WORLD TRADE
ORGANIZATIONG/VAL/N/2/IND/1
15 July 2002
(02-3909)
Committee on Customs Valuation Original:  English
INFORMATION ON IMPLEMENTATION AND ADMINISTRATION
OF THE AGREEMENT ON CUSTOMS VALUATION
Checklist of issues
INDIA
The following communication, dated 10 July 2002, has been received from the Permanent
Mission of India.
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1. Questions concerning Article 1:
(a) Sales between related person:
(i) Are sales between related persons subject to special provisions?
Sales between related persons are subject to the provisions under Rule 4 (3) of the Customs
Valuation (Determination of Price of Imported Goods) Rules 1988, which correspond to
Article 1.2 of the Agreement on Implementation of Article VII of the General Agreement on
Tariffs and Trade 1994.
(ii) Is the fact of intercompany prices prima facie considered as grounds for regarding the
respective prices as being influenced?
Transactions between two companies are treated as related in case the nature of transaction
comes within the scope of related persons defined under Rule 4 (3) of the Customs Valuation
(Determination of Price of Imported Goods) Rules 1988.
(iii) What is the provision for giving the communicati on of the afore-mentioned grounds in writing
if the importer so requests? (Article 1.2(a))
Under the administrative law in India assessing officers have to follow the principles of
natural justice while performing quasi-judicial duty, which includes rejecting the value
declared by any importer.  The officer is required to give a written notice to the importer and
grant him an opportunity to be heard in person before passing a written order rejecting the
transaction value which should explain the reasons for doing so.
(iv) How has Article 1.2(b) been implemented?
Article 1.2 (b) has been given effect to by enacting Rule 4 (3) (b) of the Customs Valuation
(Determination of Price of Imported Goods) Rules 1988.G/VAL/N/2/IND/1
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(b) Price of lost or damaged goods:
There are two provisions in the Customs Act, 1962 which provide for abatement/remission of
duty on damaged or deteriorated goods or goods that have been lost, destroyed or abandoned.  The
relevant extracts of provisions are reproduced below:
“Section 22.  Abatement of duty on damaged or deteriorated goods:
(1) Where it is shown to the satisfaction of the Assistant Commissioner of customs or
Deputy Commissione r of Customs-
(a) that any imported goods had been damaged or had deteriorated at any time before or
during the unloading of the goods in India; or
(b) that any imported goods, other than warehoused goods, had been damaged at any
time after the unloading thereof in India but before their examination under section
17, on account of any accident not due to any wilful act, negligence or default of the
importer, his employee or agent; or that any warehoused goods had been damaged at
any time before clearance for home consumption on account of any accident not dueto any wilful act, negligence or default of the owner, his employee or agent, such
goods shall be chargeable to duty in accordance with the provisions of sub-
section (2).
(2) The duty to be charged on the goods referred to in sub-section (1) shall bear the same
proportion to the duty chargeable on the goods before the damage or deterioration which the
value of the damaged or deteriorated goods bears to the value of the goods before the damage
or deterioration.”
”Section 23.  Remission of duty on lost, destroyed or abandoned goods-(1) Without prejudice to the provisions of section 13, where it is shown to the satisfaction
of the Assistant Commissioner of Customs or  Deputy Commissioner of Customs that any
imported goods have been lost (otherwise than as a result of pilferage) or destroyed, at any
time before clearance for home consumption, the Assistant Commissioner of Customs or
Deputy Commissioner of Customs) shall remit the duty on such goods.
(2) The owner of any imported goods may, at any time before an order for clearance of
goods for home consumption under Section 47 or an order for permitting the deposit of goods
in a warehouse under Section 60 has been made, relinquish his title to the goods and
thereupon he shall not be liable to pay the duty thereon.”
2. How has the provisions of Article 4 to allow the importer an option to reverse the order
of application of Article 5 and 6 been implemented?
Rule 6A of Customs Valuation (Determina tion of Price of Imported Goods) Rules 1988,
provides that the order of application of the deductive value method and computed value method canbe reversed at the request of the importer.  This procedure can be applied after taking the approval of
the Customs Officer.
In this regard, India had filed a reservation as provided under Annex III.3 to Agreement on
Implementation of Article VII of the General Agreement on Tariffs and Trade 1994.  In keeping withthe reservation, Article 4 has been adopted with a minor modification to the extent that an importerG/VAL/N/2/IND/1
Page 3
has to seek approval of the Customs officer before the methods in Article 5 & 6 are applied in the
reverse order.
3. How has Articles 5.2 been implemented?
Rule 7 (3) of Customs Valuation (Determination of Price of Imported Goods) Rules 1988,
incorporates the provisions of Article 5.2 of Agreement on Implementation of Article VII of the
General Agreement on Tariffs and Trade, 1994.  However, following India’s reservation filed under
the provisions Annex III.4 of the said Agreement, the method prescribed in the said Rule 7 (3) can be
adopted without obtaining the consent of the importer.
4. How has Article 6.2 been implemented?
Note to Rule 7A of the Interpretative Notes contained in the Customs Valuation
(Determination of Price of Imported Goods) Rules, 1988, clarified that the use of the computed value
method will be limited to those cases where the produc er is prepared to supply the necessary costing.
