G/VAL/N/1/IND/4  
 
21 February 2019  
(19-1022) Page: 1/17 
Committee on Customs Valuation  Original: English  
 
 NOTIFICATIONS UNDER ARTICLE 22 OF THE AG REEMENT ON IMPLEMENT ATION OF 
ARTICLE VII OF THE G ENERAL AGREEMENT ON TARIFFS AND TRADE 19 94 
INDIA 
The following submission, dated 14 February 2019, is being circulated at the request of the 
delegation of India.  
_______________  
 
Please find enclosed herewith the full texts of India's Gazette Notification dated 13 September 2007, 
new Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and its 
amendments thereof vide Customs Valuation (Determina tion of Value of Imported Goods) 
Amendment Rules, 2017 dated 26 September 2017. It is requested that this notification may please 
be brought to the notice of the members in accordance with Article 22 of the WTO Agreement on 
the Implementation of Article VI I of the GATT 1994.  
_______________  
 
 G/VAL/N/1/IND/4  
 
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  Customs Valuation (Determination of Value of Imported Goods) Rules, 2007  
Notification No. 94/2007 - Customs (N.T.)  
1. Short title, commencement and application .- 
(1) These rules may be called the Customs Valuation (De termination of Value of Imported Goods) 
Rules, 2007.  
(2)  They shall come into force on the 10th day of October 2007.  
(3)  They shall apply to imported goods.  
2. Definitions .- 
(1)  In these rules, unless the context otherwise requires, - 
(a) "computed valu e" means the value of imported goods determined in accordance with rule 8.  
(b) "deductive value" means the value determined in accordance with rule 7.  
(c) "goods of the same class or kind", means imported goods that are within a group or range of 
imported goods produced by a particular industry or industrial sector and includes identical 
goods or similar goods;  
(d) "identical goods" means imported goods - 
(i)  which are same in all respects, including physical characteristics, quality and reputation 
as the g oods being valued except for minor differences in appearance that do not affect 
the value of the goods;  
(ii)  produced in the country in which the goods being valued were produced; and  
(iii) produced by the same person who produced the goods, or where no s uch goods are 
available, goods produced by a different person,  
but shall not include imported goods where engineering, development work, art work, 
design work, plan or sketch undertaken in India were completed directly or indirectly 
by the buyer on these i mported goods free of charge or at a reduced cost for use in 
connection with the production and sale for export of these imported goods;  
(e) "produced" includes grown, manufactured and mined  
(f) "similar goods" means imported goods - 
(i) 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 with the goods being valued having regard to the quality, reputation 
and the existence of trade mark;  
(ii) produced in the country in which the goods being valued were produced; and  
(iii)  produced by the same person who produced the goods being valued, or where no such 
goods are available, goods produced by a different person,  
but shall not in clude imported goods where engineering, development work, art work, 
design work, plan or sketch undertaken in India were completed directly or indirectly 
by the buyer on these imported goods free of charge or at a reduced cost for use in 
connection with th e production and sale for export of these imported goods;  
(g) "transaction value" means the value referred to in sub -section (1) of section 14 of the Customs 
Act, 1962;  
(2) For the purpose of these rules, persons shall be deemed to be "related" only if - 
(i) they are officers or directors of one another's businesses;  
(ii) they are legally recognised partners in business;  
(iii) they are employer and employee;  G/VAL/N/1/IND/4  
 
