RESTRICTEDWORLD TRADE
ORGANIZATIONG/VAL/W/99
25 April 2002
(02-2346)
Committee on Customs Valuation Original:  English
COMMUNICATION FROM SRI LANKA CONCERNING PARAGRAPH 1 OF
ANNEX III OF THE AGREEMENT ON IMPLEMENTATION
OF ARTICLE VII OF THE GENERAL AGREEMENT
ON TARIFFS AND TRADE 1994
The following communication, dated 16 April 2002, has been received from the Permanent
Mission of Sri Lanka.
_______________
1. The Government of Sri Lanka wishes to refer to the decision of 23 November 2002, contained
in Document G/VAL/42, whereby an extension was granted under the provisions of paragraph l of
Annex III of the Agreement on Implementation of Article VII of GATT 1994 ("WTO/Customs
Valuation Agreement") to extend its delay in the ap plication of provisions of that Agreement till
30 April 2002.
The Government of Sri Lanka wishes to inform the Committee on Customs Valuation that
concerted efforts have been made by Sri Lanka, to implement the Work Programme and progress has
been made implementing the Work Programme.  However, as indicated in the communication of
15 October 2001, H.E. the President of the Government of Sri Lanka dissolved the Parliament in
October 2001, with parliamentary elections held on 5 December 2001.  It was our expectation that the
Bill amending the Customs Ordinance which was appr oved by the Cabinet, could be presented in new
Parliament in February/March 2002, and thus Sri Lanka would be in a position to implement the
Agreement on Customs Valuation by 1 May 2002.
2. Although the draft amendments to the Customs Ordinance was approved by the Cabinet and
referred to the Legal Draughtsmen Department to finalize the Bill, with a view to presenting it in
Parliament in February/March 2002, due to unavoidable circumstances, delays have occurred in the
Legal Draughtsmen Department in finalizing the Bill.  This was mainly due to the fact that certain
proposed constitutional amendments, amendment to election laws and framing relevant regulations
for the implementation of budget proposals had to be given priority.  Furthermore, with the newParliament convened only in the first week of January 2002, the annual Budget which was normally
presented in the month of November, was presented only in March 2002, followed by Committee
stage in Parliament which took almost the month of  March.  Therefore, a number of bills, which were
to be presented in the Parliament, were delayed.
3. In the circumstances, the amendments to the Customs Ordinance, approved by the Cabinet,
which is almost finalized by the Legal Draughtsmen Department, could not have been presented, even
if ready, in the month of March or April, due to other matters such as Budget Debate, appointment of
Constitutional Council, the Local Government Electi ons and the relevant Ministers being preoccupied
with the peace process, invariably delaying the presentation of Bills in the Parliament.G/VAL/W/99
Page 2
Therefore, it is our expectation that the draft amendments to the Customs Ordinance to
implement the WTO Customs Valuation Agreement wi ll be ready by the months of May/June, and
thereafter, to be presented in the Parliament by July /August.  Sri Lanka would, therefore, need at least
six months' extension till 31 October 2002, for the enabling legislation to be presented in Parliament
and thereafter to prepare the required administrative regulations and procedures under the enablinglegislation.  (A copy of the draft amendments to the Customs Ordinance, which has been approved by
the Cabinet and is being finalized by the Legal Draughtsmen Department, is annexed for reference).
4. Hence, considering the exceptional circumstances, which are legitimate and justifiable and
taking into account that the Government of Sri Lanka has taken meaningful steps and commenced
implementing the Work Programme and noting the longstanding commitment and considerable efforts
being made in the implementation and application to the WTO Agreement on Customs Valuation, theGovernment of Sri Lanka requests that it be allowed to delay the application of the provisions of the
WTO Agreement on Customs Valuation for a furt her period of six months commencing 1 May 2002.
5. The request by Sri Lanka for an extension for the delayed application will not prejudice the
rights and obligations of Sri Lanka under the WTO Agreements in particular, the rights andobligations under the WTO Agreement on Customs Valuation.  The Government of Sri Lanka also
takes this opportunity to reassure her trading part ners of its firm commitment to the multilateral
trading system and to faithfully implementing Arti cle VII of the General Agreement on Tariffs and
Trade (GATT) 1994.
_______________G/VAL/W/99
Page 3
AN ACT TO AMEND THE CUSTOMS ORDINANCE
Be it enacted by the Parliament of the Democratic Socialist Republic of  Sri Lanka as follows:-
1. This Act may be cited as the Customs (Amendment) Act No. ……………. of …………….,
and shall come into operation on such date (hereinafter referred to as the "appointed date") as
the Minister may appoint by Order published in the Gazette .
2. Section 51 of the principal enactment is repealed and the following section substituted
therefor:-
51 (I) Every importer who makes entry of goods imported or to be imported must,
on making entry, specify the Customs value of the  goods, determined in accordance
with Schedule E to this Ordinance, and regulations made by the Minister on that
behalf.  The Minister may make regulations for this purpose.
(II) Where the conversion of foreign currency values to the currency values of the
Republic of Sri Lanka is .necessary for the determination of value, the rates of
exchange to be used shall be those applicable on the date of presentation of the Bill of
Entry relating to those goods, and duly published in the  Gazette in terms of section 17
of this Ordinance.
(III) Every importer or agent of an importer who makes a declaration pursuant to
section 47 of this Ordinance and those others enumerated in section 51C(1),
concerned in the  said importation must –
(a) Keep the documents, records and information in respect of that entry in such
manner and for such period as is required. by section 51C of this Ordinance
and any regulations made for the purposes of that section;  and
(b) produce those documents, records and information when required by the
Customs for the purpose of establishing the accuracy of the declaration.
3. Schedule E of the principal enactment is repealed and annex I substituted therefor as the new
Schedule E.
4. The following new sections are hereby  inserted immediately after section 51 of the principal
enactment and shall have effect as sectio ns 51A, 51B, 51C, 51D, 51E, 51F, 51G and 51H.
51A (I) Nothing in the foregoing sections or Schedule E to this Ordinance, shall be
construed as restricting or calling into question the powers of the Customs officer to
satisfy himself as to the truth or accuracy of any statement, document or declaration
presented to him for the purposes of Customs valuation.
