G/VAL/W/327  
 
1 May 2019 
(19-3013) Page: 1/6 
Committee on Customs Valuation  Original: English  
 
NOTIFICATIONS UNDER ARTICLE 22 OF THE CU STOMS  
VALUATION AGREEMENT  
CHINA 
Replies from China  to Questions from the United States   
contained in document G/VAL/W/ 315  
The following submission, dated 18 April 2019, is being circulated at the request of the delegation 
of China.  
 
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Question 1  
Article 4 of Chapter I (General Provisions) of The Rules of the General Administration of 
Customs of the People's Republic of China Regarding Determination of Customs Value of 
Imported and Exported Goods  states, in part, that Customs "shall not disclose 
[confidential information] outside Customs, unless otherwise provided for by laws or 
administrative regulations."  
In response to a previous question from the United States, in G/VAL/W/184, China 
indicated th at any information relating to the determination of customs value, which is by 
its nature confidential, shall not be disclosed to any third parties outside customs unless 
in some cases as provided by Article 30 of the Lawyer Law of the People's Republic of  
China  or Article 45 of the Criminal Procedure Law of the People's Republic of China . 
Does China provide procedures that a lawyer participating in litigation, the People's Court, 
the People's Procuratorates, and the public security organs must follow to ob tain access 
to confidential information?   
Or, do Articles 30 of the Lawyer Law and 45 of the Criminal Procedure Law provide for the 
automatic disclosure of the confidential information to those persons? If so, in which 
circumstances is disclosure automati c?   
If there are procedures that must be followed, rather than automatic disclosure, can China 
please describe the procedures and identify the legal basis for those procedures?  
Answer:  
The commercial information involving business confidentiality specifi ed in Article 4 of The Rules of 
the General Administration of Customs of the People's Republic of China Regarding Determination 
of Customs Value of Imported and Exported Goods  (hereafter: "the said Rules") refers  to the 
documents provided by the importer when it declares to the Customs, including invoice, contract, 
bill of lading and packing list, etc. These documents are the business confidentiality closely related 
to the interests of the importer. The customs is  obligated to keep the information confidential for 
the importer and will not provide the above information to any third party.  G/VAL/W/327  
 
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  The importer can apply to be informed of the process of the Customs examination of the declared 
value and materials provided by the importer. In accordance with the provisions of Article 50 of the 
said Rules, the importer may ask for a written explanation from the Customs as to how the Customs 
value was determined.  
According to the Article 10 of the Agreement on Customs Valuation ( hereinafter "CVA") "…the 
authorities concerned who shall not disclose it without the specific permission of the person or 
government providing such information, except to the extent that it may be required to be disclosed 
in the context of judicial proceed ings". Thus, the Customs may disclose such information as long as 
it is required by the courts or the procuratorates in judicial proceedings and such disclosure is 
consistent with the provisions of the CVA.  
Question 2  
Article 6 (Chapter II, Section I) of The Rules of the General Administration of Customs of 
the People's Republic of China Regarding Determination of Customs Value of Imported 
and Exported Goods  provides that the order of the application of deductive value and 
computed value "could be reversed,  provided that sufficient information has been 
submitted to the Customs."  
Please explain how Article 6, which requires "sufficient information" in order to reverse 
the order of deductive and computed value, reflects Article 4 of the CVA, which provides 
that the order of application of deductive value and computed value "shall be reversed" 
"at the request of the importer."  
Answer:  
According to Article 6 of the said Rules, "the order of application of the deductive value and the 
computed value could be reversed  provided that Sufficient information is submitted by the duty 
payer to the Customs ", determination of the Customs value using computed value method may 
involve the examination of the cost and other information obtained from countries other than th e 
import ing country. "Sufficient information submitted to the Customs " specified in Article 6 of the 
said Rules refers exactly to the above -mentioned information. If the duty payer cannot provide 
sufficient information, the order of the application shall n ot be reversed and the computed value 
method cannot be prior applied.  
Question 3  
Article 18 (Chapter II, Section IV) of The Rules of the General Administration of Customs 
of the People's Republic of China Regarding Determination of Customs Value of Import ed 
and Exported Goods  states that "[h]aving examined the circumstances surrounding the 
sale, where it can be shown that the price of the imported goods has been settled in a 
manner consistent with the normal business practice, Customs may determine that th e 
price has not been influenced by the relationship."  
Please explain how Article 18 implements Interpretative Note to Article 1, Paragraph 2(3) 
of the CVA, which provides:   
"Where the customs administration is unable to accept the transaction value withou t 
further inquiry, it should give the importer an opportunity to supply such further 
detailed information as may be necessary to enable it to examine the circumstances 
surrounding the sale.  In this context, the customs administration should be 
prepared to  examine relevant aspects of the transaction, including the way in which 
the buyer and seller organize their commercial relations and the way in which the 
price in question was arrived at, in order to determine whether the relationship 
influenced the price . Where it can be shown that the buyer and seller, although 
related under the provisions of Article 15, buy from and sell to each other as if they 
were not related, this would demonstrate that the price had not been influenced by 
the relationship.  As an ex ample of this, if the price had been settled in a manner 
consistent with the normal pricing practices of the industry in question or with the 
way the seller settles prices for sales to buyers who are not related to the seller, G/VAL/W/327  
 
