G/VAL/N/2/IND/2  
 
21 February 2019  
(19-1023) Page: 1/5 
Committee on Customs Valuation  Original: English  
 
INFORMATION ON IMPLE MENTATION AND ADMINI STRATION  
OF THE AGREEMENT ON CUSTOMS VALUATION  
CHECKLIST OF ISSUES  
INDIA 
The following submission, dated 14 February 2019, is being circulated at the request of the 
delegation of India.  
 
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1. Questions concerning Article 1:  
(a) Sales between related person:  
(i) Are sales between related persons subject to special provisions?  
Sales between related persons are subject to the provisions under Rule 3 (3) of the Customs 
Valuation (Determination of V alue of Imported Goods) Rules 2007, which correspond to 
Article  1.2 of the Agreement on Implementation of Article VII of the General Agreement on 
Tariffs and Trade 1994.  
(ii) Is the fact of intercompany prices prima facie considered as grounds for 
regardin g the respective prices as being influenced?  
Transactions between two companies are treated as related in case the nature of transaction 
comes within the scope of related persons defined under Rule 2 (2) of the Customs Valuation 
(Determination of Value of Imported Goods) Rules 2007, which is based on Article 15 (4) of 
the Agreement on Implementation of Article VII.  
(iii) What is the provision for giving the communication of the afore -mentioned 
grounds in writing if the importer so requests? (Article 1.2(a))  
Under the administrative law in India, assessing officers have to follow the principles of natural 
justice while rendering quasi -judicial decisions, which includes rejecting the value declared by 
any importer. The officer is required to give a written not ice to the importer and grant him an 
opportunity to be heard in person before passing a written order rejecting the transaction 
value which should explain the reasons for doing so. This is also covered in Rule 12 of the 
Customs Valuation (Determination of Value of Imported Goods) Rules 2007.  
(iv) How has Article 1.2(b) been implemented?  
Article 1.2 (b) has been given effect to by enacting Rule 3 (3) (b) of the Customs Valuation 
(Determination of Value of Imported Goods) Rules 2007 . G/VAL/N/2/IND/2  
 
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  (b) Price of lost or dam aged goods:  
There are two provisions in the Customs Act, 1962 which provide for abatement/remission of 
duty on damaged or deteriorated goods or goods that have been lost, destroyed or abandoned. 
The relevant extracts of provisions are reproduced below:   
"Section 22.  Abatement of duty on damaged or deteriorated goods:  
(1) Where it is shown to the satisfaction of the Assistant Commissioner of customs or 
Deputy Commissioner of Customs - 
a. that any imported goods had been damaged or had deteriorated at any time  before 
or during the unloading of the goods in India; or  
b. that any imported goods, other than warehoused goods, had been damaged at any 
time after the unloading thereof in India but before their examination under 
section  17, on account of any accident not due to any wilful act, negligence or default 
of the importer, his employee or agent; or  
c. that any warehoused goods had been damaged at any time before clearance for 
home consumption on account of any accident not due to any wilful act, negligence 
or defaul t of the owner, his employee or agent,  
such goods shall be chargeable to duty in accordance with the provisions of 
sub-section  (2).   
(2) The duty to be charged on the goods referred to in sub -section (1) shall bear the same 
proportion to the duty chargea ble on the goods before the damage or deterioration 
which the value of the damaged or deteriorated goods bears to the value of the goods 
before the damage or deterioration.  
(3) For the purposes of this section, the value of damaged or deteriorated goods ma y be 
ascertained by either of the following methods at the option of the owner: - 
a. the value of such goods may be ascertained by the proper officer, or  
b. such goods may be sold by the proper officer by public auction or by tender, or with 
the consent of the o wner in any other manner, and the gross sale proceeds shall be 
deemed to be the value of such goods. "  
"Section 23.  Remission of duty on lost, destroyed or abandoned goods - 
(1) Without prejudice to the provisions of section 13, where it is shown to the satisfaction 
of the Assistant Commissioner of Customs or Deputy Commissioner of Customs that 
any imported goods have been lost (otherwise than as a result of pilferage) or 
destroye d, at any time before clearance for home consumption, the Assistant 
Commissioner of Customs or Deputy Commissioner of Customs) shall remit the duty on 
such goods.   
(2) The owner of any imported goods may, at any time before an order for clearance of 
goods  for home consumption under Section 47 or an order for permitting the deposit of 
goods in a warehouse under Section 60 has been made, relinquish his title to the goods 
and thereupon he shall not be liable to pay the duty thereon:  
Provided that the owner of  any such imported goods shall not be allowed to relinquish 
his title to such goods regarding which an offence appears to have been committed 
under this Act or any other law for the time being in force. "   
2. How has the provisions of Article 4 to allow the importer an option to reverse the 
order of application of Article 5 and 6 been implemented?  
 Rule 6 of Customs Valuation (Determination of Price of Imported Goods) Rules 2007 as 
amended, provides that the order of application of the deductive value met hod and computed G/VAL/N/2/IND/2  
 