(II) Whenever, an officer of Customs has reason to doubt the truth or accuracy of
the particulars or of the documents presented to him in support of a declaration made
pursuant to sections 47 and 51 of this Ordinance, the Customs officer may call for
from the importer or his agent or others concerned in the importation, further
explanation including documents or other evidence to prove that the declared valuerepresents the total amount actually paid or payable for the imported goods adjusted
in accordance with Article 8 of Schedule E.G/VAL/W/99
Page 4
(III) After receiving further information, or in the absence of a response, if the
Officer has still reasonable doubts about the truth or accuracy of the declared value, it
shall be deemed that the Customs value of the imported goods in question cannot be
determined under the provisions of Article 1 of Schedule E the importer shall be
informed in writing if requested to do so, the grounds for doubting the truth oraccuracy of the particulars or documents produced and the  importer shall be given an
opportunity to respond.
The final decision of the Director-General of Customs shall be communicated to the importer in
writing.
51B (I) If a Customs officer not below the rank  of an Assistant Director of Customs is
satisfied whether as the result of an examination or investigations or as the result of an audit
or examination carried out pursuant to section 51D(I) of this Ordinance, at any time, either
prior to the clearance of the goods or after the clearance of  the goods that the value declared
by an importer or his Agent in terms of section 51 of this Ordinance is -
(a) Inconsistent with Schedule E to this Ordinance, that officer may amend that
value, and that amended value shall be the Customs value for the purpose of
this Ordinance.
(II) Notice in writing must be given to the importer of –
(a) An amended value made pursuant to subsection (1) of this section;  and
(b) The basis for the amended value, and where applicable, the provisions of 
Schedule E to this Ordinance that are relevant to the amended value.
(III) Subsection (1) of this section applies whether or not the goods have been released
from the control of the Customs or whether or not any duty assessed has been paid.
(IV) An importer who is dissatisfied with a decision of the Officer, under this section may,
within 10 working days after the date on which notice of the decision is given, appeal to the
Director-General against that decision.  The  rights of appeal shall be available to an importer
whether or not the imported goods have been released to him and whether or not any part of
the Customs duty has been paid.
(V) The decision of the Director-General, on the appeal, and the reasons for such a
decision shall be in writing.  If the importer is dissatisfied with the  order of the Director-
General, he may, within 20 working days of such order, make an appeal to the relevant
Judicial Authority.
(VI) Where the Importer desires to clear the goods pending the determination of his
appeal, the Director-General may, except in cases whore a fraud is suspected, allow theclearance of the goods, on the furnishing of security for the payment of the Customs duties
and other levies for which the goods may be liable.
(VII) Nothing in this section limits or affects any powers of the Customs in respect of the
goods or any liability of the importer or any other person in respect of an offence committedin respect of the goods.
51C (I) Every importer, exporter, bondsman, customs house agent and the banks, financial
agencies and institutions, indenting agents, brokers, shipping agents, airlines, freightG/VAL/W/99
Page 5
forwarders concerned in the importation or exportation, movement and storage of goods must
keep or cause to be kept in Sri Lanka such records, for such period of time not exceeding
three years, as may be prescribed.
(II) Every such person must, as and when required by a Customs officer –
(a) Make the records available to the Customs;(b) Provide copies of the records as required;  and(c) Answer any questions relevant to matters arising under the Ordinance asked 
by any officer in respect of them.
(III) Where, for the purposes of complying with subsection (I) of this section, information
is recorded or stored by means of an electronic or  other device, the person concerned or his
agent shall, at the request of a Customs officer, operate the device, or cause it to be operated,
to make the  information available to the Customs officer.
51D (I) The Director-General of Customs or any Director of Customs, or any officer  of
Customs  authorized in that behalf by the Director-General of Customs or Director of
Customs, may at all reasonable times enter any premises or place where records are kept
pursuant to section 51C of this Ordinance and audit or examine those records either in relationto specific transactions or to the adequacy and integrity of the manual or electronic system or
systems by which such records are created and stored.
(II) For the purposes of subsection (1) of this section, a Customs officer authorized in
writing by the Director-General of Customs or a Director of Customs to do so shall have fulland free access to all lands, buildings and places and to all books, records and  documents,
whether in the custody or under the control of the Agents or Agencies mentioned in 51C or
any other person, for the purpose of inspecting any books, records, and documents and any
property, process or matter that the officer considers –
(a) Necessary or relevant for the purpose of collecting any duty under this Ordinance or
for the purpose of carrying out any other function lawfully conferred on the officer;
(b) Likely to provide any information othe rwise required for the purposes of this
Ordinance or any of those functions.
(III) The Customs officer may make extracts from or copies of any such books or
documents.
(IV) Notwithstanding subsection (II) and subsection (III) of this section, a Customs officer
shall not enter any private dwelling except with  the consent of an occupier or owner thereof
or pursuant to a writ issued under this Ordinance.
(V) Notwithstanding any other provisions of this Ordinance to the contrary, in this
section, the term "Director-General of Customs" shall mean the person for the time being
holding the post of Director-General of Custom s, and the term "Director of Customs", shall
mean the persons for the time being holding the post of Director of Customs.
51E (I) Where –G/VAL/W/99
Page 6
(a) A Customs officer has reasonable cause to suspect that goods have been undervalued,
or overvalued by any person;  or
(b) Goods have been seized under this Ordi nance for undervaluation or overvaluation.
The Director-General may, by notice in writing, require that person or any person whom the
officer suspects to be or to have been the owner or importer/exporter of those goods, or agent
thereof, as the case may be, as and when required, to produce and deliver to that officer or any
other specified Customs officer all books of account, invoice books, or other books, records,
or documents in which any entry or memorandum appears or may be supposed to appear in
respect of the purchase, importation, cost or value of, or payment for, the goods and any other
goods so imported or otherwise dealt with within a period of three years preceding the date ofthe notice.
(II) In addition to the requirements of subsection (1) of this section, the Director-General
may require the owner or importer of those goods, or agent thereof, as the case may be, as and
when required, to –
(a) Produce for the inspection of the officer or any specified Customs officer, and allow
the officer to make copies of or extracts from, any of the documents, books or records
referred to in that subsection;  and
(b) Answer any question concerning those documents, books or record.
51F The Director-General may, by notice in writing, require any person including any officer
employed in or in connection with any Government Department, Corporation, Local
Authority or any Officer employed in or in connection with any Bank, as and when required
to –
(a) Produce for inspection by a specified Customs officer any documents or records that
the Director-General considers necessary or relevant to an investigation or audit
under this Ordinance.
(b) Provide the specified Customs officer with certified copies of or extracts from any
such documents or records.
(c) Appear before a specified Customs officer and answer all questions put to him or her
concerning any goods or any transactions relating to those goods that are the subject
of any such investigation, or concerning those documents or records that are relevantto any such investigation.
