Valuation of goods

Learning objectives
Get to learn about the valuation rules for
determining Assessable Value.

Introduction
Customs duty is payable as a percentage of
Value often called Assessable Value or
Customs Value'. The Value may be either (a) Custom Valuation on the basis of
Transaction value as defined in section 14 (1)
of Customs Act or
(b) Tariff value prescribed under section 14 (2)
of Customs Act.

1. Custom Valuation on the basis of

Transaction value as per section 14 (1)
Customs Value fixed as per section 14(1) is the
Value normally used for calculating customs
duty payable (often called customs value or
Assessable Value'.)

Conditions for determining

Transaction value
Section 14 (1) provide following criteria for deciding Value for
purpose of Customs Duty:
Price for delivery at the time and place of importation or
exportation
Price in case of high sea sale
Seller and buyer have no interest in the business of each other or
one of them has no interest in the other
Price should be sole consideration for sale or offer for sale
Price should include value of intellectual property contained in it.
Sale is in the ordinary course of trade.
The sale does not involve any abnormal discount or reduction
from ordinary competitive price.
Rate of exchange as on date of presentation of Bill of Entry as fixed
by CBE&C (Board) by Notification should be considered

Valuation Rules for imported goods

Valuation in Customs Act has to be done as
per valuation rules. These rules are based on
WTO Valuation Agreement. These rules are
only for valuation of imported goods and not
applicable to export goods.

Customs Value Inclusions

Commission and brokerage
Cost of container, which are treated as being one with
the goods for customs purposes
Cost of packing whether labour or materials
Materials, components, tools, dies etc. supplied by
buyer
Royalties and license fees
Value of proceeds of subsequent sales
Cost of transport up to place of importation= 20%
Cost of insurance premium= 1.125%
Landing and unloading charges=1%

Exclusions from Assessable Value

Charges for construction, erection, assembly,
maintenance or technical assistance
undertaken after importation of plant,
machinery or equipment
Cost of transport after importation
Duties and taxes in India

Problems
Find out the assessable value:

Price charged by exporter (FOB) RS. 45,00,000

Cost of transportation to India by air Rs. 11,00,000
Cost of Insurance Rs. 60,000
Loading/Unloading charges in India Rs. 3,000

Find out the assessable value:

Price charged by exporter (FOB) RS. 45,00,000
Cost of transportation to India by sea Rs.
11,00,000
Cost of Insurance- Not available
Loading/Unloading charges in India Rs. 3,000

 Find out the assessable value if CIF is Rs.

95,00,000. Goods are transported by air. CIF
includes air transportation cost. Amount of
transportation cost and insurance cover is not
available separately.