FAQs: Customs Valuation Part 3

Summary

The script discusses the Agreement on Customs Valuation, emphasizing the transaction value method as the primary valuation approach. It defines transaction value as the actual price paid or payable for goods sold for export, adjusted by specified valuation factors. The script outlines conditions under which the transaction value method applies, including the absence of restrictions on goods and the absence of related parties between buyer and seller. It also details the valuation factors, such as dutiable elements like commissions and non-dutiable elements like discounts, and clarifies procedures for customs officers when doubting the declared value's accuracy. The script concludes with guidelines on currency conversion for customs valuation.

Takeaways

• 📊 The principal method of valuation under the Agreement on Customs Valuation is the transaction value method.
• 💼 Transaction value refers to the price actually paid or payable for the goods when sold for export to the country of importation.
• 💵 The price actually paid or payable can be in various forms, including money transfers, letters of credit, or negotiable instruments.
• 🚫 A commercial invoice usually reflects the total payment made but cannot be used if it misrepresents the price or is fraudulent.
• ✅ Customs officers should base the customs value on transaction value unless there are doubts about its truth or accuracy, or if it doesn't meet valuation conditions.
• ❓ If there are doubts about the declared value, customs officers may ask importers for further explanation and evidence.
• 🔍 The transaction value method can be applied if there's evidence of a sale for export, no restrictions on the goods' disposition, and the sale price is not subject to conditions that can't be valued.
• 🔗 The buyer and seller should not be related, or if they are, the relationship should not influence the price or the transaction value should approximate test values.
• 💼 Valuation factors include dutiable elements (like commissions, royalties) to be added and non-dutiable elements (like discounts) to be deducted from the customs value.
• 🌐 The inclusion or exclusion of charges like freight, insurance, and loading/unloading in the customs value depends on the importing country's legislation.
• 💹 When currency conversion is necessary, the rate of exchange published by the importing country's authorities should be used, reflecting the rate in effect at the time of exportation or importation.

Q & A

What is the principal method of valuation under the Agreement on Customs Valuation?

The principal method of valuation under the Agreement on Customs Valuation is the transaction value method.

What is meant by transaction value in the context of customs valuation?

Transaction value refers to the price actually paid or payable for the goods when sold for export to the country of importation, adjusted by valuation factors.

What does the price actually paid or payable represent in customs valuation?

The price actually paid or payable represents the total payment made or to be made by the buyer, which may include various forms of payment such as money transfers, letters of credit, or negotiable instruments.

Are customs officers required to accept the value declared by the importer as the customs value?

Customs officers are required to base the customs value on the transaction value to the greatest extent possible, but they are not bound to accept the declared value without verification.

What should a customs officer do if they doubt the truth or accuracy of the declared value?

If a customs officer doubts the declared value, they may ask the importer for further explanation and evidence. If doubts persist, they must communicate in writing to the importer, providing grounds for doubt and an opportunity for response.

What are the validation conditions for applying the transaction value method?

The transaction value method can be applied if there is evidence of a sale for export, no restrictions on the goods' disposition or use, the sale or price is not subject to conditions that cannot be valued, no part of the proceeds from subsequent sales accrues to the seller, and the buyer and seller are not related or the relationship does not influence the price.

What are the valuation factors that need to be considered in determining the customs value?

Valuation factors include dutiable factors like commissions, container costs, packing costs, and royalties, as well as non-dutiable factors such as discounts, interest charges, and post-importation charges.

Should the customs value include charges for freight, insurance, loading, unloading, and delivery?

The inclusion or exclusion of these charges depends on the law of the importing country, which may provide for their inclusion in the customs value based on the cost, insurance, and freight (CIF) price or exclusion based on the free on board (FOB) price.

Do charges for pre-shipment inspection need to be added to the customs value?

No, charges for pre-shipment inspection should not be added to the customs value as they are neither paid to the buyer nor for his benefit.

How is the customs value calculated when the currency of the importing country differs from the currency of the imported goods?

The customs value is calculated using the rate of exchange duly published by the competent authorities of the importing country, reflecting the rate effectively in commercial transactions, as at the time of exportation or importation as specified by each importing country.