51G (I) The Director-General may take possession of and retain any document or record
presented in connection with any entry or required to be produced under this Ordinance.
(II) Where .the Director-General takes possession of a document or record under
subsection (1) of this section, the Director-General shall, at the request of the person
otherwise entitled to the document or record, provide that person with a copy of the document
certified by or on behalf of the Director-General under the seal of the Customs as a true copy.
Such certified copy shall bear the name and designation of the Officer so certifying.
(III) Every copy so certified is admissible as evidence in all Courts as if it were the
original.G/VAL/W/99
Page 7
51H (I) Where a Customs officer carries out any lawful search, inspection, audit or
examination under this Ordinance and has reasonable cause to believe that documents coming
into his or her possession during such search, inspection, audit or examination are evidence of
the commission of an offence against this Ordinance, he or she may remove the documents
and retain them for the purpose of further investigations.
(II) Where a Customs officer takes possession of a document under subsection (1) of this
section he or she shall, at the request of the person otherwise entitled to the document,
provide the person with a copy of the document  certified by or on behalf of the Director-
General under the seal of the Customs as a true copy.  Such certified copy shall bear the name
and designation of the officer so certifying.
(III) A copy of any such document certified by  or on behalf of the Director-General under
the seal of the Customs is admissible in eviden ce in all Courts as if it were the original.
5. Section 52 of the principal enactment is repealed and the following section substituted
therefor:
52. Where an officer of Customs determines that the value declared in respect of any
goods pursuant to section 51, is not in accordance with Schedule E and is also a false
declaration with intent to defraud revenue, the goods in respect of which such declarations has
been made shall be forfeited, together with th e packages in which they are contained.  Where
such goods are not recoverable, the person making such false declaration shall forfeit eithertreble the value of such goods or be liable to a penalty of twice the amount of the duty
underpaid as a result of such false declaration, at the election of the Director-General.
6. The following new sections are hereby inserted immediately after section 52 of the
principal enactment and shall have effe ct as sections 52A, 52B, 52C and 52D:
52A (I) Every person who fails to keep records that are required to be kept by
sections 51(III) and 51C of this Act commits an offence.  Every person who commits an
offence under this section shall be liable to  a penalty not exceeding Rupees Five Hundred
Thousand.
52B Every person who –
(i) Fails without reasonable excuse to make available to the Customs on the
request of a Customs officer the records that are required to be kept by
sections 51(III) and 51C of this Ordinance.
(ii) Fails when requested by a Customs officer, to operate any mechanical or
electronic device on which any records are, or information is stored, for the
purpose of enabling the Customs officer to obtain those records or that
information commits a Customs offence under this section.
Every person who commits an offence under this section shall be liable to a penalty not
exceeding Rupees Five Hundred Thousand.
52C If any person shall with intent to defeat the purpose of this Ordinance, destroy, alter
or conceal any document, book or record required to be kept under this Act, or sends orattempts to send out of Sri Lanka any such book, record or document, every person so doing
shall be liable to forfeit a sum not exceeding Rupees Five Hundred Thousand.G/VAL/W/99
Page 8
52D All information which is by nature confidential or which is provided on a confidential
basis for the purposes of customs valuation, shall be treated as confidential information by the
officers of Customs and shall not be disclosed to any person without the written permission of
the provider of the same, except to a superior officer of Customs in the course of his official
duties or to the extent it may be required to be disclosed in a judicial proceeding.  AnyCustoms officer who discloses confidential information except in the manner permitted by
this section shall be guilty of an offence and shall be liable to a fine not exceeding Rupees
One Hundred Thousand.G/VAL/W/99
Page 9
INTERPRETATIVE NOTES
Regulations made by the Minister in terms of section 51 of the Customs Ordinance.
These interpretative notes shall apply for the interpretation of the Articles of Schedule E and
shall form an integral Part of Schedule E.
General Note:
Use of generally accepted accounting principles
1. "Generally accepted accounting principles" refers to the recognized consensus or substantial
authoritative support within a country at a particular time as to which economic resources andobligations shall be recorded as assets and liabilitie s, which changes in assets and liabilities should be
recorded, how the assets and liabilities and change s in them should be measured, what information
should be disclosed and how it should be disclosed and which financial statements should be
prepared.  These standards may be broad guidelines of general application as well as detailed
practices and procedures.
Note to Article 1
Price actually paid or payable
1. The price actually paid or payable is the total payment made or to be made by the buyer to or
for the benefit of the seller for the imported goods.  The payment need not necessarily take the form
of a transfer of money.  Payment may be made by way of letters of credit, or negotiable instruments.
Payment may be made directly or indirectly.  An  example of an indirect payment would be the
settlement by the buyer, whether in whole or in part, of a debt owed by the seller.
2. Activities undertaken by the buyer on his own account, other than those for which an
adjustment is provided in Article 8, are not considered to be an indirect payment to the seller, even
though they might be regarded as of benefit to the seller.  The costs of such activities shall not,
therefore, be added to the price actually paid or payable in determining the Customs value.
3. The Customs value shall not include the following  charges or costs, provided that they are
distinguished from the price actually paid or payable for the imported goods:
(a) Charges for construction, erection, assembly, maintenance or technical assistance,
undertaken after importation on imported goods such as industrial plant, machinery or
equipment.
(b) The cost of transport after importation.(c) Duties and taxes in Sri Lanka.
4. The price actually paid or payable refers to the price for the imported goods.  Thus the flow of
dividends or other payments from the buyer to the seller that do not relate to the imported goods are
not part of the Customs value.
Paragraph 1(a)(III)
Among restrictions which would not render a price actually paid or payable unacceptable are
restrictions which do not substantially affect the value of the goods.  An example of such restrictionsG/VAL/W/99
Page 10
would be the case where a seller requires a buyer of au tomobiles not to sell or exhibit them prior to a
fixed date which represents the beginning of a model year.
Paragraph 1(b)
1. If the sale or price is subject to some condition or consideration for which a value cannot be
determined with respect to the goods being valued, the transaction value shall not be acceptable for
Customs purpose.  Some examples of this include:
(a) The seller establishes the price of the imported goods on condition that the buyer will
also buy other goods in specified quantities;
(b) the price of the imported goods is dependent upon the price or prices at which the
buyer of the imported goods sells other goods to the seller of the imported goods;
(c) the price is established on the basis of a form of payment extraneous to the imported
goods, such as where the imported goods are semi-finished goods which have beenprovided by the seller on condition that he will receive a specified quantity of the
finished goods.
