Customs Valuation (Determination of Price of Imported
Goods) Rules, 1988 — Introduction of New Rule 10A
Circular No. 13/98-Cus., dated 9-3-1998
[From F. No. 467/114/97-Cus. V]
Government of India
Ministry of Finance (Department of Revenue)
New Delhi
Introduction of a new rule - Rule 10A in the
Customs Subject :
Valuation (Determination of price of Imported Goods ) Rules, 1988.
A new rule, Rule 10 A 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
enclosed). The Rule 10A reads as follows :-
“10A. Rejection of declared value :-
When the proper officer has reason to doubt the truth
or (1) accuracy of the value declared in relation to any imported goods, he may
ask the importer of such 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.
At the request of an importer, the proper officer,
shall (2) 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).”
As you are aware, as per Rule 4 of the Customs Valuation 2.
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.
Several instances have been brought to the notice of the 3.
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.
In a recent study conducted by the Date of Valuation on 4.
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
(CIF) 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 (CIF) whereas
the prices of HR coil itself was in the range of US$ 340 -350 PMT. Similar under
invoicing has also been noticed in regard to imports of ball bearings, plastic
raw materials etc.
In the absence of any specific evidence to reject the 5.
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.
Thus, in order to enable a fair determination of the 6.
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 10A has been added to the
Customs Valuation Rules, 1988.
The new Rule 10A has been introduced vide Notification 7.
No. 10/98 (N.T.) Cus., dated 19-2-1998, GSR No. 77, dated 19-2-1998.
Any further clarifications/comments in the matter may be 8.
sent to the undersigned.