G/VAL/W/300  
 
23 May 2017  
(17-2781) Page: 1/13 
Committee on Customs Valuation  Original: English  
 
NOTIFICATION UNDER ARTICLE  22 OF THE   
AGREEMENT ON IMPLEMENTATION OF ARTICLE VII  OF  
THE GENERAL AGREEMENT ON  TARIFFS AND TRADE 1994  
NEPAL 
Replies from Nepal to Questions from the United States (contained in G/VAL/W/286)  
regarding G/VAL/N/1/NPL/1   
The foll owing communication, dated 12 May 2017, is being circulated at the request of the 
delegation of Nepal.  
 
_______________  
 
 
Nepal would like to thank United States for its inquiry about customs valuation legislative system.  
First of all, w e would like to re call on section 13 (1) Customs Act 2007 where it clearly mentioned 
that "the rules on customs valuation, annexes and interpretative notes set forth in the Agreement 
on implementation of Article VII of the General Agreement  on Tariffs and Trade 1994 shall be 
pursued in determining the customs value of imported goods ". 
Having assessed the specific questions, we would like to provide following additional clarifications.  
Question 1  
As reflected in document G/VAL/N/1/NPL/1, Chapter 1, Section 2(b) of Nepal's 
Customs Act of 2007 states, "transaction value means the total amount to be set by 
adding freight, insurance and other related costs incurred or incurable in the 
transportation of goods imported by an importer up to the border of Nepal to the price 
actually paid or payable, directly or indirectly, by the importer to the seller of such 
imported goods."   
This definition of transaction value appears to account for adjustment under Article 8.2 
of the WTO Customs Valuation Agreement ("CVA").  Pursuant to Article 1.1 of the CVA, 
transaction value is the price actually paid or payable for the goods when sold for export 
to the country of importation adjusted in accordance with provisions of Article 8.  Can  
Nepal please indicate how it provides for adjustments under A rticles 8.1, 8.3, and  8.4 of 
the CVA, and provide cites to the relevant legal measures?  
Answer:  
WTO Customs Valuation Agreement ( "CVA") Article 2 has provided the ground for the member 
country for the inclusion of freight, insurance and other quantifiable related costs in transaction 
value.  Based on this provision Nepal has made its national legislation with the inclusion of freight 
insurance and other related cost.  Moreover, such freight insurance and other related cost 
associated with transport of impor ted goods is added in transaction value based on the declaration 
of the importer.   If not declared by importer, for the application of the safeguard measures of the 
CVA articles 8.3 and 8.4, provisions; section 13 (3), 13(4) and 13(5) of the act customs ar e 
sufficient for application of CVA arrangements.  G/VAL/W/300  
 