2. However, conditions or considerations relating to the production or marketing of the imported
goods shall not result in rejection of the transact ion value.  For example, the fact that the buyer
furnishes the seller with engineering and plans undertaken in Sri Lanka shall not result in rejection of
the transaction value for the purposes of Article 1.   Likewise, if the buyer undertakes on his own
account, even though by agreement with the seller, ac tivities relating to the marketing of the imported
goods, the value of these activities is not part of the Customs value nor shall such activities result in
rejection of the transaction value.
Paragraph 2
1. Paragraphs 2(a) and 2(b) provide different means of establishing the acceptability of a
transaction value.
2. Paragraph 2(a) provides that where the buyer and the seller are related, the circumstances
surrounding the sale shall be examined and the transaction value shall be accepted as the Customs
value provided that the relationship did not influence the price.  It is not intended that there should be
an examination of the circumstances in all cases where the buyer and the seller are related.  Such
examination will only be required where there are doubts about the acceptability of the price.  Where
the proper officer of Customs has no doubts about the acceptability of the price, it should be acceptedwithout requesting further information from the importe r.  For example, the proper officer of Customs
may have previously examined the relationship, or he may already have detailed information
concerning the buyer and the seller, and may already be satisfied from such examination or
information that the relationship did not influence the price.
3. Where the proper officer of Customs is unable to accept the transaction value without further
inquiry , he should give the importer an opportunity to supply such further detailed information as may
be necessary to enable him to examine the circumstances surrounding the sale.  In this context, the
proper officer of Customs 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 theprice 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 9,
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 example of this, if the price had been settled in aG/VAL/W/99
Page 11
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 him, this would demonstrate that the
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 period 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.
4. Paragraph 2(b) provides an opportunity for the importer to demonstrate that the transaction
value closely approximates to a "test" value previously accepted by the proper officer of Customs and
is therefore acceptable under the provisions of Article 1.  Where a test under paragraph 2(b) is met, it
is not necessary to examine the question of influence under paragraph 2(a).  If the proper officer of
Customs has already sufficient information to be sati sfied, without further detailed inquiries, that one
of the tests provided in paragraph 2(b) has been met, there is no reason for him to require the importer
to demonstrate that the test can be met.  In paragraph 2(b) the term "unrelated buyers" means buyers
who are not related to the seller in any particular case.
Paragraph 2(b)
A number of factors must be taken into consideration in determining whether one value
"closely approximates'' to another value.  These factors include the nature of the imported goods, the
nature of the industry itself, the season in which the goods are imported, and whether the difference in
values is commercially significant.  Since these factors may vary from case to case, it would beimpossible to apply a uniform standard such as a fixed percentage, in each case.  For example, a small
difference in value in a case involving one type of goods could be unacceptable while a large
difference in a case involving another type of goods might be acceptable in determining whether the
transaction value closely approximates to the "test" values set forth in paragraph 2(b) of Article 1.
Note to Article 2
1. In applying Article 2, the proper officer of Customs shall, wherever possible, use a sale of
identical goods at the same commercial level and in substantially the same quantities as the goods
being valued.  Where no such sale is found, a sale of identical goods that takes place under any one of
the following three conditions may be used:
(a) a sale at the same commercial level but in different quantities;
(b) a sale at a different commercial level but in substantially the same quantities;  or(c) a sale at a different commercial level and in different quantities.
2. Having found a sale under any one of these three conditions, adjustments will then be made,
as the case may be, for:
(a) Quantity factors only;(b) commercial level factors only;  or(c) both commercial level and quantity factors.
3. For the purposes of Article 2, the transaction value of identical imported goods means a
Customs value, adjusted as provided for in paragraph 1(b) and 2 which has already been accepted
under Article 1.G/VAL/W/99
Page 12
4. A condition for   adjustment because of different commercial levels or different quantities is
that such adjustment, whether it leads to an increase or a decrease in the value, be made only on the
basis of demonstrated evidence that clearly establishes the reasonableness and accuracy of the
adjustment, e.g. valid price lists containing prices referring to different levels or different quantities.
As an example of this, if the imported  goods being valued consist of a shipment of 10 units and the
only identical imported goods for which a transaction value exists involved a sale of 500 units, and it
is recognized that the seller grants quantity discounts, the required adjustment may be accomplished
by resorting to the seller's price list and using that price applicable to a sale of 10 units.  This does not
require that a sale had to have been made in quantities of 10 as long as the price list has been
established as being bona fide through sales at other quantities.  In the absence of such an objective
measure, however, the determination of a Customs value under the provisions of Article 2 is not
appropriate.
Note to Article 3
1. In applying Article 3, the proper officer of Customs shall, wherever possible, use a sale of
similar goods at the same commercial level and in substantially the same quantities as the goods beingvalued.  Where no such sale is found, a sale of similar goods that takes place under any one of the
following three conditions may be used.
(a) A sale at the same commercial level but in different quantities;
(b) a sale at a different commercial level, but in substantially the same quantities;  or
(c) a sale at a different commercial level and in different quantities.
2. Having found a sale under any one of these three conditions, adjustments will then be made,
as the case may be, for:
(a) Quantity factors only;(b) commercial level factors only;  or(c) both commercial level and quantity factors.
3. For the purpose of Article 3, the transaction value of similar imported goods means a
Customs value adjusted as provided for in paragraph 1(b) and (2) of Article 3 which has already been
adjusted under Article 1.
4. A condition for adjustment because of different commercial levels or different quantities is
that such adjustment, whether it leads to an increase or a decrease in the value, be made only on the
basis of demonstrated evidence that clearly establishes the reasonableness and accuracy of the
adjustment, e.g., - valid price lists containing prices referring to different levels or different quantities.
As an example of this, if the imported goods being valued consist of a shipment of 10 units and theonly similar imported goods for which a transaction value exists involved a sale of 500 units, and it is
recognized that  the seller grants quantity discounts, the required adjustment may be accomplished by
resorting to the seller's price list and using that pri ce applicable to a sale of 10 units.  This does not
require that a sale had to have been made in quantities of 10 as long as the price list has been
established as being bona fide through sales at other quantities. In the absence of such an objectivemeasure, however, the determination of a Customs value under the provisions of Article 3 is not
appropriate.G/VAL/W/99
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Note to Article 5
1. The term "unit price at which … goods are sold in the greatest aggregate quantity" means the
price at which the greatest number of units is sold in sales to persons who are not related to the
persons from whom they buy such goods at the first commercial level after importation at which suchsales take place.
