Most of the import duties and export incentives are based on the value of the goods imported or exported as the case may be.
The valuation is as per the customs guidelines for which the governing provisions are:

• Section 14 of the Custom Act 1962
• Customs Valuation (Determination of Value of Imported Goods) Rules 2007
• Customs Valuation (Determination of Value of Export Goods) Rules 2007

Primarily the declared transacted value is accepted as value of the goods (except in specific cases). However the customs may not accept the declared value based on various reasons such as :--

• Related party transactions
• Significantly higher value of comparable identical/similar goods imported at or about the same time
• Abnormal / specific and special discounts.
• The mis-declaration/ non-declaration of specified parameters.

The export valuation rules have been introduced recently only and the implications on the supply chain and financial aspects of the business are not fully understood but it is advisable to carry out an analysis on the business transactions to avoid any compliance issues.

Special Valuation Branch of the customs deals with cases involving related party transactions and follows a procedure as laid down in the circulars issued by CBEC from time to time. The procedure involves extensive investigation spread over a period of time and requires the importer to reply to a set of questionnaire and also maintain extensive documentation and furnish the information as and when required. After the investigation the customs may accept or reject the value. On rejection the value is re-determined based on the sequential methodology (identical/similar goods’ valuation, deductive valuation, computed valuation, residual valuation). At times such a redetermination may result in  imposition of fine and penalty depending on the reasons of rejection of the value.

OUR ROLE AND SCOPE   OF  WORK  FOR VALUATION OF GOODS IN TRANSACTIONS BETWEEN REALTED PARTIES

1. Scrutiny of Documents for registration of case and opinion whether registration is required or not .
2. Assistance in registration of case with the customs authorities and provisional assessment of the imports
3. Study of method of invoicing, possible effect of relationship on the invoice values, identifying the appropriate method to be used for determination of assessable value of the subject goods and Assistance in preparation of reply to Questionnaire and necessary documentations and written submission
4. Submission of Questionnaire with all related information and documents
5. Follow up and Discussion with Customs Officials and Removal of Queries
6. Preparation and submission of Additional Documents if required by the Customs Department
7. Appearing before the customs authorities for personal hearing on behalf of client.
8. Obtaining Legal Opinion from Senior Lawyers if Required
9. Regular follow up till order is issued
10. Receipt of  Order