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  (iv) any person directly or indirectly owns, controls or holds five per cent or more of the 
outstanding voting stock or shares of both of them;  
(v) one of them directly or indirectly controls the other;  
(vi) both of them are directly or indirectly controlled by a third person;  
(vii) together they directly or indirectly control a third person; or  
(viii) they are members of the same family.  
Explanation I. - The term "person" also includes legal persons.  
Explanation II.  - Persons who are associated in the business of one another in that one is the sole 
agent or sole distributor or sole concessionaire, howsoever described, of the other shall be deemed 
to be related for the purpose of these rules, if they fall within the criteria of this sub -rule. 
3. Determination of the method of valuation .- 
(1)  Subject to rule 12, the value of imported goods shall be the transaction value adjusted in 
accordance with provisions of rule 10;  
(2) Value of imported goods under sub -rule (1) shall be accepted:  
Provided that - 
(a)  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 India; or  
(ii) limit the geographical area in which the goods may be resold; or  
(iii) do not substantially affect the value of the goods;  
(b) the sale or pri ce is not subject to some condition or consideration for which a value cannot be 
determined in respect of the goods being valued;  
(c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer 
will accrue directly or indire ctly to the seller, unless an appropriate adjustment can be made 
in accordance with the provisions of rule 10 of these rules; and  
(d) the buyer and seller are not related, or where the buyer and seller are related, that transaction 
value is acceptable for customs purposes u nder the provisions of sub -rule (3) below.  
(3)(a)  Where the buyer and seller are related, the transaction value shall be accepted provided that 
the examination of the circumstances of the sale of the imported goods indicate that the 
relationship did not influence the price.  
(b) In a sale between related persons, the transaction value shall be accepted, whenever the 
importer demonstrates that the declared value of the goods being valued, closely 
approximates to one of the following val ues ascertained at or about the same time.  
(i) the transaction value of identical goods, or of similar goods, in sales to unrelated buyers 
in India;  
(ii) the deductive value for identical goods or similar goods;  
(iii) the computed value for identical goods  or similar goods:  
Provided that in applying the values used for comparison, due account shall be taken of 
demonstrated difference in commercial levels, quantity levels, adjustments in 
accordance with the provisions of rule 10 and cost incurred by the sell er in sales in 
which he and the buyer are not related;  
(c) substitute values shall not be established under the provisions of clause (b) of this sub -rule. 
(4) if the value cannot be determined under the provisions of sub -rule (1), the value shall be 
determ ined by proceeding sequentially through rule 4 to 9.  G/VAL/N/1/IND/4  
 
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  4. Transaction value of identical goods. - 
(1)(a)  Subject to the provisions of rule 3, the value of imported goods shall be the transaction value 
of identical goods sold for export to India and imported a t or about the same time as the 
goods being valued;   
Provided that such transaction value shall not be the value of the goods provisionally assessed 
under section 18 of the Customs Act, 1962.  
(b) In applying this rule, the transaction value of identical go ods 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 value of imported goods.  
(c) Where no sale referred to in clause (b) of sub -rule (1), is found, the transaction value  of 
identical goods sold at a different commercial level or in different quantities or both, adjusted 
to take account of the difference attributable to commercial level or to the quantity or both, 
shall be used, provided that such adjustments shall be made  on the basis of demonstrated 
evidence which clearly establishes the reasonableness and accuracy of the adjustments, 
whether such adjustment leads to an increase or decrease in the value.  
(2) Where the costs and charges referred to in sub -rule (2) of rule 10 of these rules are included 
in the transaction value of identical goods, an adjustment shall be made, if there are significant 
differences in such costs and charges between the goods being valued and the identical goods in 
question arising from differen ces in distances and means of transport.  
(3) In applying this rule, if more than one transaction value of identical goods is found, the lowest 
such value shall be used to determine the value of imported goods.  
5. Tra nsaction value of similar goods .- 
(1) Subject to the provisions of rule 3, the value of imported goods shall be the transaction value 
of similar goods sold for export to India and imported at or about the same time as the goods being 
valued:  
Provided that such transaction value shall not be th e value of the goods provisionally assessed 
under section 18 of the Customs Act, 1962.  
(2) The provisions of clauses (b) and (c) of sub -rule (1), sub -rule (2) and sub -rule (3), of rule 4 
shall,  mutatis mutandis,  also apply in respect of similar goods.  
6. Determination of value where value cannot be determined under rules 3, 4 and 5. - 
If the value of imported goods cannot be determined under the provisions of rules 3, 4 and 5, 
the value shall be determined under the provisions of rule 7 or, when the value ca nnot be 
determined under that rule, under rule 8.  
Provided that at the request of the importer, and with the approval of the proper officer, the 
order of application of rules 7 and 8 shall be reversed.  
7. Deductive value .- 
(1) Subject to the provisions of rule 3, if the goods being valued or identical or similar imported 
goods are sold in India, in the condition as imported at or about the time at which the declaration 
for determination of value is presented, the value of imported goods shall be based on th e unit price 
at which the imported goods or identical or similar imported goods are sold in the greatest aggregate 
quantity to persons who are not related to the sellers in India, subject to the following deductions - 
(i) either the commission usually paid or agreed to be paid or the additions usually made 
for profits and general expenses in connection with sales in India of imported goods of 
the same class or kind;  
(ii) the usual costs of transport and insurance and associated costs incurred within India;  G/VAL/N/1/IND/4  
 
