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Presentati ofor 61st batch irs

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The document provides a history of customs valuation in India and discusses key concepts and changes introduced by the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. It notes that transaction value based on the actual price paid or payable is now the primary basis for valuation, addressing issues like related party transactions. It also summarizes important rules regarding acceptance or rejection of transaction value and determining value through alternative methods.

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PRESENTATION ON Concept of Transaction Value, and Custom Valuation Rules 2007. Exclusion/Inclusion in Custom Value.
DETERMINATION OF CORRECT VALUE Low rate of duty Developing economy & industry Funds used in development __________________________________ Levy of duty. Sec. 12. Definition of value
BRIEF HISTORY In 1947 23 Countries in Geneva signed Genera Agreement of Trade and Tariffs (GATT) Art. VII of GATT deals with Valuation for Customs purpose. In 1952 Customs Co-operative Council (CCC) was created in Brussels to study Customs techniques of different countries. The special emphasis was on : Nomenclature for the classification of goods in Customs tariff. Valuation of goods for Customs purpose. In 1995 WTO was established in 1995 and GATT was replaced by WTO Agreement. WTO Agreement on Valuation 1994 is intended to implement Art.VII of GATT. Also in 1995 the CCC came to be known as World Customs Organisation (WCO).
History of Valuation The method of valuation in The Sea Custom Act 1878 was provided in Sec. 30 . Concept of Real Value in Sec. 30. It was a artificial value. It was based on the Wholesale Cash Price of such and like goods with deductions for customs duty and trade discount.
History of Valuation In the Custom Act 1962,value was defined in Sec.-14 and in definitions. Deemed value concept. Related parties was not covered by Sec.14. Custom valuation Rules 1963. WTO Valuation concept of Transaction Value was introduced in 1988.
VAL. RULES IN C. A. 62 & T.V. Section 14 of the Customs Act, 1962 deals with Valuation of goods. WTO emphasizes on Transaction Value/ Actual Value. New Valuation Rules: The new Customs Valuation system has been introduced in India with the amendment of Sec 14 of CA 1962 and bringing in force of the Customs Valuation (Determination of Price of imported goods) Rules, 1988 with effect from 16.08.1988.
Amendment of sec.14 and T.V. Amendment in Sec.14 and Valuation Rules were made in 2007 and new Sec.14 and CVR 2007 came in force with effect from 10.10.2007. OLD:- valuation of goods for purpose of assessment :-(1)For the purpose of C T A 1975,or any other law for the time being in force where under a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in course of international trade, where the seller and buyer have no interest in business of each other and price is sole consideration for the sale or offer for sale . (1-A): subject to the provision of sub-section(1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf.
Section 14 And Transaction Value Sec.14: valuation of goods : for the purpose of CTA 1975, or any other law in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to india for delivery at time and place of importation, or as the case may be, for export from india for delivery at the time and place of exportation where the buyer and seller of goods are not related and price is the sole consideration for sale subject to such other conditions as may be specified in the rules made in this behalf.
PURPOSE To remove the contradiction of deemed value and transaction value in sec.14. Offer for sale in sec.14 Conflict between sec.14(1) & 14(1-A) Court judgment:-S.C. in case of M/s Ispat Industries Ltd(2006-tiol-127-sc-cus) has held that the deeming provision of sec.14 of the custom act will prevail over the value provision of WTO valuation code.
IMPACT CVR 2007 came in sec.14 itself. subject to such other condition as may be specified in the rules made in this behalf. This provides:- for certain aspect such as related parties, manner of determination of value, acceptance or rejection of declared value, additions to transaction value. Accept,Reject,Determine value in sec.14 and CVR 2007.
Important Features of Val. Rules Rule 3:-acceptance of t v Rule 11:-document needed for t v Burden of correctness of declared value is on importer. Acceptance of t v is subject to Rule 12
Rejection of Transaction Value Rule 12 of CVR 2007 Changes after amendment. Reasons for raising doubt is inclusive Val. Bull. (I P), Alerts may be used Burden of proof comes to dept.
Concept of valuation for related parties Prior to 1988:- section 14 :- deemed value would be the price subject to the condition that buyer and seller have no interest in business of each other. Related parties were not within the definition contained in section 14(1)(a).
Situation after 1988 In the new valuation system even where buyer and seller are related, the Transaction Value would be accepted under the provisions of Rule 3(3). It does not reject Transaction Value but only gives scope for further enquiry.
Treatment for related parties transaction Whether they are related. Rule 2(2) Only relationship will not disqualify Transaction Value. Rule 3 (2)(d). In case of relationship how/when Transaction Value is acceptable. Rule 3(3). Rule 10 are adjustments to Transaction Value which examines addition of certain expenses, with relation to imported goods such as Royalties, License fee etc. to the value.