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  Question 2  
Customs Act of 2007, Chapter 5, Section 13(1) provides, "The rules on customs 
valuation, annexes and interpretative notes set forth in the Agreeme nt on 
Implementation of Article  VII of the Genera l Agreement on Tariffs and Trade 1994 (CVA) 
shall be pursued in determining the customs value of the imported goods."  
In light of Articles 22 and 14 of the CVA, could Nepal provide further information as to 
how it intends to implement the following provisi ons of the CVA (including the 
respective Interpretative Notes):  Articles 1.1(a) -(d), Articl e 1.2, Article 2.1(b), Article 
2.2, Article 2.3, Article 3.1(b), Article  3.2, Article 3.3, Article 5, Article 6, Articles  7.2 and 
7.3, Articles 8.1, 8.3, and 8.4, A rticle  10, Article 12, and Article 15?  
Answer:  
It is already mentioned that Nepal is committed towards CVA in its articles, annexes and 
interpretative notes.  As a compulsory provision of CVA article 22.1, government of Nepal has 
insured the conformity of its legal provisions.  Series of consultation meeting has to be done with 
stakeholders before any change in legal as well as procedural aspects and every legal document 
has to be published in printed formats in Nepal Gagect  as well as the Department of Cus toms 
website  http://www.customs.gov.np . and, access to such legal documents is easy for all 
stakeholders.  Furthermore, as per mentioned CVA article 22.2, it shall be informed to the 
committee if any changes in its  laws and regulations.   
Later part of the question is not specific one, however the concern is seems to be focused on  
appropriate application of transaction value method; adjustment in transaction value as per 
defined in agreement; in case of using alter native methods proper attention should be given for 
sequential order of application of alternative methods.  These concepts are incorporated in 
customs act 2007 and Rules 2007, namely: section 2, section 13 subsection (1) to (19) sections 
61, rule 41 and s o on.  In addition the Department of Customs has issued Valuation Directives 
2010 as per Customs Act 2007 section 93.  A comparison relating with CVA articles and 
incorporation on Nepalese national legislation are as follows:  
Article of CVA  Related act/rul e provision in customs 
act/rule/directives  Remarks  
1.1(a)  restrictions by the buyer  
 (b)  conditional price clause  
 (c)  article 8 adjustments  
 (d)  related party condition  Valuation directives 2010 section 11  Valuation directive 2010 
text is available in  Nepali 
language; translation of 
related part is attached 
in annex.  1.2 test on related party transaction  Valuation directives 2010 section 8  
2.1(b)  applying identical goods 
method and commercial level 
treatment  Act Section 13(8) and Directives sectio n 14 
2.2 article 8 adjustment  Act Section 2(b), 13(8) directives section 14  
2.3 lowest value consideration clause  directives section 14(g)  
3.1(b)  similar goods method and 
quantity adjustment clause  Act Section 13(9) and Directives section 15  
3.2 similar goods and distance and 
mode of transport adjustment clause  Act Section 13(9) and Directives section 15  
3.3 lowest value consideration in similar 
goods  Act Section 13(9) and Directives section 15  
5 greatest aggregate quantity clause  Act Section 13(8), 13(9) directive section 16  
6 computed value method  Act Section 13(11), directive section 18  
7.2 restrictive conditions for reasonable 
means method  Act Section 13(12), directive section 19(d)  
7.3 written notice provision  Act Section 13(7)   
8.1 inclusions in paid or payable  Act Section 13 directive section 8  
8.3 use of quantifiable data  Act Section 13 directive section 8  
8.4 restriction on addition on pay or 
payable  Act Section 13 directive section 8  
10 confidential information  Right to  information act 2007  Can access from 
http://www.moic.gov.np
/upload/documents/right
-to-information -act.pdf  G/VAL/W/300  
 
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  Article of CVA  Related act/rul e provision in customs 
act/rule/directives  Remarks  
12 publications of document  Right to information act 2007   
15 definition of terms  Act Section 2  Can access from 
http://www.moic.gov.np
/upload/documents/right
-to-information -act.pdf  
 
Question 3  
Customs Act of 2007, Chapter 5, Sectio n 13(4) states that "if… transaction value does 
not appear to include freight, insurance, and other related expenses, the Customs 
Officer shall determine the transaction value by adding an estimated amount likely to be 
incurred for the same."  
Could Nepal p lease explain how the Customs Officer will determine an estimated amount 
for freight, insurance and other related expenses, and identity the source of information 
that would be the basis for that determination?  
Answer:  
In most cases freight insurance and other related costs are included in transaction value declared 
by the importers.  If the transaction value declared by importer doesn't include freight, insurance 
and other related expenses, customs officer shall determine transaction value by adding an 
essential amount likely to be incurred for the same.   In such a situation, customs officer should 
follow the prescribed bases and norms by Director General for fixing the estimated amount of such 
related costs as mentioned in section 13(5).  
In addition, imp orter has to be given the opportunity to submit necessary document and 
information relating to actual freight, insurance and other related expenses no later than 90 days 
after the date of fixation of the estimated amount of freight insurance and other rela ted costs.  
Then customs officer shall be considered as the final amount of such of freight insurance and other 
related costs as per section 15(4) of customs act 2007.  
Question 4  
Customs Act of 2007, Chapter 5, Section 13(8) provides for the definition of identical 
goods.  Could Nepal clarify if minor differences in appearance would preclude goods 
from being regarded as identical?  
Answer:  
Article 15.2 (a) of the agreement and section 13(8) explanation of identical goods is almost 
similar, however second par t of the definition -' minor differences in appearance would not preclude 
goods  otherwise conforming to the definition from being regarded as identical' is not mentioned in 
customs act. Section 14(3) of the valuation manual incorporated this provision whic h is reproduced 
in annex. Hence, it is not necessary to doubt for application of this provision.  
Question 5  
Customs Act of 2007, Chapter 5, Section 13(15) and Customs Rules 2007, Chapter  6, 
Section 29 provide for the Customs Officer's ability to purchase t he imported goods the 
Customs Officer considers to be undervalued.   
Could Nepal please explain further the circumstances under which such purchases would 
be approved, and how such purchases would be conducted, including the role of the 
Fund identified und er Section 29?  Please also explain the basis for providing for such 
purchases, as opposed to allowing the goods to be released upon payment of amounts 
owed.  Could Nepal also please provide further information as to how it will ensure this 
provision does not create a conflict of interest on the part of the Customs officer doing 
his official duty?    G/VAL/W/300  
 
