Q22. When can one apply the method of valua­tion based on the transaction value of identical goods?

Ans: The method of valuation based on trans­action value of identical goods can be used when the transaction value method fails or is not applicable and when transaction value of identical goods imported at or about the same time is available.

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Q23. What are identical goods?

 

Ans: Identical goods have been defined in the ACV as goods that are:

 

(i)   the same in all respects including physical characteristics, quality and reputation;

 

(ii)       produced in the same country as the goods being valued; and

 

(iii)       produced by the producer of the goods being valued.

 

Minor differences in appearance which do not affect the value would not preclude goods which otherwise conform to the definition from being considered as identical goods. Where identical goods produced by the same producer are not available, identical goods produced by a different producer can be considered.

 

The definition of identical goods excludes imported goods for which engineering. Development, artwork. design work, plans or sketches are undertaken in the country of importation and are provided by the buyer to the producer of the goods free of charge or at a reduced cost.

 

Examples of identical goods are steel sheets of identical chemical composition, finish and size, imported for automobile bodies in one case and for furnace lining in another; wallpaper imported by interior decorators and wholesalers etc.

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Q24. When can one apply the method of valuation based on the transaction value of similar goods?

 

Ans: The method based on transaction value of similar goods is to be applied if the transaction value method and the method based on the transaction value of identical goods fail or do not apply. Similar goods used in this method should have been imported at or about the same time as the goods being valued.

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Q25. What are similar goods?

 

Ans:  Similar goods have been deemed in the ACV as goods which:  

 

(i)            closely resemble the goods being valued in terms Of characteristics and component materials

 

(ii)    can perform the same functions and are commercially interchangeable with the goods being valued'

 

(iii)   are produced in the same country as the goods being valued; and

 

(iv)   are produced by the producer of the goods being valued.

 

Where similar goods produced by the same produced are not available, similar goods produced by a different producer can be considered.           

 

The definition of similar goods excludes imported goods for which engineering, development, artwork, design work, plans or sketches are undertaken in the country of importation and are provided by the buyer to the producer of the goods free of charge or at reduced cost.

 

An example of similar goods is interchangeable rubber tubes imported from two different producers with different trademarks but of the same standard, quality and equivalent reputation as well as similar characteristics, components and functions for use by motor vehicle manufacturers. Normal grade sodium peroxide for bleaching and special grade pure sodium peroxide for analytical purposes are not similar goods as  ­they have different specifications and are not inter­changeable.

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Q26. What adjustments have to be made while adopting values of identical or similar goods? ­

 

Ans: The transaction values of identical or similar goods have to be adjusted upwards or downwards if there are differences between the goods being valued on the one hand and the identical or similar goods on the other in order to take account of:

(i)      commercial level differences;

 

(ii)       quantity differences; and

 

(iii)             significant differences in the transport costs, insurance charges etc., due to variance in mode of transport and distance.

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Q27. Which value is to be used if there are a number of transaction values of identical or similar goods?

 

Ans: If there is more than one transaction value of identical or similar goods, the lowest of such values has to be used.

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Q28. When can one apply the deductive value method and what are its salient features?

 

Ans: The deductive value method comes next in the hierarchy of valuation methods to be applied where the ones described earlier fail. By this method, the value for assessment is determined on the basis of sales in the country of importation of the goods being valued or of identical or similar imported goods, less certain speci­fied expenses resulting from the importation and sale of the goods.

 

The sale in the country of importation should satisfy the following conditions:

 

(i)    the goods have been resold in the same condition as imported;

 

(ii)    sales of the goods have taken place at or about the time of importation of the goods being valued;

 

(iii)   if there are no sales at or about the time of importation, sales made at the earliest date, but later than 90 days, after importation of the goods being valued can be used;           .

 

(iv)   if there are no sales of identical or similar import goods in the same condition as imported, sales of goods being valued after further processing can be used; and

 

(v)   the purchaser must not be related to the seller in the country of importation.

 

The unit price at which the greatest number of units sold must be found. Deductive value is determined deducting from such unit price the following:

 

●             commissions usually paid or profits and general expenses usually added for sale in the country of importation of imported goods of the same class or kind;

 

●    usual transport, insurance and other associated costs incurred within the country of importation;

 

●             customs duties and other taxes payable in the country of importation on import and sale; and

 

●    value added by processing when applicable.

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Q29. When can one apply the computed value method and what are its salient features?

 

Ans: The computed value method is the next method of valuation in the hierarchical sequence. However, there is a provision for reversing the sequence of application of the computed value method with that of deductive value method at the option of the importer.

 

Under this method, the value for assessment is based on computed value which shall be the sum of:

 

●    the cost of materials, fabrication and processing;

 

●    an amount for profit and general expenses for sales of goods of the same class or kind in the country of exportation for export to the country of importation; and

 

●    the cost of transport, insurance and loading, unloading and handling charges if these are required to be added to the customs value under the law in the importing country.

 

The use of this method will be generally limited to those cases where the buyer and seller are related, and the producer is prepared to supply the necessary costing and facilities for subsequent verification to the customs authorities in the country of importation. Under paragraph 2 of Article 6 of the ACV, the information supplied by the producer can be verified by the customs authorities of the importing country in another country only with the agreement of the producer and only if the government of that country does not object to such investigation.

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Q30. When can one apply the fallback method and what are its salient features?

 

Ans: When customs value cannot be determined under any of the other methods of valuation, the same has to be determined applying those methods in a flexible manner and in accordance with the principles and general provisions of Article VII of GATT, 1994, on the basis of data available in the country of importa­tion.

 

The value of imported goods determined under this method should be based on previously determined customs values to the extent possible. Since this method allows a flexible approach, some of the requirements under the earlier methods can be flexibly interpreted. For example, the value of identical and similar goods produced in other countries can be used. The require­ments of identical and similar goods imported at or about the same time can be flexibly interpreted. The requirements of goods being sold in the condition as imported and the 90 days period under the deductive value method can be flexibly interpreted.

 

In applying the fallback method, if more than one of the previous methods can be applied flexibly, the normal sequence for using those methods should be taken into account.

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Q31. Are there any restrictions under the fallback method in using some value standards?

 

Ans: Under the fallback method, it is not permissible to base the value on:

 

●    the selling price in the country of importation of goods produced in such country;

 

●    the higher of two alternative values;

 

●    the price of goods in the domestic market of the country of exportation;

 

●    the price of goods for export to a country other than the country of importation;

 

●       minimum customs values; or

 

●       arbitrary or fictitious value.

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Q32. Are there any provisions in the ACV for applying minimum values?

 

Ans: Paragraph 2 of Annex III to the ACV provides that developing countries, which currently value goods on the basis of minimum values, may retain such values on a limited and transitional basis subject to such terms a s agreed to by the WTO Members.

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