5. Questions concerning Article 7?
(a) What provisions have been made for making value determinations pursuant to Article 7?
Rule 8 of Customs Valuation (Determination of Price of Imported Goods) Rules 1988,
incorporates the provisions of Article 7 of the Agreement.   
(b) What is the provision for informing the impor ter of the customs value determined under
Article 7?
(c) Are the prohibitions found in Article 7.2 delineated?
6. How have the options found in Article 8.2 been handled? In the case of f.o.b. application,
are ex-factory prices also accepted?
As provided under Article 8 (2) of the Agreement, Rule 9 of Customs Valuation
(Determination of Price of Imported Goods) Rules 1988, states that the value of the goods shall
include the elements of freight, insurance, and loading, unloading and handling charges incurred in
the importation of the imported goods.
7. Where is the rate of exchange published, as required by Article 9.1?
Rate of exchange is notified by the Government of India from time to time in the Official
Gazette as provided for in the statute.
8. What steps have been taken to ensure confidentiality, as required by Article 10?
The Indian Customs Act, 1962 contains adequate provisions for ensuring confidentiality.
Extract of Section 136 (3) is given below:
‘If any officer of customs, except in the discha rge in good faith of his duty as such officer or
in compliance with any requisition made under any law for the time being in force, discloses any
particulars learnt by him in his official capacity in respect of any goods, he shall be punishable with
imprisonment for a term which may extend to six months, or with fine, which may extend to one
thousand rupees, or with both’.G/VAL/N/2/IND/1
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9. Questions concerning Article 11?
(a) What rights of appeal are open to the importer or any other person?
Under the Customs Act, 1962 the importer and his agent can appeal against a decision on
valuation to the Commissioner (Appeal) in the fi rst instance.  A second appeal also lies to the
Customs Excise and Gold (Control) Appellate Tribunal.  Benches of the said Tribunal consist ofmembers drawn from Indian Customs and Excise Service as well as from the judiciary.  An appeal
against the Tribunal’s order can only be made to the High Court or Supreme Court of India, which is
the highest court of the land.
(b) How is he to be informed of his right to further appeal?
The importers are invariably informed of their right of appeal by the adjudicating and
appellate authorities in the body of their orders.
10. Provide information on the publication, as required by Article 12,of:
(a) 
(i) The relevant national laws;
Customs Act, 1962 containing the relevant customs Laws on Valuation.
(ii) The regulations concerning the application of the Agreement;
Customs Valuation Rules (Determination of price of imported goods) Rules 1988 is the
relevant regulation concerning application of Agreement on Customs Valuation in India.
(iii) The judicial decision and administrative rulings of general application to the Agreement;
The national laws relating to valuation of imported goods are contained in the Customs Act,
1962 and Customs Valuation (Determination of Price of Imported Goods) Rules 1988 issued
under the Customs Act.  The Act and rules are published in the Official Gazette.  Judicial
decisions and rulings of the Tribunal are published in reputed law journals.  Indian Customs
Administration has put up a special web-site for valuation issues and important decisions of
the Supreme Court of India are displayed on the web-site.
(iv) general or specific laws being referred to in the rules of implementation or application:
(b) Is the publication of further rules anticipated? Which topics would they cover?
The Regulations on Import and Export Tariff of the People’s Republic of China are being in
the process of revision and shall be published upon the date of its approval. The said Regulations will
cover the issues related to customs valuation of imported and exported goods.G/VAL/N/2/IND/1
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11. Questions concerning Article 13:
(a) How is the obligation of Article 13(last sentence) being dealt with in the respective
legislation?
(b) Have additional explanations been laid down?
Section 18 of the Customs Act, 1962 and Customs (Provisional Duty Assessment)
Regulations, 1963 allow an importer to withdraw his goods from customs pending final determination
of value by giving a guarantee in the form of surety, security deposit or bank guarantee.
12. Questions concerning Article16:
(a) Does the respective national legislation contain a provision requiring customs authorities to
give an explanation in writing as to how the customs value was determined?
Rule 10A (2) of the Customs Valuation Rules (Determination of Price of Imported Goods),
1988 provides that, at the request of the importer, the proper officer shall intimate the importer in
writing the grounds for doubting the truth or accuracy of the value declared of the imported goods.
Thereafter, a reasonable opportunity of being heard is to given to the importer before taking a final
decision in the matter.
(b) Are there any further regulations concerning above-mentioned requests?
13. How have the Interpretative Note s of the Agreement been included?
The interpretative notes to the Agreement have been included in the body of the Customs
Valuation (Determination of Price of Imported Goods) Rules 1988, as a Schedule to the rules.
14. How have the provisions of the Decision of 26 April 1984 on the Treatment of Interest
Charges in the Customs Value of Imported  goods (VAL/6.Rev.1) been implemented?$
The Decision on the Treatment of Interest Charges has been implemented under
administrative instructions.
15. For those countries applying paragraph 2 of the Decision 24 September 1984 on the
Valuation of Carrier Media Bearing Softwa re for Data Processing Equipment (VAL/8),
how have the provisions of this paragraph been implemented?
India does not apply paragraph 2 of the said Decision.
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