2. As an example of this, goods are sold from a price list which grants favourable unit prices for
purchases made in larger quantities.
Sale quantity Unit price Number of sales Total quantity sold at
each price
1-10 units 100 10 sales of 5 units
5 sales of 3 units65
11-25 units 95 5 sales of 11 units 55
Over 25 units 90 1 sale of 30 units 80
1 sale of 50 units
The greatest number of units sold at a price is 80, therefore, the unit price in the greatest
aggregate quantity is 90.
3. As another example of this, two sales occur. In the first sale 500 units are sold at a price of
95 currency units each.  In the second sale, 400 units are sold at a price of 90 currency units each.  In
this example, the greatest number of units sold at a particular price is 500;  therefore, the unit price in
the greatest aggregate quantity is 95.
4. A third example would be the following situation where various quantities are sold at various
prices.
(a) Sales
Sale quantity Unit price
40 units 100
30 units 90
15 units 100
50 units 95
25 units 10535 units 90
05 units 100
(b) Totals
Total quantity sold
Unit price
65 90
50 95
60 100
25 105
In this example, the greatest number of units sold at a particular price is 65, therefore, the unit
price in the greatest aggregate quantity is 90.G/VAL/W/99
Page 14
5. Any sale in Sri Lanka; as described in paragraph I above, to a person who supplies directly or
indirectly free of charge or at reduced cost for use in connection with the production and sale for
export of the imported goods any of the elements specified in paragraph 1(b) of Article 8 of
Schedule E, should not be taken into account in establishing the unit price for the purposes ofArticle 5.
6. It should be noted that "profit and general expenses" referred to in paragraph 1 of Article 5
should be taken as a whole.  The figure for the purposes of this deduction should be determined on the
basis of information supplied by or on behalf of the importer unless his figures are inconsistent with
those obtained in sales in Sri Lanka, of imported goods of the same class or kind.  Where the
importer's figures are inconsistent with such figures, the amount for profit and general expenses maybe based upon relevant information other than that supplied by or on behalf of the importer.
7. The "general expenses" include the direct and indirect costs of marketing the goods in
question.
8. Local taxes payable by reason of the sale of the goods for which a deduction is not made
under the provisions of paragraph 1(a)(iv) of Article 5 shall be deducted under the provisions of
paragraph 1(a) (I) of Article 5.
In determining either the commissions or the usual profits and genera! expenses under the
provisions of paragraph 1 of Article 5, the question whether certain goods are "of the same class orkind" as other goods must be determined on a case-by-case basis by reference to the circumstances
involved.  Sales in Sri Lanka, of the narrowest group or range of imported goods of the same class or
kind, which includes the goods being valued, for which the necessary information can be provided,
should be examined.  For the purposes of Article 5 "goods of the same class or kind" includes goods
imported from the same country as the goods being valued as well as goods imported from othercountries.
10. For the purposes of paragraphs 1(b) of Article 5 the "earliest date" shall be the date by which
sales of the imported goods or of identical or similar imported goods are made in sufficient quantity to
establish the unit price.
11. Where the method in paragraph 2 of Article 5 is used, deductions made for the value added by
further processing shall be based on objective and quantifiable data relating to the cost of such work.
Accepted industry formulas, recipes, methods of construction, and other industry practices would
form the basis of the calculations.
12. It is recognized that the method of valuation provided for in paragraph 2 of Article 5 would
normally not be applicable when as a result of the further processing, the imported goods lose their
identity.  However there can be instances where, although the identity of the imported goods is lost,
the value added by the processing can be determined accurately without unreasonable difficulty.  On
the other hand, there can also be instances where the imported goods maintain their identity but form
such a minor element in the goods sold in Sri Lanka that the use of this valuation method would beunjustified.  In view of the above, each situation of this type must be considered on a case-by-case
basis.
Note to Article 6
1. As a general rule, Customs value of imported goods is determined under this schedule on the
basis of information readily available in Sri Lanka.  In order to determine a computed value, however,
it may be necessary to examine the costs of produc ing the goods being valued and other informationG/VAL/W/99
Page 15
which has to be obtained from outside Sri Lanka.  Furthermore, in most cases, the producer of the
goods will be outside the jurisdiction of the Customs Administration of Sri Lanka.  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 supply to the Sri Lanka Customs the necessary costings and to provide
facilities for any subsequent verification which may be necessary.
2. The "cost or value" referred to in paragraph 1( a) of Article 6 is to be determined on the basis
of information relating to the production of the goods being valued supplied by or on behalf of the
producer.  It is to be based upon the commercial accounts of the producer, provided that such accounts
are consistent with the generally accepted accounting principles applied in the country where the
goods are produced.
3. The "cost or value" shall include the cost of elements specified in paragraphs 1(a) and (II) and
(III) of Article 8.  It shall also include the value apportioned as appropriate under the provisions of the
relevant note to Article B, of any element specified in paragraph 1(b) of Article 8 which has been
supplied directly or indirectly by the buyer for use in connection with the production of the imported
goods. The value of the elements specified in paragraph 1(b)(iv) of Article 8 which are undertaken inSri Lanka shall be included only to the extent that such elements are charged to the producer.  It is to
be understood that no cost or value of the elements referred to in this paragraph shall be counted twice
in determining the computed value.
4. The "amount for profit and general expenses" referred to in paragraph 1(b) of Article 6 is to
be determined on the basis of information supplied by or on behalf of the producer unless the
producer's figures are inconsistent with those 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 Sri Lanka.
5. It should be noted in this  context that the "amount for profit and general expenses" has to be
taken as a whole.  It follows that if, in any particular case, the producer's profit figure is low and his
general expenses are high, the producer's profit and general expenses taken together may nevertheless
be consistent with that usually reflected in sales of goods of the same class or kind.  Such a situation
might occur, for example, if a product were being launched in Sri Lanka and the producer accepted a
nil or low profit to offset high general expenses associated with the launch.  Where the producer can
demonstrate a low profit on his sales of the imported goods because of particular commercialcircumstances, his actual profit figures should be taken into account provided that he has valid
commercial reasons to justify them and his pricing policy reflects usual pricing policies in the branch
of industry concerned.  Such a situation might occur for example, where producers have been forced
to lower prices temporarily because of an unforeseeable drop in demand, or where they sell goods to
complement a range of goods being produced in Sri Lanka and accept a low profit to maintaincompetitivity. Where the producer's own figures for profit and general expenses are not consistent
with those 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 Sri Lanka, the amount for
profit and general expenses may be based upon relevant information other than that supplied by or on
behalf of the producer of the goods.