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  value method can be reversed at the request of the importer. This procedure can be applied 
after taking the approval of the Customs Officer.   
 In this regard, India had filed a reservation as provided under Annex III.3 to Agreement on 
Implementation of Article VII of the General Agreement on Tariffs and Trade 1994. In keeping 
with the reservation, Article 4 has been adopted with a minor modification to the extent that 
an importer has to seek approval of the Customs officer before the metho ds in Article s 5 and 
6 are applied in the reverse order.  
3. How has Articles 5.2 been implemented?  
 Rule 7 (3) of Customs Valuation (Determination of Price of Imported Goods) Rules 2007  as 
amended , incorporates the provisions of Article 5.2 of Agreeme nt on Implementation of 
Article  VII of the General Agreement on Tariffs and Trade, 1994. However, following India 's 
reservation filed under the provisions Annex III.4 of the said Agreement, the method 
prescribed in the said Rule 7 (3) can be adopted without ob taining the consent of the importer.  
4. How has Article 6.2 been implemented?  
 Note to Rule 8 of the Interpretative Notes contained in the Customs Valuation (Determination 
of Price of Imported Goods) Rules, 2007, clarified that the use of the computed valu e method 
will be limited to those cases where the producer is prepared to supply the necessary costing.    
5. Questions concerning Article 7?  
(a) What provisions have been made for making value determinations pursuant to 
Article 7?  
 Rule 9 of Customs Valua tion (Determination of Price of Imported Goods) Rules 2007  as 
amended , incorporates the provisions of Article 7 of the Agreement.    
(b) What is the provision for informing the importer of the customs value determined 
under Article 7?  
 As explained above in 1 (a) (iii).  
(c) Are the prohibitions found in Article 7.2 delineated?  
 Yes, in terms of Rule 9 (2) of Customs Valuation (Determination of Price of Imported Goods) 
Rules 2007 as amended.  
6. How have the options found in Article 8.2 been handled? In the case of f.o.b. 
application,  are ex -factory prices also accepted?  
 As provided under Article 8(2) of the Agreement, Rule 10 of Customs Valuation (Determination 
of Price of Imported Goods) Rules 2007  as amended , states that the value of the goods shall 
include the elements of freight  of the imported goods to the place of importation , insurance, 
and loading, unloading and handling charges associated with the delivery of the imported 
goods to the place of importation .   
7. Where is the rate of exchange publishe d, as required by Article 9.1?  
 Rate of exchange is published by the Central Board of Indirect Taxes & Customs (CBIC), which 
is the competent authority, from time to time as provided under Customs Act, 1962 on the 
official website of CBIC.  
8. What steps ha ve been taken to ensure confidentiality, as required by Article 10?  
 The Customs Act, 1962 contains adequate provisions for ensuring confidentiality. Extract of 
Section 136 (3) is given below:  G/VAL/N/2/IND/2  
 