Issues examined by SVB Whether del. Value is true transaction value in cases of related party transactions. Rule 3. Whether payments made by the buyer, over and above the invoice value, has to be added to invoice value for chargeability of duty. Rule 10.
Indian Customs Practice Examination of records and documents is undertaken by SVB Central Registry Database (CRD ) for SVB cases maintained in Directorate of Valuation. Meanwhile, imported goods are cleared provisionally against bond with Bank Guarantee / cash deposit. Decisions given by SVB of one Custom House is applicable for imports anywhere in the country.
PROCEDURE FOR RELATED IMPORTERS DECLARATION FILES B/E IMPORTER NOT RELATED BE ASSESSED RELATED B/E ASSESSED SVB CIRCULAR RD 1% APPG. GROUP
REGISTRATION / FINALISATION IN SVB AO VISIT QUESTIONER SVB REGISTRATION PH BY DC SVB O-IN-O B/E ASSESSED
Factors Verified By SVB Restrictions as to the disposition or use of the goods by the buyer Art 1(a) Rule 3(2)(a) of CVR 2007 The sale price is not subject to some condition or consideration Art 1(b) Rule 3(2)(b) of CVR 2007 Any part of the proceeds of any subsequent resale , disposal or use of the goods by the buyer will accrue directly or indirectly to the seller Art 1(c) Rule 3(2)(c) of CVR2007
CHECK ON TRANSACTION BETWEEN IMPTR and SUPLLR. PROCEEDS CONDITIONS RESTRICTIONS TV OF UNRELATED BUYERS IF NOT RELATIONSHIP DID NOT INFLUENCE TV ACCEPT
Acceptance of Transaction Value On Examination of the circumstance of the sale of imported goods indicate that the relationship did not influence the price. Art 1(2)(a)/ Rule 3(3)(a) of CVR 2007 If the Importer demonstrate that the declared value of the goods being valued closely approximates to the transaction value of identical / similar goods in sales to unrelated buyers in India Art 1(2)(b) / Rule 3(3)(b) of CVR 2007
REJECTION OF TRANSACTION VALUE R-6 SIMILAR GOODS R-5 IDENTICAL GOODS REJECT TV R-7 DEDUCTIVE METHOD R-7a COMPUTED VALUE R-8 RESIDUAL METHOD
Cost and Services to be Added (Rule 10 of CVR 2007) Commissions and Brokerage incurred by the Buyer but not included in the price. Art 8(1)(a) Rule. 10(1)(a)(i) Royalty and Licence Fees Art 8(1)(c) Rule. 10(1)(c) Value of any part of proceeds of subsequent resale, disposal or use of imported goods that accrues to the seller. Art 8(1)(d) Rule. 10(1)(d) Payments actually made or to be made as a condition of sale of the imported goods. Rule. 10(1)(e) Service stocking discount Engineering, development , design work and plans & sketches charges. Art 8(1)(b) Rule. 10(1)(b)(iv)
Cost and Services NOT to be Added (Rule 9 of CVR 88) Buying Commissions. Art 8(1)(a)(i) Rule. 10(1)(a)(i) Interest on deferred payments CBEC 493/39/98-Cus VII/30-1-89 Payment made by the buyer for right to distribute / resell / reproduce Art 8(1)息 Rule. 10(1)(c)
Valuation (Import) Rules 2007 Rule 4 : Transaction value of identical goods imported at or about same time in a sale at same commercial level and substantially same quantity
Valuation (Import) Rules 2007 Rule 5 : Transaction value of similar goods imported at or about same time in a sale at same commercial level and substantially same quantity
Valuation (Import) Rules 2007 Rule 6 : Sequence of determination under Rule 7 (Deductive value) or Rule 8 (Computed value)
Valuation (Import) Rules 2007 Rule 7 : Deductive value based on unit price of goods valued or identical or similar goods in the condition as imported and sold in greatest aggregate quantity to persons unrelated to seller in India
Valuation (Import) Rules 2007 Rule 8 : Computed value based on cost of materials and fabrication or other processing employed in producing imported goods and profit and general expenses for sale of goods made by producers in country of exportation
Valuation (Import) Rules 2007 Rule 9 : Residual method to value on the basis of reasonable means but should not exceed the price in course of international trade. .concept of deemed value
OTHER CHANGES IN VALUATION RULES A proviso has been added to Rule 4 & 5 concerning similar and identical goods. A proviso has been added to Rule 9 (earlier Rule 8) in line with Article 7 of WTO valuation agreement. An explanation is added to Rule 10 (1) (earlier Rule 9) in view of S.C. judgment in M/S J K Corporation Ltd. An explanation is added to Rule 10(2) in view of S.C. judgment in M/S Garden Silk Mills Ltd. An explanation is added to Rule 12 (earlier Rule 10A) relating to rejection of Transaction Value.