6. The "general expenses" referred to in paragraph 1(b) of Article 6 covers direct and indirect
costs of producing and selling the goods for export which are not included under paragraph 1(a) of
Article 6.
7. Whether certain goods are "of the same class or kind" as other goods must be determined on a
case-by-case basis with reference to the circumstances involved.  In determining the usual profits and
general expenses under the provisions of Article 6, sales for export to Sri Lanka of the narrowest
group or range of goods, which includes the goods being valued, for which the necessary informationG/VAL/W/99
Page 16
can be provided, should be examined.  For the purposes of Article 6 "goods of the same class or kind"
must be from the same country as the goods being valued.
Note to Article 7
1. Customs values of imported goods determined under the provisions of Article 7 should, to the
greatest extent possible, be based on previously determined customs values.
2. The methods of valuation to be employed under Article 7 may be those laid down in (Rules
2 to 9), inclusive, but a reasonable flexibility in the application of such methods would be in
conformity with the aims and provisions of Article 7.
3. Some examples of reasonable flexibility are as follows:
(a) Identical goods - The requirement that the  identical goods should be imported at or
about the same time as the goods being valued  could be flexibly interpreted;  identical
imported goods produced in a country other than the country of exportation of thegoods being valued could be the basis for Customs valuation;  Customs values of
identical imported goods already determined under the provisions of (Articles 5 and
6) could be used.
(b) Similar goods - The requirement that the similar goods should be imported at or
about the same time as the goods being valued  could be flexibly interpreted; similar
imported goods produced in a country other than the country of exportation of the
goods being valued could be the basis for Customs valuation; Customs values of
similar imported goods already determined under the provisions of (Articles 5 and 6)
could be used.
(c) Deductive method  - The requirement that the goods shall have been sold in the
"condition as imported in paragraph 1(a) of Article 5 be flexibly interpreted;  the
90 days' requirement could be administered flexibly.
Note to Article 8
Paragraph 1(a)(i)
The term "buying commissions" means fees paid by an importer to his agent for the service of
representing him abroad in the purchase of the goods being valued.
Paragraph 1 (b) (ii)
1. There are two factors involved in the apportionment of the elements specified in paragraph 1
(b) (ii) of Article 8 to the imported goods - the value of the element itself and the way in which that
value is to be apportioned to the imported goods. The apportionment of these elements should bemade in a reasonable manner appropriate to circumstances and in accordance with generally accepted
accounting principles.
2. Concerning the value of the element, if the importer acquires the element from a seller not
related to him at a given cost, the value of the element is that cost. If the element was produced by theimporter or by a person related to him, its value would be the cost of producing it. If the element had
been previously used by the importer, regardless of whether it had been acquired or produced by such
importer, the original cost of acquisition or product ion would have to be adjusted downward to reflect
its use in order to arrive at the value of the element.G/VAL/W/99
Page 17
3. Once a value has been determined for the element it is necessary to apportion that value to the
imported goods. Various possibilities exist. For example, the value might be apportioned to the first
shipment if the importer wishes to pay duty on the entire value at one time. As another example, the
importer may request that tie value be apportioned over the number of units produced up to she timeof the first shipment. As a further example, he may request that the value be apportioned over the
entire anticipated production where contracts or firm commitments exist for that production. The
method of apportionment used will depend upon the documentation provided by the importer.
4. As an illustration of the above, an importer provides the producer with a mould to be used in
the production of the imported goods and contracts with him to buy 10,000 units. By the time of
arrival of the first shipment of 1,000 units, the producer has already produced 4,000 units. Theimporter may request the proper officer of Customs to apportion the value of the mould over
1,000 unit, 4,000 units or 10,000 units.
Paragraph 1(b)(iv)
1. Additions for the elements specified in paragraph 1(b)(iv) of Article 8 should be based on
objective and quantifiable data.  In order to minimize the burden for both the importer and proper.
officer of Customs in determining the values to be added, data readily available in the buyer's
commercial record system should be used in so far as possible .
2. For those elements supplied by the buyer which were purchased or leased by the buyer, the
addition would be the cost of the purchase or the lease. No addition shall be made for those elements
available in the public domain, other than the cost of obtaining copies of them.
3. The case with which it may be possible to calculate the values to be added will depend on a
particular firm's structure and management practice, as well as its accounting methods.
4. For example, it is possible that a firm which imports a variety of products from several
countries maintains the records of its design centre outside the country of importation in such a way
us to show accurately the costs attributable to a given product.  In such cases, a direct adjustment may
appropriately be made under the provisions of Article 8.
5. In another case, a firm may carry the cost of the design centre outside the country of
Importation as a general overhead expense without allocation to specific products.  In this instance, an
appropriate adjustment could be made under the provisions of Article 8 with respect to the imported
goods by apportioning total design centre costs over total production benefiting from the design centre
and adding such apportioned cost on a unit basis to imports.
6. Variations in the above circumstances will, of course, require different factors to be
considered in determining the proper method of allocation.
7. In cases where the production of the element in question involve a number of countries and
over a period of time, the adjustment should be limited to the value actually added to that element
outside the country of importation.
Paragraph 1(c)
1. The royalties and licence fees referred to in rule paragraph 1(c) of Article 8 may include
among other things, payments. in respect to patents, trademarks and copyrights. However, the charges
for the right to reproduce the imported goods in Sri Lanka shall not be added to the price actually paid
or payable for the imported determining the Customs value.G/VAL/W/99
Page 18
2. Payments made by the buyer for the right to distribute or resell the imported goods shall not
be added to the price actually paid or payable for the imported goods if such payments are not a
condition of the sale for export to Sri Lanka of the imported goods.
Paragraph 3
3. Where objective and quantifiable data do not exist with regard to the additions required to be
made under the provisions of Article 8, the transaction value cannot be determined under the
provisions of Article.  As an illustration of this, a royalty is paid on the basis of the price in a sale in
Sri Lanka of a litre of a particular product that was imported by the kilogram and made up into a
solution after importation. If the royalty is based partially on the imported goods and partially on otherfactors which have nothing to do with the imported goods (such as when the imported goods are
mixed, with domestic ingredients and are no longer separately identifiable, or when the royalty cannot
be distinguished from special financial arrangements between the buyer and the seller), it would be
inappropriate to attempt to make an addition for th e royalty. However, if the amount of this royalty is
based only on the imported goods and can be readily quantified, an addition to the price actually paidor payable can be made.