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  Answer:  
Provision of section 13(15) and rule 29 - 'purchase of under invoiced goods' is the last resort 
measure for customs valuation control.  Ministry of Finan ce has allocated a revolving fund in 
department of customs for this purpose.  If the customs officer has found reasonable ground for 
under invoicing in imported goods, either customs officer could proceed for buying such goods or 
cleared such goods by addi ng 50 % additional duty.  Before choosing buying decision, Director 
General shall be informed and got Permission.   Purchase amount to be set adding 5% amounts to 
the value declared by importer.  In both cases, importer has right to appeal.   That's why; this  
provision does not create a conflict of interest on the part of the Customs officer doing his official 
duty. 
Question 6  
Customs Act of 2007, Chapter 12, Section 62(2), on judicial appeal, provides that a 
person who files an appeal "may make such appeal by  making payment of or furnishing 
a deposit of duty and amount of fine and penalty chargeable pursuant to that decision or 
order against which such appeal is to be made, to or with the concerned Customs 
Office."  
Could Nepal please explain what appears to be  a requirement that a person filing an 
appeal pay for duties and fines and penalties, in light of Article 11.2 of the CVA?  
Please also indicate how Nepal has implemented Article 11.3 of the CVA, which provides 
that notice of a decision on appeal shall be g iven to the appellant, that reasons for such 
a decision shall be provided in writing, and that the appellant shall be informed of any 
rights of further appeal.  Please provide cites to the relevant legal measures.  
Answer:  
There is two tier appeal system for customs valuation cases in C ustoms Act 2007.  A person who is 
not satisfied with any decision or order made by the customs officer pursuant to section 13 may, 
for the review of such decision or order file an application to the valuation committee formed 
pursuant to section 61(2).  In addition, importer who is not satisfied with any decision made by 
valuation review committee may make an appeal to the revenue Tribunal (section 62.1) within 35 
days after the date of the determination of such customs duty or  the imposition of punishment or 
the making of decision.  
As per section 61(7) a person who files an application in valuation review committee shall deposit 
of the duty chargeable according to the valuation determined by the customs officer.  This 
provision  facilitates importers timely clearance of goods and furnished an appeal later.  And this 
deposit system is not against the provision of article 11.1.  Further, Revenue Tribunal is an 
independent judicial body as mentioned Article 11.2.  Same deposit amoun t can be used in 
valuation committee and revenue tribunal if necessary.  There is no extra penalty system for 
appeal.  
Question 7  
Customs Rules 2007, Chapter 5, Section 27(1) states that "for purpose of sub -rule (2) of 
the rule (34) of the Act, in order to determine whether the transaction value of the 
goods as declared by the importer is realistic or not, the value may be determined 
through the application of all or any methods as stipulated in Section 13 of the Act."   
Please explain how Nepal has implemen ted Article 7.2 of the CVA, which provides that 
customs value shall not be determined on certain bases.  Please indicate where in 
Nepal's law this article is implemented.  
Answer:  
Rule 27 provisions are related with Post clearance Audit purposed.  Even in Post Clearance Audit 
process customs valuation guidelines as prescribed in section 13 are fully considered which are in G/VAL/W/300  
 
