Section 12 in The Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.
12. Interpretative notes.
- The interpretative notes specified in it the schedule to these rules shall apply for the interpretation of these rules.The Schedule(See rule 2)Interpretative NotesGeneral Note - Use of generally accepted accounting principles. - "Generally accepted accounting principles" refers to the recognized consensus or substantial authoritative support within a country at a particular time as to which economic 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 RulesNote 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 4. - 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 credit or negotiable instruments. Payment may 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 adjustment is provided in rule 9, 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 determining 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, erection, 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 payable 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 valueRule 4(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 4 (2) (b). - If the sale or price is subject to some condition or consideration or which a value cannot be determined with respect to the goods being valued, the transaction value shall not be acceptable 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 the 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 semi-finished goods which have been provided by the seller on condition that be he well 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 rejection of the transaction value. For example, the fact that the buyer furnished the seller with engineering and plans undertaken in India shall not result in rejection of the transaction value for the purposes of rule 4. Likewise, if the buyer undertakes on his 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 value.Rule 4 (3). - 1. Rules 4 (3) (a) and 4 (3) (b) provide different means of establishing the acceptability of a transaction value.