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  this would demonstrate that t he price had not been influenced by the 
relationship.  As a further example, where it is shown that the price is adequate to 
ensure recovery of all costs plus a profit which is representative of the firm's overall 
profit realized over a representative perio d of time (e.g. on an annual basis) in sales 
of goods of the same class or kind, this would demonstrate that the price had not 
been influenced."  
Can China further explain their process for determining "circumstances of the sale?" Is 
there a legal test for this circumstance to pass? Can China further elaborate on what is 
meant by "normal business practice?"  
Answer:  
Regarding the process of examining "circumstances of the sale ", Article 44 of the said Rules provides 
that "Where the Customs has doubts about t he truth or accuracy of the value declared by the duty 
payer, or considering the relationship between the buyer and seller did influenced the price, Customs 
shall issue Notice to Query Declared Value by Customs of People 's Republic of China (hereinafter 
referred as Notice to Query Declared Value; see Annex  II of the said Rules) and notify the duty payer 
or his agent the grounds for doubts in written form. The duty payer or his agent shall, within 5 
working days from the date of receipt of Notice to Query De clared Value, provide related documents 
or other evidence in writing that could demonstrate the truth  or accuracy of the declared value, or 
the declared value not being influenced by the relationship between the buyer and seller. "  
Based on the documents a nd information provided by the importer, China Customs examines the 
circumstances of the sale. There is no uniform standard to different situations in terms of 
examination of the circumstances of the sale, so examination of each transaction is conducted on  a 
case-by-case basis.  
The phrase "normal business practice " refers to "normal pricing practices of the industry in question " 
mentioned in Paragraph 2.3 of the Note to Article 1 of CVA, which indicates usual pricing policies of 
the industry concerned.  
Ques tion 4  
Article 22 (Chapter II, Section V) of The Rules of the General Administration of Customs 
of the People's Republic of China Regarding Determination of Customs Value of Imported 
and Exported Goods  states that, in the context of transaction value of id entical or similar 
goods, "the transaction value of the identical or similar goods produced by the same 
manufacturer shall be used in the first place."  
Can China explain the meaning of "in the first place" in this context, and explain how the 
requirement t o use the value of goods produced by the same manufacturer "in the first 
place" is consistent with Articles 2 and 3 of the CVA?  
Answer:  
The phrase "in the first place " used in Article 22 of the said Rules means that the transaction value 
of the identical or similar goods produced by the same manufacturer shall be used in the first place 
when applying the methods of the transaction value of identical or similar goods, which is consistent 
with Article 15.1(e) of the CVA: "goods produced by a different person  shall be taken into account 
only when there are no identical or similar goods, as the case may be, produced by the same person 
as the goods being valued ". Article 22 of the said Rules is completely in conformity with the 
provisions of the CVA.  
Question 5  
Article 24(a) (Chapter II, Section V) of The Rules of the General Administration of Customs 
of the People's Republic of China Regarding Determination of Customs Value of Imported 
and Exported Goods  provides for the deduction of "profit, general expenses (e ither direct 
or indirect) and commissions usually paid…" in the context of deductive value.  G/VAL/W/327  
 