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  line of the provisions of Article 7.2 of the CVA.  Section 19(d) of the valuation manual which is 
reproduced i n annex fully incorporated  the A rticle 7.2 provisions.  
Question 8  
Customs Rules 2007, Chapter 13, Section 54, provides for the establishment of a special 
Valuation Committee to determine the value of vehicles and means of transportation 
deposited in the customs office.  
Can Nepal co nfirm that the valuation of vehicles by the Valuation Committee is 
determined pursuant to the methods of valuation specified in the CVA and in accordance 
with Study 1.1 (Treatment of Used Motor Vehicles)?    
Answer:  
Provision of Rule 54 is related with sect ion 71 which deals for valuation of confiscated v ehicles. 
In such situation, transaction value couldn't be established under Article 1 of CVA.  The valuation 
committee which is formed under rule 54 determines the customs value of such confiscated 
vehicles.   The value determined by the valuation committee is used for auction  purpose of such 
vehicles.  The  committee should consider physical condition, local demand, usefulness, useable 
period and depreciation while determining the value of such vehicles.  Cust oms rule 54 provisions 
are not directly related to study 1.1 of treatment of used vehicle, however provisions are broadly 
similar.  G/VAL/W/300  
 
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  ANNEX  
Translation of Related Parts of Valuation Manual 2010.  
"8.  Method for the determination of customs value on the basis  of transaction value:  
(a) Transaction value means price actually paid or payable to the seller abroad by the buyer of 
Nepal for the importation of the goods into the country.  
 Price actually paid or payable is understood as the total amount paid or payabl e by the 
buyer to the seller or paid or payable for the benefit of the seller for the imported goods. 
There is not necessary to make payment by cash transfer. The payment can be made 
through letter of credit or negotiable instrument. The payment may be dir ect or indirect. For 
an example, the payment of any of the loans of the seller paid wholly or partially by the 
buyer is also a kind of indirect payment.  
In determining the Customs value on the basis of transaction value, expenses as prescribed 
by the Act s hould be adjusted.  
(b) Methods and procedures as stipulated in Article 1 of the Agreement should be followed while 
declaring the value by the importer and while determining the customs value by the 
Customs Officer.  
(c) The transaction value according to th e sub -article (2) of the article 13 of the Act is the 
primary base of the customs valuation. Article 13 of the Act, Articles 1 and 8 of the 
Agreement should be studied together and implemented while determining the transaction 
value.  
(d) Basic elements of  the transaction value as follows should be identified before determining 
the transaction value:  
(i) Related only with the imported goods;  
(ii) Sold compulsorily;  
(iii) Sold for the exportation i n the importing country (Nepal);  
(iv) Sold under the terms an d conditions stipulated in Sub -article (b) of Article 8 of 1.1 of 
the Agreement; and  
(v) Adjusted according to sub-article (3) of Article 8.  
(e) "Price actually paid or payable" being the important part of the transaction value, it includes 
all the values of the goods and the transaction value should be determined by adjusting the 
price actually paid or to be paid also.  
(f) The declaration of the transaction value should not be accepted if the seller has implied the 
following conditions to the importer on s elling the goods:  
(i) Conditions implied to buy other goods in specified quantity.  
(ii) The price of the imported goods is dependent upon the price at which the buyer sells 
other goods to the seller of the imported goods.  
(iii) 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 been 
provided by the seller on condition that the seller will receive a specified quantity of 
the finished goods.  
(g) If the  exporter is benefitted directly or indirectly from the sale or consumption of the 
imported goods, the transaction value should be determined by adjusting the benefitted 
amount to the price actually paid or payable.  
(h) Whether the buyer and seller are rel ated or not should be ascertained while determining the 
transaction value. If related, examination should be made on the effect of the value of the 
goods due to the relationship.  
(i) In Article 15 (4) of the Agreement, provisions are made about the people deemed to be 
related on the conditions given below:  
(i) They are officers or directors of  one another's businesses;  G/VAL/W/300  
 
