G/VAL/W/328  
 
17 May 2019 
(19-3430) Page: 1/2 
Committee on Customs Valuation  Original: English  
 
NOTIFICATIONS UNDER ARTICLE 22 OF THE CU STOMS  
VALUATION AGREEMENT  
SRI LANKA 
Follow -up questions  from the United States  to Sri Lanka   
regarding document G/VAL/W/ 320 
 
The following submission, dated 15 May 2019, is being circulated at the request of the delegation of 
the United States . 
 
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The United States would like to thank Sri Lanka for its responses contained in G/VAL/W/320 and to 
ask the following clarifying questions:  
 
In its response, Sri Lanka specified that subsection (1)(B) of Gazette Notification No. 1971/10 refers 
to "vehicles that are regarded as 'used' at the time of importation " and that "[a]ll brand -new motor 
vehicles fall under section (1)(A). " 
 
Question 1  
 
With respect to the cus toms valuation of a used vehicle, subsection (1)(B) of Gazette Notification 
No. 1971/10 provides that "the value … should not be below 85% of the transaction value ( excluding 
applicable local taxes ) of a similar or identical brand -new vehicle at the country  of export of such 
vehicle. " 
 
The United States would like to ask Sri Lanka again whether this provision creates a minimum value 
for used vehicles. As we understand subsection (1)(B) of Gazette Notification No. 1971/10, it appears 
to create a minimum value  for used vehicles, in particular, 85% of the value of a new vehicle. 
If Sri Lanka considers that Notification No. 1971/10 does not create a minimum value, please explain 
how it does not, and clarify how subsection (1)(B) is applied.   
 
Question 2  
 
Sri Lan ka further indicated that, for purposes of subsection (1)(B) of Gazette Notification 
No. 1971/10, "the types of vehicles … are mostly the vehicles that are imported pursuant to a 
purchase without intervening use. " Therefore, "[i]n order to facilitate trade,  the price is adjusted to 
take account of the depreciation to have a standard method of valuation. " 
 
The Supplement to Study 1.1 of the Technical Committee on Customs Valuation identifies "two types 
of situation which need to be dealt with in the valuation  of imported used vehicles ": (1) the vehicle 
is imported pursuant to a purchase without intervening use; and (2) the vehicle is imported after 
additional use since the purchase.  The Supplement to Study 1.1 outlines different approaches to the 
valuation dep ending on which category the imported used vehicle falls into, but in both scenarios 
utilized Articles 1, 2, 3, 5 before also using Article 7.  Will Sri Lanka please explain whether it uses 
the same valuation approach for both categories of vehicles and, if  so, why?  
 
  G/VAL/W/328  
 
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  Question 3  
 
Sri Lanka also noted "[w]hen the provision of Article 1 cannot be applied, the application of Article  2 
through 6 also becomes inappropriate. In all such cases, customs value of used vehicles has to be 
determined under the provisions of Article 7 of the agreement. " 
 
However, Study 1.1, for example, provides guidance on the valuation of used motor vehicles under 
Articles 1, 2, 3, and 5 of the CVA. See Paragraphs 8 -15 of the Supplement to Study 1.1.   
 
Would Sri Lanka please e xplain further on what basis it has determined that Articles 2 through 6 of 
the CVA are "inappropriate " and apparently disregarded in the valuation of used automobiles?   
 
Question 4    
 
Would Sri Lanka please explain whether subsection (1)(B) of Gazette No tification No.  1971/10 is 
consistent with the requirement to apply Articles 1 through 7 of the CVA in sequential order?  
 
Question 5    
 
With respect to vehicles imported pursuant to a purchase without intervening use, paragraph 6 of 
Study 1.1 states that "[g]iven that importation follows upon a sale, the price actually paid or payable 
in connection with that transaction should serve as the basis for establishing transaction value 
whenever the requirements and conditions of Article 1 of the Agreement are fulf illed." 
 
Can Sri Lanka please explain how subsection (1)(B)  of Gazette Notification No. 1971/10, which sets 
the value of a used vehicles as "not… below 85% of the transacted value ( excluding applicable of 
local taxes ) of a similar or identical brand -new vehicle at the country of export of such vehicle " 
reflects paragraph 6 of Study 1.1?  
 
Question 6   
 
Finally, Question 3, paragraph 7 of the Supplement to Study 1.1 asks whether "values listed in a 
foreign catalogue, published by an independent authority ind icating prices of new and used cars, 
with and without tax, on the domestic market of the exporting country, be used as a basis (initial 
price) for establishing the Customs value of a used motor vehicle? " The response, paragraph 8, 
clarifies that Article 7. 2(c) of the CVA "prohibits the use of the price of goods on the domestic market 
of the country of export as a basis for valuation " and that Study 1.1 outlines "a procedure which 
involves using catalogue prices pertaining to the country of importation, from  which adjustments 
would be made …" 
 
As used in subsection (1)(B), does the "transacted value … at the country of export " refer to a 
domestic price in the country of export or to the transaction value in a sale for export to Sri Lanka?  
If it is the former, would Sri Lanka please explain whether subsection (1)(B), which appears to set 
a minimum value for used vehicles based on the value of a similar or identical brand -new vehicle in 
the country of export, reflects paragraph 8 of the Supplement to Study 1.1 of  the Technical 
Committee on Customs Valuation?  
 
The United States remains concerned about the apparent use of minimum prices provided for in 
Gazette Notifications. Article 7.2 of the CVA prohibits the use of minimum customs values. 
The United States reques ts that Sri Lanka revoke any Gazette Notification that sets minimum prices 
for imported goods, including automobiles.   
 
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