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  Article 5.1  (a)(i) of the CVA provides for the deduction of " either  the commissions usually 
paid or agreed to be paid or the additions usually made for profit and g eneral expenses in 
connection with sales in such country of imported goods of the same class or kind." 
(Emphasis added).  
Can China please clarify Article 24(a), which appears to provide for the deduction of profit, 
general expenses, and commissions, in lig ht of Article 5.1  (a)(i) of the CVA?  
Answer:  
Having regard to the General Introductory Commentary of the Agreement which recognizes that 
customs value should be based on simple and equitable criteria consistent with commercial practices, 
China fully compli es with this principle while determining the Customs value of imported goods by 
verifying different roles of importers, taking account of different business practices involved. Same 
principle applies when using the deductive value method.  
Generally speakin g, it is rather clear that the mentioned deduction is made either for commissions 
or for profit and general expenses. The commission would normally be deducted where the sale in 
the country of importation of the goods being valued was or is to be made on a n agency/commission 
basis. The profit and general expenses would normally be deducted in transactions which do not 
involve commissions. Therefore, in practice, the deduction of both profit and general expenses and 
commission in the same business situation will not occur.  
Question 6  
Article 25(b) (Chapter II, Section V) of The Rules of the General Administration of 
Customs of the People's Republic of China Regarding Determination of Customs Value of 
Imported and Exported Goods  provides for the addition of "the profit and general 
expenses (either direct or indirect) of the goods of the same class or kind as the imported 
goods being valued which are sold for export to the Customs territory of the People's 
Republic of China."  
Can China explain the meaning of "either direct or indirect" expenses in the context of 
Article 25(b)?  
Can China also explain how Article 25(b) implements CVA Article 6.1(b)?  Article 6.1(b) 
requires that the profit and general expenses to be applied under the  computed value 
method be based on " equal to that usually reflected in sales of goods of the same class or 
kind as the goods being valued which are made by producers in the country of exportation  
for export to the country of importation" (emphasis added).  
Answer:  
Paragraph 7 of the Note to Article 6  (ANNEXE I) of CVA states that the "general expenses" referred 
in paragraph 1 (b) of Article 6 covers the direct and indirect costs of producing and selling the goods 
for export which are not included under parag raph 1 (a) of Article 6. The  "general expenses (either 
direct or indirect)" as mentioned in Article 25(b)  (Chapter  II, Section  V) of the said Rules derives 
from the provisions of CVA, and the meaning is consistent with the definition of the "general 
expens es" in CVA.  
According to Paragraph 1 of the Note to Article 6  (ANNEXE I) of CVA, the use of the computed value 
method will generally be limited to those cases where the buyer and seller are related, and the 
producer is prepared to provide to the authoritie s of the country of importation the necessary 
costings and facilities for any subsequent verification which may be necessary.  
Thus, the use of the computed value method is subject to strict conditions, which generally requires 
the producer to provide rele vant information. In fact, such information usually relates to the goods 
of the same class or same kind as the goods being valued which are made by producers in the 
country of exportation. In practice, the Customs will choose the goods made by producers in  the 
country of exportation as the goods of the same class or kind when applying the computed value 
method. Therefore, the practice of China Customs is in conformity with the provisions of CVA.  G/VAL/W/327  
 