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  (ii) They are legally recognized partners in business;  
(iii) They are employer and employee;  
(iv) Any person directly or indirectly owns, co ntrols or holds 5 % or more of the 
outstanding voting stock or shares of both of them;  
(v) One of them directly o r indirectly controls the other;  
(vi) Both of them are directly or indirect ly controlled by a third person;  
(vii) Together they directly or indi rectly control a third person ; or 
(viii) They are members of the same family.  
(j) For the purpose of paragraph (8) of Sub -article (i) of Article 8 above, member of the same 
family according to the prevailing Nepal laws means individuals having the relation  as 
follows and their members of the joint family in a common kitchen:  
(i) Husband/Wife ; 
(ii) Father, Mother and Sons, Daughters;  
(iii) Elder sister, Younger sister and  Elder brother, Younger brother;  
(iv) Grand -father, Grand -mothe r and Grand -son, Grand -daughter;  
(v) Uncle, Aunt and Nephew, Nice;  
(vi) Son-in-law, Sister's husband and Wife's younger brother, Wife's  elder brother, 
Daughter -in-law; 
(vii) Wife's youn ger sister, Elder mother -in-law; 
(viii) Husband's elder brother, Husband's elder brother's wife,  Husband's younger brother, 
Husband's younger brother's wife, Husband's younger sister, Husband's younger 
sister's husband, Husband's elder sister;  
(ix) Mother -in-law, Father -in-law; 
(x) Maternal uncle, Maternal uncle's wife and Sister's son, Sister's daug hter; 
(xi) Father's sister, Father's sister's husband and Wife's brother's son, Wife's brother's 
daughter.  
(k) The fact that the importer establishes that the relations has not affected the price actually 
paid or payable and such value closely approximates  the test price, such price may be 
accepted as the transaction value, though the buyer and the seller are related to each other.  
- Explanation : 
For the purpose of this Article "Test Value" means the transaction value of the identical 
goods or similar goods  sold to unrelated importer for the sell in the country of importation or 
deductive value or computed value.  Such test value should be produced/presented by the 
initiation of the importer himself and the test value should not replace the transaction value .  
(l) There is the possibility of value/price transfer in the branch or sister concern of the 
multinational company of the country of export by dispatching the goods in the country of 
import, as such whether the transaction is an actual sale or not should  be verified. If the 
transaction is not an actual sale, valuation should be determined by applying other methods 
of the clause 13 of the Act rather applying transaction value method.  
(m) Notwithstanding anything contained in sub -clause (l) the price may or  may not be accepted 
as a transaction value on the basis of analysis of the "Test value/price" on the ground the 
relation has affected the price or not, though the price transfer is based on real transaction 
or real sale.  
(n) Expenses  to be adjusted in th e transaction value/price : 
(i) Customs value must be assessed by adding transport charges up to the exporting 
point of the country of the export of the goods and up to the concerning customs point 
of Nepal from there, according to the terms of the delivery  of the goods, if such 
transaction expenses are not adjusted in the transaction price. If the documents 
supporting the transport charges are not submitted, such expenses should be 
adjusted as prescribed by the Director General pursuant to sub -clause (5) of  the 
clause 13 of the Act.  
(ii) The clearing charges of the container carrying goods should be added in the 
transaction value as a transport cost, if not added in it.  G/VAL/W/300  
 
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  (iii) The additional repacking cost of the goods incurred in the course of export is not  
generally included in the price of the goods, though the packing charges in the series 
of production is added in the sales price. Such expenses should be added in the 
transaction value of the goods.  
(iv) Insurance premium according to the terms of deliver y of the goods up to the 
exporting point of the country of export and up to the concerning customs point of 
Nepal if not shown, such expenses must be added in the transaction value of the 
goods while determining the transaction value. If the document regar ding premier 
payment is not submitted, such charges should be added on the basis as prescribed 
by the Director General pursuant to sub -clause (5) of the clause 13 of the Act.  
(v) Commissions and brokerages paid by the buyer on the purchase of any of the g oods 
should be included in the transaction value.  
 But the purchase commissions and fees paid to the agent representing the buyer in the 
country of export should not be added in the transaction value. Because the expenses on the 
presence of the buyer himse lf and or by his representative/ personnel would not be adjusted 
in the transaction value in the course of purchase of the goods in the exporting country. 
Whether the agent represents the seller or buyer should be ascertained. If the agent is the 
authorize d representative of the buyer, brokerage commissions and fees paid to him should 
not be added in the transaction value. The agent should not be regarded as the 
representative of the buyer, if he is concerned with the ownership of the goods as a 
representat ive of the seller or as an independent agent or has the capacity of controlling the 
business or has the status to control the price to be paid by the buyer and as such condition 
the brokerage commissions and fees should be added in the transaction value. B rokerage 
charges, commissions and fees paid to the mediator for rendering service is not mentioned 
in the invoice in general, so such exports should be included in the transaction value.  
Awareness should be taken in the possibility of showing more/excess p urchase commission 
amount of the nature not liable to be included in the transaction value for under invoicing.  
(vi) The price of assisting materials supplied from any of the countries abroad directly or 
indirectly by the buyer free of charge or at the re duced price for use in connection 
with the production of the imported goods should be added in the transaction value.  
As for example label, guide book, packing materials, button, motor parts, dies, 
moulding block, design, blueprint fall in those materials .  The following expenses are 
also to be included in the price of the materials, their calculated proportionate price 
should be included in the transaction value of the imported goods:  
(i) Cost incurred in the purchase or production of the goods.  
(ii) Cost incurred in the transportation and exportation.  
(iii) Value added price due to the materials used in the production of the imported 
goods.  
(vii) Royalties and license fees are referred together in the Article relating to the Rules on 
Customs Valuation an d in the explanatory note of the Agreement. Provision has been 
made in the explanatory note of Article 8.1(c) of the Agreement to include payments, 
among other things, made in respect to patents, trademarks and copyright in the 
transaction value. Whereas i n reference to the imported goods the royalties and 
license fees paid by the buyer as of the terms of sales are not included in the price 
actually paid or payable, such amount should be adjusted in the transaction value of 
the goods imported.  
(viii) Any fr action of the profit amount from the sale or disposition/use of the imported 
goods in Nepal has to be returned to the seller of the goods by the importer directly or 
indirectly, as laid down in the terms of the agreement, such payment should be 
adjusted in  the transaction value.  
(ix) Expenditures like rent, fees, taxes, demurrage charges, broker/agent fees, 
loading/unloading/handling charges of the airways, of the shipping yard or of the dry 
port incurred by the importer should be adjusted in the transacti on value.  G/VAL/W/300  
 