VALUATION TOOLS NIDB VAL. BULETTIN VALUATION ALERTS AND GUIDELINES CRD
Case laws for rejection of T V Price of Contemporary Imports-T V refuted on the basis of prices of contemporary imports Lark Trading co Vs cc 1995(76)ELT381TR Big Byte Corp. Vs cc 2006(201)ELT 70TR Pasupati Traders Vs cc 2003(154)ELT373T Chandni Int. Vs cc 2003(153) ELT 312 TR Schokhi Indus Vs cc 2002(146)ELT462TR CC Vs Siddharth Overseas 2002(146)ELT389TR SAS impex Vs cc 2002(144)ELT215TR BNK Intrade Vs cc(140)ELT TR. Utkal Commercial Corporation Vs cc 2001(137)ELT439TR
Vast difference between list price and declared price Vimal Enterprises Vs CC 2001(129)ELT 123 TR. Nidhi Distributors Vs CC 2001 (137) ELT 568 TR.
Difference between international price and invoice price Plast Fab Vs CC 1993 (66) ELT 441 TR. Wipro Information Technology Ltd.Vs CC 1998 (100) ELT 401 TR
Vast difference between prices of identical goods Pan Asia Enterprises Vs CC 1995(79) ELT 332 TR. Mangla Trading Co. Vs CC 1996(81) ELT 397 TR.
Steep fall in prices Shree Ganesh Agencies Vs CC 1998(104) ELT 88 TR. GOODS MISECLARED Tirupati Granites (p) Ltd. Vs CC 1995 ELT 301 TR FORGED CERTIFICATE OF ORIGIN CC Vs Sanjay Chandiram 4 S.C. 222 FALLS INVOICE CONFIRMED BY CUSTOMS AUTHORITIES OF EXPORTING COUNTRY Konia Trading Co Vs CC 2006 (199)ELT 689 TR
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Presentati ofor 61st batch irs

  • 1. PRESENTATION ON Concept of Transaction Value, and Custom Valuation Rules 2007. Exclusion/Inclusion in Custom Value.
  • 2. DETERMINATION OF CORRECT VALUE Low rate of duty Developing economy & industry Funds used in development __________________________________ Levy of duty. Sec. 12. Definition of value
  • 3. BRIEF HISTORY In 1947 23 Countries in Geneva signed Genera Agreement of Trade and Tariffs (GATT) Art. VII of GATT deals with Valuation for Customs purpose. In 1952 Customs Co-operative Council (CCC) was created in Brussels to study Customs techniques of different countries. The special emphasis was on : Nomenclature for the classification of goods in Customs tariff. Valuation of goods for Customs purpose. In 1995 WTO was established in 1995 and GATT was replaced by WTO Agreement. WTO Agreement on Valuation 1994 is intended to implement Art.VII of GATT. Also in 1995 the CCC came to be known as World Customs Organisation (WCO).
  • 4. History of Valuation The method of valuation in The Sea Custom Act 1878 was provided in Sec. 30 . Concept of Real Value in Sec. 30. It was a artificial value. It was based on the Wholesale Cash Price of such and like goods with deductions for customs duty and trade discount.
  • 5. History of Valuation In the Custom Act 1962,value was defined in Sec.-14 and in definitions. Deemed value concept. Related parties was not covered by Sec.14. Custom valuation Rules 1963. WTO Valuation concept of Transaction Value was introduced in 1988.
  • 6. VAL. RULES IN C. A. 62 & T.V. Section 14 of the Customs Act, 1962 deals with Valuation of goods. WTO emphasizes on Transaction Value/ Actual Value. New Valuation Rules: The new Customs Valuation system has been introduced in India with the amendment of Sec 14 of CA 1962 and bringing in force of the Customs Valuation (Determination of Price of imported goods) Rules, 1988 with effect from 16.08.1988.
  • 7. Amendment of sec.14 and T.V. Amendment in Sec.14 and Valuation Rules were made in 2007 and new Sec.14 and CVR 2007 came in force with effect from 10.10.2007. OLD:- valuation of goods for purpose of assessment :-(1)For the purpose of C T A 1975,or any other law for the time being in force where under a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in course of international trade, where the seller and buyer have no interest in business of each other and price is sole consideration for the sale or offer for sale . (1-A): subject to the provision of sub-section(1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf.