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  Question 7  
Articles 26 and 27 (Chapter II, Section V) of The R ules of the General Administration of 
Customs of the People's Republic of China Regarding Determination of Customs Value of 
Imported and Exported Goods  appear to be related to Article 7 of the CVA.  
Can China explain how Articles 26 and 27 implement the Int erpretative Note to Article 7 
of the CVA?   
How do Articles 26 and 27 reflect that, as explained in the Interpretative Note to Article  7, 
customs values determined under Article 7 of the CVA "should, to the greatest extent 
possible, be based on previously determined customs values"?  
How do Articles 26 and 27 reflect that, as explained in the Interpretative Note to Article  7, 
"[t]he methods of valuation to be employed under Article 7 should be those laid down in 
Articles 1 through 6 but a reasonable flexibil ity in the application of such methods would 
be in conformity with the aims and provisions of Article 7."?  
Answer:  
Article 7 of the CVA and its Interpretative Notes provide the principles for the application of 
reasonable means, specify a list of "prices " that shall not be used as the basis of customs value, and 
give several illustrative examples of reasonable flexibility. To implement the CVA, Articles 26 and 27 
of the said Rules set forth the definition of reasonable method, list the prices not to be use d in 
Customs valuation, and also specify that the determination of the Customs value of the imported 
goods shall  be based on objective and quantifiable data in accordance with the principles of 
objectivity, fairness and uniformity prescribed in Article 2 thereof. Therefore, the above -mentioned 
provisions are in conformity with Article 7 of the CVA and its Interpretative Notes.  
Question 8  
Article 52 of The Rules of the General Administration of Customs of the People's Republic 
of China Regarding Determinati on of Customs Value of Imported and Exported Goods  
provides that "[t]he duty payer who dissents from the decision made by the Customs on 
the Customs valuation of goods in question shall pay duties and taxes first according to 
relevant administrative decisi ons made by Customs, and may submit an appeal for 
administrative reconsideration…"  
Article 11 of the CVA provides for the right of appeal of a determination of customs value 
without penalty. Please confirm that duty payers in China may appeal Customs' 
determinations without penalty.   
Paragraph 3 of Article 11 of the CVA also provides that "[n]otice of the decision on appeal 
shall be given to the appellant and the reasons for such decision shall be provided in 
writing. The appellant shall also be informed o f any rights of further appeal."  Can China 
please identify where this provision is implemented in China's customs law?  
Answer:  
1. China Customs has fully implemented Article 11 of the CVA. It is confirmed that importers or 
duty payers in China are entitl ed to apply for administrative reconsideration or fill a suit without 
penalty. Relevant laws and regulations are listed as follows:  
i)  The Customs Law of the People's Republic of China  
Article 64 provides that "[w]here the obligatory duty payer is involve d in a dispute over 
duty payment with the Customs, he shall pay the duties, and may apply for 
administrative reconsideration in accordance with relevant provisions; if the decision is 
still considered unacceptable, he may file a suit in a people's court ac cording to law. " G/VAL/W/327  
 
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  ii)  The Regulations of the People's Republic of China on Import and Export Duties  
Article 64 provides that "[w]here the duty payer or guarantor has objections to the 
Customs' determination of the duty payer or customs value; goods classification; 
determination of origin, applicable duty rates or exchange rates; duty reduction, 
exemption, recovery or refund; collection of fines for late payment; or determination of 
the manner and place of duty collection; it shall pay the duties and may apply to the 
Customs at the next higher level for administrative reconsideration according to law; if 
the duty payer or guarantor refuses to accept the decision of administrative 
reconsideration, it may lodge a lawsuit to the People's court according t o law. " 
2. Paragraph 3 of Article 11 of the CVA provides that "[n]otice of the decision on appeal shall be 
given to the appellant and the reasons for such decision shall be provided in writing. The  appellant 
shall also be informed of any rights of further appeal ". These provisions are also embodied in relevant 
Customs laws and regulations as follows:  
i)  Rules of the General Administration of Customs of the People 's Republic of China on 
Administrative Reconsideration  
Article 77 provides that "[i]n making a n administrative reconsideration decision, a 
Customs administrative reconsideration authority shall issue a written Administrative 
Reconsideration Decision, and serve it on the applicant, the respondent and the third 
parties concerned. An  Administrative Re consideration Decision shall bear the following 
particulars: …(g) the specific reasons and legal basis on which the administrative 
reconsideration decision is made; … " 
Article 9 provides that "...Where he/she/it refuses to accept the decision of 
administra tive reconsideration made by Customs, it may then bring the case to a 
people 's court for an administrative proceeding. " 
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