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FREQUENTLY ASKED QUESTIONS
(FAQ)
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Ans: The ACV is a trader-friendly and
trade facilitating Agreement. It seeks to harmonise systems of customs valuation
across WTO Member countries. Even some non-Member countries apply its
principles. Since the most preferred and primary method of valuation under the
ACV is based on the transaction value, the duty liability becomes known in
advance. It brings in greater objectivity and transparency to determination of
customs value and makes the border crossing faster, cutting down costs and
delays. The ACV gives several rights to the importers. These are discussed in
the next section.
Ans: He should first find out whether
his goods are subject to ad valorem duty under the customs tariff of his
country. If so, he should truthfully declare (in the entry document for
the imported goods) the actual price paid for the goods; fill in a special
valuation form, if required; and also disclose to the customs authorities if he
has any special relationship with the supplier; or if there are any further
payments to be made, or any special conditions attached to the purchase. He
should also submit copies of documents relating to the import such as a
purchase order or contract, invoice, freight and insurance bills etc. In many
countries, if an importer is regularly importing identical or similar goods
from the same source, he may be allowed to clear his goods on a simple
declaration on subsequent occasions -once customs value is determined for an
earlier import.
Ans: Paragraph 2 of
the General Introductory Commentary to the ACV stipulates that where the
customs value cannot be determined under the transaction value method, there
should normally be a process of consultation between the customs officials and
the importer with a view to arriving at alternative basis of valuation. The ACV
puts of emphasis on the interaction between the importers and the customs
officials to determine the customs value in a transparent manner. Full and
complete disclosure of the circumstances of sale and payments made will assist
in proper and early determination of customs value.
Ans: The
ACV neither provides for issue of advance ruling in valuation matters nor
prohibits it. The importer has to check the domestic law of his country and
find out if he can get an advance ruling by disclosing all relevant facts ahead
of the imports taking place.
Ans: There is no
uniform system that will suit the specific needs of every country. However,
depending on its size, volume of trade and number of customs entry points, each
country has to plan as to whether its valuation control should be exercised
centrally or through regional and local offices. Similarly, there can be a
choice between pre-clearance controls and post clearance controls, depending on
the types of importers. In the case of a manufacturer-importer, a periodic
post-clearance audit at his fixed place of business may be more suitable. On
the other hand, pre clearance control may be better suited in respect of
traders having no fixed place of business or traders importing from different
ports at irregular intervals. Normally, most customs administrations prescribe
a value declaration as a control document in addition to the entry document.
For smaller consignments below a threshold value, the declaration is usually
waived. Risk analysis methods can be put in place for selecting specific
imports or specific importers for greater scrutiny based on past record as well
as risk profiles.
Ans: Yes. Since post-importation audit
may take time and the national laws may provide a time-limit for recovery of
short-levied duty, it is necessary to fix a time-limit under the national laws
requiring the importers to keep the records relating to import transactions
till then.
Ans: The ACV does not support or
encourage fraudulent declaration of value. However, it does not contain any
provision or guidelines for penalties and fines. Each country has to provide
for adequate penal provisions in its domestic legislation to tackle valuation
fraud. Such fraud needs to be curbed with a heavy hand as it not only deprives
the state of its legitimate revenue but also causes trade distortion and puts
honest traders at a disadvantage. At the same time, unintentional misdeclaration
on account of a wrong understanding of the valuation provisions should be dealt
with leniently.
Ans: Yes. The
valuation provisions under the ACV are very detailed and are supplemented by
detailed interpretative notes. Both the customs officials and the traders need
to be trained extensively to be able to apply the provisions. Since the ACV
lays greater emphasis valuation based on transaction value and greatly reduces
the discretion of the customs officials, they need to have special training and
better administrative skills to be able to detect fraudulent declarations while
facilitating honest importers.
Ans: Building a valuation database with
both historical and current import data is not an easy task, particularly if it
has to incorporate details of description of the goods along with differences
in quantity, quality, commercial level, country of origin, name of manufacturer,
brand etc. to provide meaningful comparison. It requires adequate financial,
human and computing resources to build, maintain, and update such a database
particularly if the basket of imported goods is very large for a country.
However, a valuation database is useful for determining customs value on the
basis of transaction value of identical and similar goods. It is also useful
for detecting suspected valuation fraud cases.