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  (iii) the customs duties and other taxes payable in India by reason of importation or sale of 
the goods.  
(2) If neither the imported goods nor identical nor similar imported goods are sold at or about the 
same time of importation of the goods being valued, the value of imported goods shall, subject 
otherwise to the provisions of sub -rule (1), be based on the unit price at which the imported goods 
or identical or similar imported goods are sold in India, at the earliest date after importation but 
before the e xpiry of ninety days after such importation.  
(3)(a) If neither the imported goods nor identical nor similar imported goods are sold in India in the 
condition as imported, then, the value shall be based on the unit price at which the imported 
goods, after f urther processing, are sold in the greatest aggregate quantity to persons who 
are not related to the seller in India.  
(b) In such determination, due allowance shall be made for the value added by processing and 
the deductions provided for in items (i) to ( iii) of sub -rule (1).  
8. Computed value .- 
Subject to the provisions of rule 3, the value of imported goods shall be based on a computed value, 
which 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 India;  
 (c) the cost or value of all other expenses under sub -rule (2) of rule 10.  
9. Residual method .- 
(1) Subject to the provisions of rule 3, where the value of imported goods cannot be determined 
under the provisions of any of the preceding r ules, the value shall be determined using reasonable 
means consistent with the principles and general provisions of these rules and  on the basis of data 
available in India;  
Provided that the value so determined shall not exceed the price at which such or l ike goods 
are ordinarily sold or offered for sale for delivery at the time and place of importation in the 
course of international trade, when the seller or buyer has no interest in the business of other 
and price is the sole consideration for the sale or offer for sale.  
(2) No value shall be determined under the provisions of" this rule on the basis of - 
(i) the selling price in India of the goods produced in India;  
(ii) a system which provides for the acceptance for customs purposes of the highest of the 
two alternative values;  
(iii) the price of the goods on the domestic market of the country of exportation;  
(iv) the cost of production other than computed values which have been determined for 
identical or similar goods in accordance with the provisions of  rule 8;  
(v) the price of the goods for the export to a country other than India;  
(vi) minimum customs values; or  
(vii) arbitrary or fictitious values.  
10.Cost and services. - 
(1) In determining the transaction value, there shall be added to the price actually paid or payable 
for the imported goods, - 
(a) the following to the extent they are incurred by the buyer but are not included in the price 
actually paid or payable for the imported goods, namely: - 
(i) commissions and brokerage, except buying commi ssions;  G/VAL/N/1/IND/4  
 