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   "If any officer of customs, except in the discharge in good faith of his duty as such 
officer or in compliance with any requisition made under any law for the time being in 
force, discloses any particulars learnt by him in his official capacity in respect o f any 
goods, he shall be punishable with imprisonment for a term which may extend to six 
months, or with fine, which may extend to one thousand rupees, or with both ". 
9. Questions concerning Article 11?  
(a) What rights of appeal are open to the importer or  any other person?  
 Under the Customs Act, 1962 the importer and his agent can appeal against a decision on 
valuation to the Commissioner (Appeal) in the first instance. A second appeal also lies to the 
Customs Excise and Service Tax Appellate Tribunal (CE STAT) . An appeal against the Tribunal 's 
order can only be made to the Supreme Court of India, which is the highest court of the land.  
(b) How is he to be informed of his right to further appeal?  
 The importers are invariably informed of their right of appeal by the adjudicating and appellate 
authorities in writing in the body of their orders.  
10. Provide information on the publication, as required by Article 12, of:  
(a) (i) The relevant national la ws;  
Customs Act, 1962 containing the relevant customs Laws on Valuation.  
(ii) The regulations concerning the application of the Agreement;   
Customs Valuation Rules (Determination of price of imported goods) Rules 2007 is the relevant 
regulation concerning  application of Agreement on Customs Valuation in India.  
(iii) The judicial decision and administrative rulings of general application to the 
Agreement;  
The national laws relating to valuation of imported goods are contained in the Customs Act, 
1962 and Cu stoms Valuation (Determination of Price of Imported Goods) Rules 2007  as 
amended  issued under the Customs Act. The Act and rules are published in the Official Gazette  
and on the website of Central Board of Indirect Taxes and Customs (CBIC) . Judicial decisi ons 
and rulings of the Tribunal are published in reputed law journals. CBIC has put up a special 
web-site for valuation issues and important decisions of the Supreme Court of India are 
displayed on the web -site. 
(iv) general or specific laws being referred  to in the rules of implementation or 
application:  
Section 156 (2) (a) of the Customs Act, 1962 empowers the Central Government to make 
rules providing for the manner of determining the transaction value of the imported goods 
under Section 14 of Customs Ac t, 1962.  
(b) Is the publication of further rules anticipated? Which topics would they cover?  
No. 
11. Questions concerning Article  13: 
(a) How is the obligation of Article 13 (last sentence) being dealt with in the respective 
legislation?  
Section 18 of the Customs Act, 1962 read with Customs (Provisional Duty Assessment) 
Regulations, 2011 and Customs (Finalisation of Provisional Assessment) Regulations, 2018 G/VAL/N/2/IND/2  
 
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  allow an importer to release his goods from customs pending final determination of value by 
giving a guarantee in the form of surety, security deposit or bank guarantee.  
(b) Have additional explanations been laid down?  
Administrative instructions in the form of Circular No. 38/2016 dated 22 August 2016 for 
uniform application of these regulations have bee n issued.  
12. Questions concerning Article 16:  
(a) Does the respective national legislation contain a provision requiring customs 
authorities to give an explanation in writing as to how the customs value was 
determined?  
Rule 12 of the Customs Valuation Rul es (Determination of Price of Imported Goods), 2007 
provides that, at the request of the importer, the proper officer shall intimate the importer in 
writing the grounds for doubting the truth or accuracy of the value declared of the imported 
goods. Thereaf ter, a reasonable opportunity of being heard is to be given to the importer 
before taking a final decision in the matter.  
(b) Are there any further regulations concerning above -mentioned requests?  
No. 
13. How have the Interpretative Notes of the Agreement been included?  
The interpretative notes to the Agreement have been included in the body of the Customs 
Valuation (Determination of Price of Imported Goods) Rules 2007  as amended , as a schedule 
to the rules.  
14. How have the provisions of the Decision of 26  April 1984 on the Treatment of 
Interest Charges in the Customs Value of Imported goods (VAL/6.Rev.1) been 
implemented?  
The Decision on the Treatment of Interest Charges has been implemented under 
administrative instructions.  
15. For those countries applyi ng paragraph 2 of the Decision 24 September 1984 on the 
Valuation of Carrier Media Bearing Software for Data Processing Equipment 
(VAL/8), how have the provisions of this paragraph been implemented?  
The Government of India  notified the provisions of this paragraph by publishing it in its official 
gazette. For such goods, t he transaction value is equal to the aggregate of the cost of carrier 
medium and the freight and insurance charges incurred in res pect of the carrier medi um. 
The value of motion pictures, music, gaming software for use on gaming consoles printed or 
recorded on media falling under chapter headings 3706 or 8523 is not to be included in the 
transaction value. However, this is not applicable in case of motion p ictures, music or gaming 
software in a pre -packaged form for retail sale.  
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