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  10. Non-adjustable amounts included in the price:  
In the case of non -adjustable amounts included in the price of the goods, it should be 
reconciled according to the clause 6.  
11. Transaction value not acceptable:  
If the conditions according to c lause 1 of the rules on valuation of the Agreement prevail as 
follows, the transaction value would not be acceptable:  
(a) Proceed between impo rter and supplier not concluded;  
(b) Not sold out for the export to N epal from the country of supply;  
(c) Restrict ions other than mentioned in sub -clause (2) of clause 8 are as follows:  
(i) Restrictions implied by the laws of the importing country or by the public authorities,  
(ii) Restrictions limited to resale in the certain geographical area, or  
(iii) Restrictions  of the nature not affecting substantially in the value of the goods.  
(d) Having any condition or limit for which a value cannot be determined with re spect to the 
goods being valued;  
(e) Having the condition of getting the part of proceeds due to the resal e or use of the goods 
imported in Nepal by the seller directly or indirectly, unless an appropriate adjustment can 
be made.  
(f) Value influenced by the relationship of the buyer and seller.  
14. Determination of customs value on the basis of identical goods  methods  : 
(a) Where the declared transaction value is made invalid, the customs value should be 
determined on the basis of the transaction value of the identical goods according to the sub -
clause (8) of the clause 13 of the Act  and Article 2 of the Agreem ent; 
(b) For the purpose of sub -clause (a) identical goods means the goods as follows:  
(i) Having physical characteristics, quality and reputation the same in all respects,  
(ii) Having the same country of origin of the goods in valuation.  
(iii) Having the goods in valuation produced by the same producer.  
In the case of non -availability of the goods by the same producer, identical goods produced 
by other producers of the same country can be take n as reference.  
(c) Notwithstanding anything written elsewhere a bove, if the normal differences of the goods in 
valuation have no implication on the price of the goods and other conditions remaining the 
same for this purpose, such goods can be taken into consideration for compar ison purpose 
as identical goods;  
(d) If engineering, development, artwork, design work and plans and sketches are undertaken 
in Nepal and such works are provided under reduced cost or free of cost by the seller to the 
producer, such goods should not  be taken as an identical goods;  
(e) According t o this sub -clause, comparison should be made between the identical goods 
imported at or about the same time with same commercial level and in substantially the 
same quantity while comparing the  goods at the time of valuation;  
- Explanation : 
(i) "At or abou t the same time" means the exported time or time of export not affecting 
the price due to commercial practice and market condition. Such time, in general, may 
be of prior to one month. In such condition other rules on customs valuation should 
not be applie d by interpreting the goods not being identical due to non -significant 
differences.  
(ii) "At the same commercial level" means the condition of the sale of the identical goods, 
where no such sale is found, at the same commercial level (wholesale, retail, u ltimate 
user or consumer) but in different quantities or at a different commercial level and in G/VAL/W/300  
 