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  (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 wh ere supplied 
directly or indirectly by the buyer free of charge or at reduced cost for use in connection with 
the production and sale for export of imported goods, to the extent that such value has not 
been included in the price actually paid or payable, n amely: - 
(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, art work, design work, and plans and sketches undertaken 
elsewhere than in India and necessary for the production of the imported goods;  
(c) royalties and licence fees related to the imported goods that the buyer is required to pay , 
directly or indirectly, as a condition of the sale of the goods being valued, to the extent 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;  
(e) all other payments actually made or to be made as a condition of sale of the imported goods, 
by the buyer to the seller, or by the buyer to a third party to satisfy an ob ligation of the seller 
to the extent that such payments are not included in the price actually paid or payable.  
Explanation. - Where the royalty, licence fee or any other payment for a process, whether patented 
or otherwise, is includible referred to in cla uses (c) and (e), such charges shall be added to the price 
actually paid or payable for the imported goods, notwithstanding the fact that such goods may be 
subjected to the said process after importation of such goods.  
(2) For the purposes of sub -section ( 1) of section 14 of the Customs Act, 1962 (52 of 1962) and 
these rules, the value of the imported goods shall be the value of such goods, for delivery at the 
time and place of importation and shall include - 
(a) the cost of transport of the imported goods to the place of importation;  
(b) loading, unloading and handling charges associated with the delivery of the imported goods 
at the place of importation; and  
(c) the cost of insurance:  
Provided that - 
(i) where the cost of transport referred to in clause (a) is not ascertainable, such cost shall 
be twenty per cent of the free on board value of the goods;  
(ii) the charges referred to in clause (b) shall be one per cent of the free on board value of 
the goods plus the cost of transport referred to in clause (a) plus the cost of insurance 
referred to in clause (c);  
(iii) where the cost referred to in clause (c) is not ascertainable, such cost shall be 1.125% 
of free on board value of the goods;  
Provided further that in the case of goods imported by air, where the cost referred to in clause (a) 
is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods:  
Provided also that where the free on board value of the goods is not ascertainable, the costs referred 
to in clause (a) sha ll be twenty per cent of the free on board value of the goods plus cost of insurance 
for clause (i) above and the cost referred to in clause (c) shall be 1.125% of the free on board value 
of the goods plus cost of transport for clause (iii).  
Provided also that in case of goods imported by sea stuffed in a container for clearance at an Inland 
Container Depot or Container Freight Station, the cost of freight incurred in the movement of 
container from the port of entry to the Inland Container Depot or Containe r Freight Station shall not 
be included in the cost of transport referred to in clause (a).  G/VAL/N/1/IND/4  
 
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  Explanation. - The cost of transport of the imported goods referred to in clause (a) includes 
the ship demurrage charges on charted vessels, lighterage or barge char ges. 
(3) Additions to the price actually paid or payable shall be made under this rule on the basis of 
objective and quantifiable data.  
(4) No addition shall be made to the price actually paid or payable in determining the value of the 
imported goods excep t as provided for in this rule.  
11. Declaration by the importer. - 
(1) The importer or his agent shall furnish - 
(a) a declaration disclosing full and accurate details relating to the value of imported goods; and  
(b) any other statement, information or doc ument including an invoice of the manufacturer or 
producer of the imported goods where the goods are imported from or through a person other 
than the manufacturer or producer, as considered necessary by the proper officer for 
determination of the value of imported goods under these rules.  
(2) Nothing contained in these rules shall be construed as restricting or calling into question the 
right of the proper officer of customs to satisfy himself as to the truth or accuracy of any statement, 
information, docum ent or declaration presented for valuation purposes.  
(3) The provisions of the Customs Act, 1962 (52 of 1962) relating to confiscation, penalty and 
prosecution shall apply to cases where wrong declaration, information, statement or documents are 
furnished under these rules.  
12. Rejection of declared value. - 
(1) When the proper officer has reason to doubt the truth or accuracy of the value declared in 
relation to any imported goods, he may ask the importer of such goods to furnish further information 
includ ing documents or other evidence and if, after receiving such further information, or in the 
absence of a response of such importer, the proper officer still has reasonable doubt about the truth 
or accuracy of the value so declared, it shall be deemed that the transaction value of such imported 
goods cannot be determined under the provisions of sub -rule (1) of rule 3.   
(2) At the request of an importer, the proper officer, shall intimate the importer in writing the 
grounds for doubting the truth or accuracy of the value declared in relation to goods imported by 
such importer and provide a reasonable opportunity of being heard, before taking a final decision 
under sub -rule (1).  
Explanation. -(1) For the removal of doubts, it is hereby declared that: - 
(i)  This rule by itself does not provide a method for determination of value, it provides a 
mechanism and procedure for rejection of declared value in cases where there is 
reasonable doubt that the declared value does not represent the transaction value; 
where the declared value is rejected, the value shall be determined by proceeding 
sequentially in accordance with rules 4 to 9.  
(ii)  The declared value shall be accepted where the proper officer is satisfied about the truth 
and accuracy of the declared value after the said enquiry in consultation with the 
importers.  
(iii)  The proper officer shall have the powers to raise doubts on the truth or accuracy of the 
declared value based on certain reasons which may include - 
(a) the significantly higher value at which ide ntical or similar goods imported at or about the same 
time in comparable quantities in a comparable commercial transaction were assessed;  
(b) the sale involves an abnormal discount or abnormal reduction from the ordinary competitive 
price;  
(c) the sale inv olves special discounts limited to exclusive agents;  
(d) the misdeclaration of goods in parameters such as description, quality, quantity, country of 
origin, year of manufacture or production;  G/VAL/N/1/IND/4  
 