  • 8. Section 14 And Transaction Value Sec.14: valuation of goods : for the purpose of CTA 1975, or any other law in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to india for delivery at time and place of importation, or as the case may be, for export from india for delivery at the time and place of exportation where the buyer and seller of goods are not related and price is the sole consideration for sale subject to such other conditions as may be specified in the rules made in this behalf.
  • 9. PURPOSE To remove the contradiction of deemed value and transaction value in sec.14. Offer for sale in sec.14 Conflict between sec.14(1) & 14(1-A) Court judgment:-S.C. in case of M/s Ispat Industries Ltd(2006-tiol-127-sc-cus) has held that the deeming provision of sec.14 of the custom act will prevail over the value provision of WTO valuation code.
  • 10. IMPACT CVR 2007 came in sec.14 itself. subject to such other condition as may be specified in the rules made in this behalf. This provides:- for certain aspect such as related parties, manner of determination of value, acceptance or rejection of declared value, additions to transaction value. Accept,Reject,Determine value in sec.14 and CVR 2007.
  • 11. Important Features of Val. Rules Rule 3:-acceptance of t v Rule 11:-document needed for t v Burden of correctness of declared value is on importer. Acceptance of t v is subject to Rule 12
  • 12. Rejection of Transaction Value Rule 12 of CVR 2007 Changes after amendment. Reasons for raising doubt is inclusive Val. Bull. (I P), Alerts may be used Burden of proof comes to dept.
  • 13. Concept of valuation for related parties Prior to 1988:- section 14 :- deemed value would be the price subject to the condition that buyer and seller have no interest in business of each other. Related parties were not within the definition contained in section 14(1)(a).
  • 14. Situation after 1988 In the new valuation system even where buyer and seller are related, the Transaction Value would be accepted under the provisions of Rule 3(3). It does not reject Transaction Value but only gives scope for further enquiry.
  • 15. Treatment for related parties transaction Whether they are related. Rule 2(2) Only relationship will not disqualify Transaction Value. Rule 3 (2)(d). In case of relationship how/when Transaction Value is acceptable. Rule 3(3). Rule 10 are adjustments to Transaction Value which examines addition of certain expenses, with relation to imported goods such as Royalties, License fee etc. to the value.
  • 16. Issues examined by SVB Whether del. Value is true transaction value in cases of related party transactions. Rule 3. Whether payments made by the buyer, over and above the invoice value, has to be added to invoice value for chargeability of duty. Rule 10.
  • 17. Indian Customs Practice Examination of records and documents is undertaken by SVB Central Registry Database (CRD ) for SVB cases maintained in Directorate of Valuation. Meanwhile, imported goods are cleared provisionally against bond with Bank Guarantee / cash deposit. Decisions given by SVB of one Custom House is applicable for imports anywhere in the country.
  • 18. PROCEDURE FOR RELATED IMPORTERS DECLARATION FILES B/E IMPORTER NOT RELATED BE ASSESSED RELATED B/E ASSESSED SVB CIRCULAR RD 1% APPG. GROUP
  • 19. REGISTRATION / FINALISATION IN SVB AO VISIT QUESTIONER SVB REGISTRATION PH BY DC SVB O-IN-O B/E ASSESSED
  • 20. Factors Verified By SVB Restrictions as to the disposition or use of the goods by the buyer Art 1(a) Rule 3(2)(a) of CVR 2007 The sale price is not subject to some condition or consideration Art 1(b) Rule 3(2)(b) of CVR 2007 Any part of the proceeds of any subsequent resale , disposal or use of the goods by the buyer will accrue directly or indirectly to the seller Art 1(c) Rule 3(2)(c) of CVR2007
  • 21. CHECK ON TRANSACTION BETWEEN IMPTR and SUPLLR. PROCEEDS CONDITIONS RESTRICTIONS TV OF UNRELATED BUYERS IF NOT RELATIONSHIP DID NOT INFLUENCE TV ACCEPT
  • 22. Acceptance of Transaction Value On Examination of the circumstance of the sale of imported goods indicate that the relationship did not influence the price. Art 1(2)(a)/ Rule 3(3)(a) of CVR 2007 If the Importer demonstrate that the declared value of the goods being valued closely approximates to the transaction value of identical / similar goods in sales to unrelated buyers in India Art 1(2)(b) / Rule 3(3)(b) of CVR 2007