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  different quantities. Having found a sale under any of these three conditions, 
adjustments should be made, as of the case, for the factors given below:  
(a) Quan tity factors only,  
(b) Commercial level factors only, or  
(c) Both commercial level and quantity factors  
(f) In addition to the provisions relating to the adjustment of the Agreement, transportation 
costs, loading/unloading/handling charges and insurance pr emium described in Article 8.2 
might affect the price of the goods in valuation and the transaction value of the identical 
goods, as such adjustment should be done as follows:  
(i) Transportation costs : Transportation cost might be different on the conditio n that the 
imported goods is dispatched from the producer country or other country or/and the 
importing country is geographically large or/and dispatched by air/marine. For 
example:  
(a)  Vehicle produced in Japan and dispatched from Japan or the same vehi cle 
dispatched from Dubai.  
(b) Commodities produced in Shanghai of the People's Republic of China and 
dispatched from Shanghai or dispatched from Gwanjao of China.  
(c) Goods produced in India and dispatched from Mumbai by air and land.  
(ii) Loading, unload ing and handling charges :  Harbour charges may be different to the 
consignment dispatched from different places. Charges of any of the harbours might 
be very high up because of facilities provided and busyness of the port.  
(iii) Insurance : Insurance premiu m might be different on the basis of the transportation 
route. If the route is risky insurance premium might be high and if less risky premium 
might be low.  
Hence, in determining the value according to Article 2 of the Agreement when the 
transaction value of the goods to be valued could not be determined in accordance with 
Article 1 of the Agreement, customs value must be determined on the basis of justifiable and 
exactness by adjusting transportation costs, load/unload/handling charges and insurance 
premiu m as described above in the confirmed value after the adjustment of price difference 
due to commercial level and different quantities.  
(g) While applying the paragraph 3 of Article 2 of the Agreement, the lowest transaction value 
must be taken as a base va lue, if the identical goods is found more than one transaction 
value;  
(h) Bases and reasons are as follows when the value could not be determined from the 
transaction value of the identical goods:  
(i) Identical goods not being the same in every aspects of physical characteristics, 
qualities and reputations, or  
(ii) The goods in valuation not being the produced goods of the country of production, or  
(iii) Engineering, development, artwork, design work or sketches undertaken in the 
country of importation.  
Note: Custom value should not be determined on the basis of the prevailing transaction value of 
the identical goods accepting as identical goods imported in such condition that any of the 
terms and conditions stated above prevails. Which of the conditions exi sts?  It should be 
clearly stated and should make valuation by similar goods method.  
15. To determine the customs value on the basis of the transaction value of similar 
goods:  
(a) This method should be applied when the customs value could not be determine d according 
to Articles 1 and 2 of the rules on cus toms valuation of the Agreement;  
(b) For the purpose of sub -article (1) similar goods means the goods as follow:  G/VAL/W/300  
 