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  (e) the non declaration of parameters such as brand, grade, spe cifications that have relevance to 
value;  
(f) the fraudulent or manipulated documents.  
13. Interpretative notes. - 
The interpretative notes specified in the Schedule to these rules shall apply for the interpretation of 
these rules.  
The Schedule  
(See rule 13 ) 
Interpretative Notes  
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 eco nomic resources and 
obligations shall be recorded as assets and liabilities, which changes in assets and liabilities should 
be recorded, how the assets and liabilities and changes 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.  
Notes to rules  
Note to rule 2  
In rule 2(2)(v), for the purposes of these rules, 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.  
Note to rule 3  
Price actually paid or payable  
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 cr edit or negotiable instruments. 
Payment m ay 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.  
Activities undertaken by the buyer on his own account, other than those for which an adjus tment is 
provided in rule 10, 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 d etermining the value of imported goods.  
The value of imported goods 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, erectio n, 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 India.  
The price actually paid or payabl e 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.  G/VAL/N/1/IND/4  
 
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  Rule 3(2)(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 restrictions 
would be the case where a seller requires a buyer of automobiles not to sell or exhibit them prior to 
a fixed date which represents the beginning of a model year.  
Rule 3(2)(b)  
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 a cceptable for 
customs purposes. 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 t he 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 semifin ished goods which have been provided by the 
seller on condition that he will receive a specified quantity of the finished goods.  
However, conditions or considerations relating to the production or marketing of the imported goods 
shall not result in rejecti on of the transaction value. For example, the fact that the buyer furnishes 
the seller with engineering and plans undertaken in India shall not result in rejection of the 
transaction value for the purposes of rule 3. Likewise, if the buyer undertakes on hi s own account, 
even though by agreement with the seller, activities relating to the marketing of the imported goods, 
the value of these activities is not part of the value of imported goods nor shall such activities result 
in rejection of the transaction v alue. 
Rule 3(3)  
1. Rule 3(3)(a) and rule 3(3)(b) provide different means of establishing the acceptability of a 
transaction value.  
2. Rule 3(3)(a) provides that where the buyer and the seller are related, the circumstances 
surrounding the sale shall be exa mined and the transaction value shall be accepted as the value of 
imported goods 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 se ller 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 accepted without requesting further i nformation from the importer. 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 i nformation 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 a s 
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 t heir 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 
rule 2(2), b uy 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 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 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.  G/VAL/N/1/IND/4  
 