  • 23. REJECTION OF TRANSACTION VALUE R-6 SIMILAR GOODS R-5 IDENTICAL GOODS REJECT TV R-7 DEDUCTIVE METHOD R-7a COMPUTED VALUE R-8 RESIDUAL METHOD
  • 24. Cost and Services to be Added (Rule 10 of CVR 2007) Commissions and Brokerage incurred by the Buyer but not included in the price. Art 8(1)(a) Rule. 10(1)(a)(i) Royalty and Licence Fees Art 8(1)(c) Rule. 10(1)(c) Value of any part of proceeds of subsequent resale, disposal or use of imported goods that accrues to the seller. Art 8(1)(d) Rule. 10(1)(d) Payments actually made or to be made as a condition of sale of the imported goods. Rule. 10(1)(e) Service stocking discount Engineering, development , design work and plans & sketches charges. Art 8(1)(b) Rule. 10(1)(b)(iv)
  • 25. Cost and Services NOT to be Added (Rule 9 of CVR 88) Buying Commissions. Art 8(1)(a)(i) Rule. 10(1)(a)(i) Interest on deferred payments CBEC 493/39/98-Cus VII/30-1-89 Payment made by the buyer for right to distribute / resell / reproduce Art 8(1)息 Rule. 10(1)(c)
  • 26. Valuation (Import) Rules 2007 Rule 4 : Transaction value of identical goods imported at or about same time in a sale at same commercial level and substantially same quantity
  • 27. Valuation (Import) Rules 2007 Rule 5 : Transaction value of similar goods imported at or about same time in a sale at same commercial level and substantially same quantity
  • 28. Valuation (Import) Rules 2007 Rule 6 : Sequence of determination under Rule 7 (Deductive value) or Rule 8 (Computed value)
  • 29. Valuation (Import) Rules 2007 Rule 7 : Deductive value based on unit price of goods valued or identical or similar goods in the condition as imported and sold in greatest aggregate quantity to persons unrelated to seller in India
  • 30. Valuation (Import) Rules 2007 Rule 8 : Computed value based on cost of materials and fabrication or other processing employed in producing imported goods and profit and general expenses for sale of goods made by producers in country of exportation
  • 31. Valuation (Import) Rules 2007 Rule 9 : Residual method to value on the basis of reasonable means but should not exceed the price in course of international trade. .concept of deemed value
  • 32. OTHER CHANGES IN VALUATION RULES A proviso has been added to Rule 4 & 5 concerning similar and identical goods. A proviso has been added to Rule 9 (earlier Rule 8) in line with Article 7 of WTO valuation agreement. An explanation is added to Rule 10 (1) (earlier Rule 9) in view of S.C. judgment in M/S J K Corporation Ltd. An explanation is added to Rule 10(2) in view of S.C. judgment in M/S Garden Silk Mills Ltd. An explanation is added to Rule 12 (earlier Rule 10A) relating to rejection of Transaction Value.
  • 33. VALUATION TOOLS NIDB VAL. BULETTIN VALUATION ALERTS AND GUIDELINES CRD
  • 34. Case laws for rejection of T V Price of Contemporary Imports-T V refuted on the basis of prices of contemporary imports Lark Trading co Vs cc 1995(76)ELT381TR Big Byte Corp. Vs cc 2006(201)ELT 70TR Pasupati Traders Vs cc 2003(154)ELT373T Chandni Int. Vs cc 2003(153) ELT 312 TR Schokhi Indus Vs cc 2002(146)ELT462TR CC Vs Siddharth Overseas 2002(146)ELT389TR SAS impex Vs cc 2002(144)ELT215TR BNK Intrade Vs cc(140)ELT TR. Utkal Commercial Corporation Vs cc 2001(137)ELT439TR
  • 35. Vast difference between list price and declared price Vimal Enterprises Vs CC 2001(129)ELT 123 TR. Nidhi Distributors Vs CC 2001 (137) ELT 568 TR.
  • 36. Difference between international price and invoice price Plast Fab Vs CC 1993 (66) ELT 441 TR. Wipro Information Technology Ltd.Vs CC 1998 (100) ELT 401 TR
  • 37. Vast difference between prices of identical goods Pan Asia Enterprises Vs CC 1995(79) ELT 332 TR. Mangla Trading Co. Vs CC 1996(81) ELT 397 TR.
  • 38. Steep fall in prices Shree Ganesh Agencies Vs CC 1998(104) ELT 88 TR. GOODS MISECLARED Tirupati Granites (p) Ltd. Vs CC 1995 ELT 301 TR FORGED CERTIFICATE OF ORIGIN CC Vs Sanjay Chandiram 4 S.C. 222 FALLS INVOICE CONFIRMED BY CUSTOMS AUTHORITIES OF EXPORTING COUNTRY Konia Trading Co Vs CC 2006 (199)ELT 689 TR