Note to  Article 9
Paragraph 4
For the purpose of Article 9, the term "Person" includes a legal person, where appropriate.
Paragraph 4(e)
For the purpose of this Schedule, one person shall be deemed to control another when the
former is legally or operationally in a position to exercise restraint or direction over the latter.G/VAL/W/99
Page 19
SCHEDULE – ANNEX I
RULES ON CUSTOMS VALUATION
Article 1
The Customs value of imported goods shall be the transaction value, that is the price actually
paid or payable for the goods when sold for export to Sri Lanka adjusted in accordance with the
provisions of Article 8, provided.
(a) That there are no restrictions as to the disposition or use of the goods by the buyer
other than restrictions which:
(i) Are imposed or required by law or by the public authorities in Sri Lanka;
(ii) Limit the geographical area in which the goods may be resold;  or
(iii) Do not substantially affect the value of the goods.
(b) That the sale or price is not subject to some condition or consideration for which a
value cannot be determined with respect to goods being valued;
(c) That no part of the proceeds of any subsequent resale, disposal or use of the goods by
the buyer will accrue directly or indirectly to the seller, unless an appropriateadjustment can be made in accordance with the provisions of Article 8;  and
(d) That the buyer and seller are not related, or where the buyer and the seller are related,
that the transaction value is acceptable for Customs purposes under the provisions of
paragraph 2.
2. (a) In determining whether the transaction value is acceptable for the purposes of
paragraph 1, the fact that the buyer and the seller are related within the meaning of
Article 9 of this Schedule shall not in itself be grounds for regarding the transaction
value as unacceptable.  In such case the circumstances surrounding the sale shall be
examined and the transaction value shall be accepted provided that the relationship
did not influence the price.  If in the light of information provided by the importer orotherwise, the Customs Administration has grounds for considering that the
relationship influenced the price, its shall communicate its grounds to the importer
and the importer shall be given a reasonable opportunity to respond.  If the importer
so requests, the communication of the grounds shall be in writing.
(b) In a sale between related persons, the transaction value shall he accepted and the
goods valued in accordance with the provisions of paragraph 1 whenever the importer
demonstrates that such value closely approximates to one of the following occurring
at or about the same time:
(i) The transaction value in sales to unrelated buyers of identical or similar
goods for export to Sri Lanka;
(ii) The Customs value of identical or similar goods as determined under the
provisions of Article 5;
(iii) The Customs value of identical or similar, goods as determined under the
provisions of Article 5.G/VAL/W/99
Page 20
In applying the foregoing tests, due account shall be taken of demonstrated differences in
commercial levels, quantity levels, the elements enumerated in Article 8 and costs incurred by the
seller in sales in which the seller and the buyer are not related that are not incurred by the seller in,
sales in which the seller and the buyer are related.
(c) The tests set forth in paragraph 2(b) are to be used at the initiative of the importer and
only for comparison purposes.  Substitute values may not be established under the
provisions of paragraph 2(b).
Article 2
1. (a) If the Customs value of the imported goods cannot be determined under the
provisions of Article 1, the Customs value shall be the transaction value of identical
goods sold for export to Sri Lanka and exported at or about the same time as the
goods being valued.
(b) In applying this Article, the transaction value of identical goods in a sale at the same
commercial level and in substantially the quantity as the goods being valued shall be
used to determine the Customs value. Where no such sale is found, the transaction
value of identical goods sold at a different commercial level and/or in different
quantities, adjusted to take account of differences attributable to commercial level
and/or to quantity, shall be used, provided that such adjustments can be made on thebasis of demonstrated evidence which clearly establishes the reasonableness and
accuracy of the adjustment, whether the adjustment leads to an increase or a decrease
in the value.
2. Where the costs and charges referred to in paragraph 2 of Article 8 are included in the
transaction value, an adjustment shall be made to take account of significant differences in such costs
and charges between the imported goods and the identical goods in question arising from differences
in distances and modes of transport.
3. If in applying this  Article, more than one transaction value of identical goods is found, the
lowest such value shall be used in determining the Customs value of the imported goods.
Article 3
1. (a) If the Customs value of the imported goods cannot be determined under the
provisions of Article 1 and 2, the Customs value shall be the transaction value of
similar goods sold for export to Sri Lanka and exported at or about the same time asthe goods being valued.
(b) In applying this Article, the transaction value of similar goods in a sale at the same
commercial level and in substantially the same quantity as the goods being valued
shall be used to determine the Customs value. Where no such sale is found, thetransaction value of similar goods sold at a different commercial level and/or in
different quantities, adjusted to take account of differences attributable to commercial
level and/or to quantity, shall be used, provided that such adjustments can be made on
the basis of demonstrated evidence which clearly establishes the reasonableness and
accuracy of the adjustment, whether the adjustment leads to an increase or a decreasein the value.
2. Where the costs and charges referred to in paragraph 2 of Article 8 are included in the
transaction value, an adjustment shall be made to take account of significant differences in such costsG/VAL/W/99
Page 21
and charges between the imported goods and the similar goods in question arising from differences in
distances and modes of transport.
3. If, in applying this Article, more than one transaction value of similar goods is found, the
lowest such value shall be used to determine the Customs value of the imported goods.
Article 4
If the Customs value of the imported goods cannot be determined under the provisions of
Article 1, 2 and 3, the customs value shall be determined under the provisions of Article 5 the
Customs value cannot be determined under that Article, under the provisions of Article 6 except that,
at the request of the importer, the order of a pplication of Article 5 and 6 shall be reversed.
Article 5
1. (a) If the imported goods or identical or similar imported goods are sold in Sri Lanka in
the condition as imported, the Customs value of the imported goods under theprovisions of this Article shall be based on the unit price at which the imported goods
or identical or similar imported goods are so sold in the greatest aggregate quantity, at
or about the time of the importation of the goods being valued, to persons who are not
related to the persons from whom they buy such goods, subject to deductions for the
following:
(i) Either the commission usually paid or agreed to be paid or the additions
usually made for profit and general expenses in connection with sales in Sri
Lanka of imported goods of the same class or kind;
(ii) The usual costs of transport and insurance and associated costs incurred
within Sri Lanka;
(iii) Where appropriate, the costs and charges referred to in paragraph 2 of
Article 8;  and
(iv) The Customs duties and other national taxes payable in Sri Lanka by reason
of the importation or sale of the goods.