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  4. Rule 3(3)(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 rule 3. Where a test under rule 3(3)(b) is met, 
it is not necessary to examine the question of influence under rule 3(3)(a). If the proper officer of 
customs has already sufficient information to be satisfied, without further detailed in quiries, that 
one of the tests provided in rule 3(3)(b) has been met, there is no reason for him to require the 
importer to demonstrate that the test can be met. In rule 3(3)(b) the term "unrelated buyers" means 
buyers who are not related to the seller in any particular case.  
Rule 3(3)(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 be 
impossible to apply a uniform standard such as a fixed percentage, in each case. For examp le, 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 "tes t" values set forth in rule 3(3)(b).  
Notes to rule 4  
1. In applying rule 4, 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 
value d. 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; or  
(b) a sale at a different commercial level but i n 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 rule 4, the transaction value of identical imported goods means a value, 
adjusted as provided for in rule 4(l)(b) and (c) and rule 4(2) which has  already been accepted under 
rule 3.  
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 shi pment of 10 units and the 
only identical imported goods for which a transaction value exists involved a sale of 500 units, and 
it is recognised that the seller grants quantity discounts, the required adjustment may be 
accompli shed by resorting to the selle r's price list and using that p rice 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 ab sence of such 
an objective measure, however, the determination of a value under the provisions of rule 4 is not 
appropriate.  
Note to rule 5  
1. In applying rule 5, the proper officer of customs shall, wherever possible, use a sale of similar 
goods at the sa me commercial level and in substantially the same quantities as the goods being 
valued. For the purpose of rule 5, the transaction value of similar imported goods means the value G/VAL/N/1/IND/4  
 
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  of imported goods, adjusted as provided for in rule 5(2) which has a lready be en accepted under 
rule 3. 
2. All other provisions contained in note to rule 4 shall  mutatis mutandis  also apply in respect of 
similar goods.  
Note to rule 7  
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 
such sales 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 units  65 
11-25 units  95  5 sales of 11 units 55 
Over 25 units  90 1 sale of 30 units,  
1 sale of 50 units  80 
 
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                        105 
35 units                          90 
5 units                          100 
(b) Totals  
Total quantity       Unit price  
sold 
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.  
5. Any sale in India, as described in paragraph 1 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 G/VAL/N/1/IND/4  
 
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  export of the imported goods any of the elements specified in rul e10(l)(b), should not be taken into 
account in establishing the unit price for the purposes of rule 7.  
6. It should be noted that "profit and general expenses" referred to in rule 7(1) should be taken 
as a whole. The figure for the purposes of this deducti on should be determined on the basis of 
information supplied by or on behalf of the importer unless his figures are inconsistent with those 
obtaining in sales in India, of imported goods of the same class or kind. Where the importer 's figures 
are inconsist ent with such figures, the amount for profit and general expenses may be 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 rule 7(l)(iii) shall be deducted under the provisions of rule 7(l)(i).  
9. In determining either the commissions or the usual profits and general expenses under the 
provisions of rule 7(1), the question whether certain goods are "of the same class or kind" as other 
goods must be determined on a case -by-case basis by reference to the circumstances involved. 
Sales in India, of the narrowes t 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 rule 7 goods of the same class or kind" includes goods importe d from 
the same country as the goods being valued as well as goods imported from other countries.  
10. For the purposes of rule 7(2) the "earliest date" shall be the date by which sales of the 
imported goods or of identical or similar imported, goods are ma de in sufficient quantity to establish 
the unit price.  
11. Where the method in rule 7(3) 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 indust ry 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 rule 7(3) would normally not be 
applicable when, as a result of the furt her 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 the country of importation that the use of this valuation method 
would be unjustified. In view of the above, each situatio n of this type must be considered on a case -
by-case basis.  
Note to rule 8  
1. As a general rule, value of imported goods is determined under these rules on the basis of 
information readily available in India. In order to determine a computed value, however,  it may be 
necessary to examine the costs of producing the goods being valued and other information which 
has to be obtained from outside India. Furthermore, in most cases, the producer of the goods will 
be outside the jurisdiction of the proper officer. T he 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 proper officer the necessary costings and to provide facilities for any subsequent 
verificati on which may be necessary.  
2. The "cost or value" referred to in clause (a) of rule 8 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 cl auses (1)(a)(ii) and 
(1)(a)(iii) of rule 10. It shall also include the value, apportioned as appropriate under the provisions G/VAL/N/1/IND/4  
 
