value
1. (Value: price actually paid or payable
when sold for import in India)
2. More than one transaction: last
transaction value shall be taken

Valuation under specific cases

Price rise between date of contract and
date of actual import:
Value shall be transaction value
1. Price actually paid/ payable
imported/ exported goods.
2. Stated in the contract (unless not
acceptable)
3. Price rise is irrelevant.

Valuation of imported goods

If Transaction value (Rule 3) is
rejected by customs authority: following
methods are used in sequence:
Comparative Value Method
- Transaction value of identical goods
(Rule 4)
- Transaction value of similar goods (Rule
5)
Deductive value (Rule 7)

If Transaction value (Rule 3) is rejected

by appropriate customs authority: WHY ?
Restrictions as to disposition or use of
the goods by the buyer
Sale price is subject to some condition/
consideration
value
cannot
be
determined
Buyer and seller are related

In certain cases
Transaction Value

No

rejection

of

If Restrictions as to disposition or use

of the goods by the Law or public
authority of India.
If Restrictions as to disposition or use
of
the
goods,
limits
the
geographical area Resold.
Buyer and seller are related: did not
influence the price

Transaction value of identical goods

(Rule 4)
Rule 4(1)(a): if valuation under Rule 3 is
not possible
Value: Transaction value of Identical
Goods
Sold for export to India and imported at
or about same time

Transaction value of identical goods

(Rule 4)
Value: Transaction value of Identical
Goods
At the same commercial level and
substantially same quantity

Transaction value of identical goods

(Rule 4)
Identical Goods: Conditions:
1. Same in all respect: physical,
characteristics, quality, reputation.
2. Produced in same country
3. Produced by same manufacture (if not,
other manufacturer)
Adjustments to be made Rule 4 (1)(c): if
two prices: lowest - taken

Transaction value of similar goods

(Rule 5)
Rule 5(1)(a): if valuation under Rule 3 & 4
is not possible
Value: Transaction value of Similar Goods
Sold for export to India and imported at
or about same time

Transaction value of Similar goods

(Rule 5)
Similar Goods: Conditions:
1. Alike in all respect: characteristics,
components and perform same
function
2. Commercially inter-changeable goods
3. Produced in same country
4. Produced by same manufacture (if not
other manufacturer)

Deductive Method (Rule 7)

Value = Market Value in India post
import activity/ costs, etc.
Identical and similar goods are sold in
India
Have selling price in India.
Sale should be in same condition as IMPORT
Price= Unit Price goods (imported/
identical or similar goods) sold in
greatest aggregate quantity to not

Computed Method (Rule 8)

Value =
Cost of production/ fabrications/
processing
+ Profit
+ Pre-importation expenses
If, permitted by Customs officers,
assesse can use before Deductive
Method

Residual Method (Rule 9)

Fallback Method or Best Judgment
Method (Income Tax and Sales Tax)
Reasonable means general provisions
of the Valuation Rules.
Value cannot exceed normal price.
Value - based on previously
determined values
Prohibition:
- Use of selling price of India
- accepting highest of the alternative

Valuation of Exported goods

Law: Customs (Valuation of Exported
Goods) Rules, 2007
Methods:
Tariff value (Section 14 (2))
Transaction Value [Section14 (1)]
Comparative Value Method (Rule 4)
- (Goods like kind and quality)
Computed Value (Rule 5)
Residual method (Rule 6)

Goods derelict, wreck, etc.

Derelict: left abandoned without
recovering hope
Jetsam: goods thrown overboard the
ship
Flotsam: floating wreckage of ship
Wreck: broken by peril
COMING TO INDIA
Shall be: dealt as they were imported i.e.
liable to duty UNLESS SHOWN duty
free goods