(b) If neither the imported goods nor identical nor similar imported goods are sold at or
about the time of importation of the goods being valued, the Customs value shall
subject otherwise to the provisions of paragraph 1(a) be based on the unit price atwhich the imported goods or identical or similar imported goods are sold in Sri Lanka
in the condition as imported at the earliest date after the importation of the goods
being valued but before the expiration of 90 days after such importation.
2. If neither the imported goods nor identical nor similar goods are sold in Sri Lanka in the
condition as imported, then if the importer so requests, the Customs value shall be based on the unit
price at which the imported goods after further processing are sold in the greatest aggregate quantity
to persons in Sri Lanka who are not related to the persons from whom they buy such goods, due
allowance being made for the value added by such processing and the deductions provided for in
paragraph 1(a).G/VAL/W/99
Page 22
Article 6
1. The Customs value of imported goods under the provisions of this Article shall be based on a
computed value.  Computed value shall consist of the sum of:
(a) The cost or value of materials and fabrication or other processing employed in
producing the imported goods;
(b) An amount for profit and general expenses 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 Sri Lanka.
(c) The cost or value of all other expenses incurred as set out in paragraph 2 of Article 8.
2. The Director-General of Customs may not re quire or compel any person not resident in
Sri Lanka to produce for examination, or to allow access to any account or other record for the
purpose of determining a computed value.  However, information supplied by the producer of tiregoods for the purposes of determining the Customs value under the provisions of this Article may be
verified in another country by the Director-General of Customs with the agreement of the producer
and provided sufficient advance notice is given to the Government of the country in question and the
latter does not object to the investigation.
Article 7
1. If the Customs value of the imported goods cannot be determined under the provisions of
Article 1 through 6 inclusive, the Customs value shall be determined using reasonable means
consistent with the principles and general provisions of this Agreement and of Article VII ofGATT 1994 and on the basis of data available in Sri Lanka.
2. No Customs value shall be determined under the provisions of this Article on the basis of:
(a) The selling price in Sri Lanka of goods produced in Sri Lanka;(b) A system which provides for the acceptance for Customs purposes of the higher of
two alternative values;
(c) The price of goods on the domestic market of the country of exportation;(d) The cost of production other than computed values which have been determined for
identical or similar goods in accordance with the provisions of Article 6;
(e) The price of the goods for export to a country other than Sri Lanka;(f) Minimum Customs value;  or(g) Arbitrary or fictitious values.
3. If the importer so requests, the importer shall be informed in writing of the Customs value
determined under the provisions of this Article and the method used to determine such value.G/VAL/W/99
Page 23
Article 8
1. In determining the Customs value under the provisions of Article 1, there shall be added to
the price actually paid or payable for the imported goods:
(a) The following, to the extent that they are incurred by the buyer but are not included in
the price actually paid or payable for the goods:
(i) Commissions. and brokerage, except buying commissions;
(ii) The cost of containers which are treated as being one for Customs purposes.
with the goods in question;
(iii) The cost of packing whether for labour or materials.
(b) The value, apportioned as appropriate, of the following goods and services where
supplied directly or indirectly by the buyer free of charge or at reduced cost for use inconnection with the production and sale for export of the imported goods, to the
extent that such value has not been included in the price actually paid or payable:
(i) Materials, components, parts and similar items incorporated in the imported
goods;
(ii) Tools, dies, moulds and similar items used in the production of the imported
goods;
(iii) Materials consumed in the production of the imported goods;(iv) Engineering, development, artwork, design work and plans and sketches
undertaken elsewhere than in the country of importation and necessary for the
production of the imported goods.
(c) Royalties and licence fees related to the goods being valued that the buyer must pay,
either directly or indirectly, as a condition of sale of the goods being valued to theextent that such royalties and fees are not included in the price actually paid or
payable
(d) The value of any part of the proceeds of any subsequent resale, disposal or use of the
imported goods that accrues directly or indirectly to the seller.
2. The following costs:
(a) The cost of transport of the imported goods to the port or place of importation;
(b) loading, unloading and handling charges associated with the transport of the imported
goods to the port or place of importation; and
(c) The cost of insurance.
3. Additions to the price actually paid or payable shall be made under this Article only on the
basis of objective and quantifiable data.G/VAL/W/99
Page 24
4. No additions shall be made to the price actually paid or payable in determining the Customs
value except as provided in this Article.
Article 9
1. In this Schedule:
(a) "Customs value of imported goods" means the value of goods for the purpose of
levying ad valorem  duties of Customs on imported goods;
(b) "Country of importation'' means country or Customs territory of importation;  and
(c) "Produced" includes grown, manufactured and mined.
2. In this Schedule:
(a) "Identical goods" means, goods which are the same in all respects, including physical
characteristics, quality and reputation.  Minor differences in appearance, would not
preclude goods otherwise conforming to the definition from being regarded as
identical;
(b) "Similar goods" means, goods which although not alike in all respects, have like
characteristics and like component materials which enable them to perform the same
functions and to be commercially interchangeable. The quality of the goods, their
reputation and the existence of a trademark are among the factors to be considered in
determining whether goods are similar;
(c) The terms "identical goods" and "similar goods" do not include, as the case may be,
goods which incorporate or reflect engineering, development, artwork, design work
and plans and sketches for which no adjustment has been made under
paragraph 1(b)(iv) of Article 8 because such elements were undertaken in Sri Lanka;
(d) Goods shall not be regarded as "identical goods" or "similar goods" unless they were
produced in the same country as the goods being valued;
(e) Goods produced by a different person shall be taken into account only when there are
no identical goods or similar goods as the case may be, produced by the same person
as the goods being valued.
3. In this Schedule, "goods of the same class or kind" means goods which fall within a group or
range of goods produced by a particular industry or industry sector, and includes identical or similar
goods.
4. For the purposes  of this Schedule, persons shall be deemed to be related only if:
(a) They are officers or directors of one another's business;(b) they are legally recognized partners in business;
(c) they are employer and employees;
(d) any person directly or indirectly owns, controls or holds 5 per cent or more of the
outstanding voting stock or shares of both of them;G/VAL/W/99
Page 25
(e) one of them directly or indirectly controls other;
(f) both of them are directly or indirectly controlled by a third person;
(g) together they directly or indirectly control a third person;  or
(h) they are members of the same family.
5. Persons who are associated in business with one another in that one is the sole agent, sole
distributor or sole concessionaire, however, described of the other shall be deemed to be related for
the purposes of this Schedule if they fall within the criteria of paragraph 4.
__________