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  of the relevant note to rule 10,  of any element specified in rule 10(l)(b) which has been supplied 
directly or indirectly by the b uyer for use in connection with the production of the imported goods. 
The value of the elements specified in rule 10(l)(b)(iv) which are undertaken in India shall be 
included only to the extent that such elements are charged to the producer. It is to be un derstood 
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 clause(b) of rule 8 is to be 
determined on the basis of in formation supplied by or on behalf of t he 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 f or export to 
India.  
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,  producer's profit figure is low and his 
general expenses are high, the produ cer'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 India 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 
commercial circumstances, his actual profit figures should be t aken 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 India and accept a low profit to 
maintain competitivity. Where the producer 's own figures for profit and general expens es 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 India, 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 clause (b) of rule 8 covers the direct and indirect costs 
of producing and selling the goods for export which are not included under clause (a) of rule 8.  
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 rule 8, sales for export to India of the narrowest group 
or range of goods, which includes the goods being valued, for which the necessary information can 
be provided, should be examined. For the purposes of rule 8 "goods of the sam e class or kind" must 
be from the same country as the goods being valued.  
Note to rule 9  
1. Value of imported goods determined under the provisions of rule 9 should to the greatest 
extent possible, be based on previously determined customs values.  
2. The m ethods of valuation to be employed under rule 9 may be those laid down in rules 3 to 
8, inclusive, but a reasonable flexibility in the application of such methods would be in conformity 
with the aims and provisions of rule 9.  
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 the goods being valued 
could be the basis for customs valuation; customs values of identical imported goods already 
determined under the provisions of rules 7 and 8 could be used.  
(b) Similar goods. - The requirement that the sim ilar 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 G/VAL/N/1/IND/4  
 
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  be the basis for customs val uation; customs values of similar imported goods already 
determined under the provisions of rules 7 and 8 could be used.  
(c) Deductive method.  - The requirement that the goods shall have been sold in the "condition as 
imported" in rule 7(1) could be flexib ly interpreted; the ninety days requirement could be 
administered flexibly.  
Note to rule 10  
In rule 10(l)(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 goo ds being valued.  
Rule 10(l)(b)(ii)  
1. There are two factors involved in the apportionment of  the elements specified in 
rule 10(l)(b)(ii) to the imported goods - the value of the element itself and the way in which that 
value is to be apportioned to the imp orted goods. The apportionment of these elements should be 
made in a reasonable manner appropriate to the circumstances and in accordance with generally 
accepted accounting principles.  
2. Concerning the value of the element, if the importer acquires the el ement 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 
the importer or by a person related to him, its value would be the cost of producing it. If the element 
had been previously used b y the importer, regardless of whether it had been acquired or produced 
by such importer, the original cost of acquisition or production would have to be adjusted downward 
to reflect its use in order to arrive at the value of the element.  
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 the value be apportioned over the number of units produced up to 
the time of the first shipment. As a further example, he may request that the value be apportioned 
over the entire anticipated producti on 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 al ready produced 4,000 units. 
The importer may request the proper officer of customs to apportio n the value of the mould over 
1,000 units, 4,000 units or 10,000 units.  
Rule 10(l)(b)(iv)  
1. Additions for the elements specified in rule 10(l)(b)(iv) should be based on objective and 
quantifiable data. In order to minimise 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 buy er, 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 w ill 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 
as to show accurately the costs attributable to a given product. In such cases, a direct adjustment 
may appropriately be made under the provisions of rule 10.  G/VAL/N/1/IND/4  
 