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  (i) Not alike in all respects but having like characteristics and like component materials, 
able to perform the same functions equally to the goods to be valued and 
commercially interchangeable.  
(ii) The goods to be valued produced in the country of production.  
(iii) The goods to be valued produced by the producer.  
The goods produced by a differ ent producer of the same country can be taken into account 
only when the goods produced by the same producer is not available.  
(c) Notwithstanding anything mentioned above, if the general difference seen in the comparing 
goods makes no difference in the pr ice of the goods and for this purpose, if other definitions 
are similar, those goods can be taken as similar g oods for the comparison purpose;  
(d) If engineering, development, artwork, design work or sketches are undertaken in Nepal and 
such works have bee n provided to the producer by the importer in a reduced price or free of 
cost as such those goods should not be accepted/considered as similar goods. Some 
examples of similar goods are as follows:  
(i) Produced by two different producers, having different trademarks but capacity and 
characteristics similar.  
(ii) Commode (sanitary fixtures) for bath room, produced by two separate  producers, 
able to perform the same functions equally because of the similar standard, 
characteristics and reputation should be accepted as a similar goods instead of 
identical goods.  
(e) According to this clause, while comparing the goods, comparison must be made with the 
goods of equal commercial level and with approximately equal quantities exported to Nepal 
from the third count ry at or about the same time of the valuation of the goods.  
- Explanation : 
(a) "At of about the same time" means the exported time and time of export not affecting 
the price due to commercial practice and market condition. Such time, in general, may 
be of prior to one month.   In such condition other rules on Customs valuation should 
not be applied by interpreting the goods not being similar due to non -significant 
differences.  
(b) "At the same commercial level" means the condition of the sale of the similar  goods, 
where no such sale is found, at the same commercial level (wholesale, retail, ultimate 
user or consumer) but in different quantities or at a different commercial level and in 
different quantities. Having found on sale under any of these three condi tions, 
adjustments should be made, as of the case, for the factors given below:  
(i) Quantity factors only,  
(ii) Commercial level factors only, or  
(iii) Both commercial level and quantities factors.  
(g) While applying the paragraph 3.3 of Article 3 of the A greement, the lowest transaction value 
must be taken as a base value, if the similar goods is found more than one transaction 
value.  
(h) Bases and reasons are as follows when the value could not be determined from the 
transaction value of the identical goo ds: 
(i) Characteristic factors and component materials not being similar, unable to perform 
the same functions and commerci ally non -interchangeable goods;  
(ii) The goods in valuation not being the produced goods of the country of production ; or 
(iii) Engin eering, development, artwork, design work or sketches undertaken in the 
country of importation.  
 Hence, in the above condition the transaction value of the imported goods should not be 
made base for the goods in valuation.  G/VAL/W/300  
 
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  16. Condition to determine Custom s value on the basis of the transaction value of 
identical goods and similar goods:  
(a) If the Customs value of the goods could not be determined on the basis of the transaction 
value, Customs value of the goods in valuation should be determined on the bas is of the 
transacti on value of the identical goods;  
(b) The value cannot be determined on the basis of the transaction value of the identical goods 
if the identical goods like to the imported goods was not imported prior to it.   In this 
condition the value  of the imported goods to be valued should be determined on the basis of 
the transaction value of the  similar goods imported earlier;  
(c) Customs value of the goods should be determined on the basis of the available transaction 
value of the identical goods  and if not available on the basis of the transaction value of the 
similar goods. This sequential order should not be altered.  
18. Computed  value method:  
(a) Customs value can be determined by calculating the expenditure of production or 
manufacturing cos ts and profit taken or to be taken by the seller while selling the goods to 
the importer. This method should be applied when the value could not be determined 
according to Articles 8, 14, 15 and 17.  
But, if the importer requests to apply this method for th e determination of the value before 
applying the valuation method according to Article 17, the Customs Officer shall accept 
accordingly and apply Article 17 again if the value could not be determined by this method  
(b) While determining the customs value a ccording to this clause, the exporting country should 
sale same class or kind of goods to the importing country on the bases of production costs, 
profit amount and general expenditures as shown.  
(c) According to this clause, Customs value should be calcula ted as follows:  
(i) First of all, the aggregated value of the cost price and expenses should be determined 
as follows:  
(a) Materials employed in producing the imported goods, and  
(b) Production and other processing costs, direct or indirect labour cost, ot her 
factory expenses of the imported goods.  
(ii) The following expenses should be added if not added in (a) and (b) above:  
(a) Costs or fees of packaging  
(b) Expenditure regarding logical aggregate assists according to generally accepted 
accounting princip les. 
(c) Engineering, artwork etc. completed in Nepal and expenses of which recovered 
from producer.  
(iii) Export sale profit and general expenditure shown by the producer as of the goods of 
the same level and same kind exported to Nepal.  
Transportation co st, insurance, loading, unloading and handling charges incurred up to the 
shipping port and up to the Nepalese border from there.  
(d) According to this clause, some examples of determining the customs value are as follows:  
19. Fallback Method:  
(d) The valu e of the imported goods should not be determined according to this clause on the 
basis given below:  
(i) Selling price of the goods produced in the country of importation ; 
(ii) Higher of two alternative values for customs purposes;  
(iii) Domestic market pri ce of the goods of exporting country;  G/VAL/W/300  
 
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  (iv) The cost of production of the goods (except the price determined by the computed 
value method of identical or similar goods according to the clause 18 ); 
(v) Price of the goods for the export to other country excep t Nepal;  
(vi) Minimum Customs value ; or 
(vii) Arbitrary or fictitious values. " 
 
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