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  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 rule 10 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 consid ered 
in determining the proper method of allocation.  
7. In cases where the production of the element in question involves 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.  
Rule 10(l)(c)  
1. The royalties and licence fees referred to in rule 10(l)(c) 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 the country of importation shall not be added to the price actually 
paid or payable for the imported goods in determining the customs value.  
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 the country of importation of the imported goods.  
Rule 10(3)  
Where objective and quantifiable data do not exist with regard to the additions required to be made 
under the provisions of rule 10, the transaction value cannot be determined under the provisions of 
rule 3. As an illustration of this, a royalty is paid on the basis of the price in a sale in the importing 
country 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 
other factors, 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 mak e an addition for the 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 paid or payable can be made.  
  G/VAL/N/1/IND/4  
 
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  [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINAR Y, PART -II, SECTION -3,  
SUB-SECTION (i)]  
Government of India  
Ministry of Finance  
(Department of Revenue)  
(Central Board of Excise and Customs)  
Notification No. 91/2017 -CUSTOMS (N.T.)  
New Delhi, 26th September, 2017  
4 Asvina, 1939 (SAKA)  
G.S.R. ….. (E). – In exercise of the powers conferred by section 156 read with section 14 of the 
Customs Act, 1962 (52 of 1962), the Central Government, hereby makes the following rules to 
amend the Customs Valuation (Determination of Value of Imported Goods) Rules 2007, na mely: -  
2.  (i)  These rules may be called the Customs Valuation (Determination of Value of Imported 
Goods) Amendment Rules, 2017.  
(ii)  They shall come into force on the date of their publication in the Official Gazette.  
3.  In the Customs Valuation (De termination of Value of Imported Goods) Rules 2007, -  
(a)  in rule 2, after clause (d), the following shall be inserted, namely: -  
"(da) "place of importation " means the customs station, where the goods are brought 
for being cleared for home consumption or for being removed for deposit in a 
warehouse; "  
(b)  in rule 10, for sub -rule (2), the following shall be substituted, namely: -  
"(2)  For the purposes of sub -section (1) of section 14 of the Customs Act, 1962 (52 of 1962) and 
these rules, the value of the imported goods shall be the value of such goods, and shall include -  
(a)  the cost of transport, loading, unloading and handling char ges associated with the 
delivery of the imported goods to the place of importation;  
(b)  the cost of insurance to the place of importation:  
Provided that where the cost referred to in clause (a) is not ascertainable, such cost 
shall be twenty per cent of  the free on board value of the goods:  
Provided further that where the free on board value of the goods is not ascertainable 
but the sum of free on board value of the goods and the cost referred to in clause (b) 
is ascertainable, the cost referred to in c lause (a) shall be twenty per cent of such sum:  
Provided also that where the cost referred to in clause (b) is not ascertainable, such 
cost shall be 1.125% of free on board value of the goods:  
Provided also that where the free on board value of the goods  is not ascertainable but 
the sum of free on board value of the goods and the cost referred to in clause (a) is 
ascertainable, the cost referred to in clause (b) shall be 1.125% of such sum:  
Provided also that in the case of goods imported by air, where t he cost referred to in 
clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board 
value of the goods:  
Provided also that in the case of goods imported by sea or air and transshipped to 
another customs station in India, the cos t of insurance, transport, loading, unloading, 
handling charges associated with such transshipment shall be excluded.  G/VAL/N/1/IND/4  
 
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  Explanation -  
The cost of transport of the imported goods referred to in clause (a) includes the ship demurrage 
charges on charted vessel s, lighterage or barge charges. "  
[F. No. 466/32/2015 -Cus-V]  
 
(Satyajit Mohanty)  
Director (ICD)  
Note: - The principle rules were published in the Gazette of India, Extraordinary, Part -II, Section -3, 
Sub-section (i), vide Notification No.  94/2007 –Customs  (N.T.), dated the 13th September, 2007, 
vide number G.S.R. 592 (E), dated the 13th September, 2007.  
__________