Customs Valuation (Determination of Value of imported Goods) Rules, 2007

 VALUATION Explain the provisions of determination of value under the Customs Valuation Rules in case the value declared by the importer does not represent the transaction or 
Valuation of the goods imported. 

In case the value declared by the importer does not represent the transaction value of the goods imported, the value shall be determined by proceeding sequentially through rules 4 to 9 of the custom valuation (Determination of value of Imported Goods) Rules, 2007. 

These Rules are framed by central Govt Under the provisions of Sec. 14 of Customs Act, 1962 . 

Transaction value: 
Transaction value means the value reffered to in sub- section (1) of Section 14 of Customs Act,1962. ie

•  The price actually paid or payable for the goods when sold for export to India (except in case of exceptions), 
• For delivery at the time and place of importation,
•  Where the buyer and seller of the goods are not related, 
• Price is the sole consideration for the sale, 

Rule 3 : 

Subject to Rule 12, the value of imported goods shall be the Transaction Value adjusted in accordance with provisions of Rue 10 of Customs Valuation (Determination of Value of Imported (Goods)) Rules, 2007.

 Rule 3 (2) 

Transaction value can be accepted only if the following requirements are satisfied. 

i) No restrictions on buyer for disposal of goods 
ii) Sale not subject to condition of which value cannot be determined. Ex: buyer to buyer same other goods in specified quantity.
 iii)No further consideration of which adjustment cannot be made seller should not get part subsequent sale. 
iv) Unrelated buyer and seller. 

If the value cannot be detrmined under the provisions of sub- rule(1) or rejected under rule 12, the value shall be determinined by proceeding sequentially through rule 4 to 9 

Rule 4 : Transaction value of identical goods., 
Subject to the provisions of Rule 3, the value of the imported goods shall be the transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued. If more than one TV is available, the lowest value shall be taken. The provisionally assesed value of identical goods cannot be taken unto account. 

Rule 5 : Transaction Value of similar goods. 
Subject to the provisions of rule 3, the value of the imported goods shall be the transaction value of similar goods for export to India and imported at or about the same time as the goods being valued. If more than one TV is available, the lowest value shall be taken. The provisionally assesed value of similar goods cannot be taken unto account. 

Rule 6: 
Where the Value the of the imported goods cannot be determined under rule 3, 4 and 5, the value shall be determined under rule 7 or rule 8. At the request of importer, the application of rules 7and 8 shall be reversed.

 Rule 7 : 
Deductive Value In case valuation cannot be done under rule 3,4,and 5,the Value of the imported goods shall be ‘based on the unit price at which, imported goods or identical or similar imported goods are sold in the greatest aggregate quantity to persons who are not related to the sellers in India. This rule would normally not be applicable when, as a result of further processing, the imported goods lose their identity (or) 

Rule 8: Computed Value 
In case valuation cannot be done under rule 7, the Value of the imported goods shall be done on the basis of 'computed value', which shall consist of the sum of the cost or value of materials and fabrications etc., employed in producing the imported goods,profit and general expenses, freight,insurance and handling charges etc incurred upto place of importation. The above costs are to be reckoned in the country of production and not in India. 

Rule 9 : Residual Method 
Where the value of imported goods cannot be determined under the provisions of any of the preceding rules, the value shall be determined, using reasonable means on the basis of data available in India. To extent possible the value to be based on previously determined customs values. 
This rules specifically bars fixing of i) minimum customs values ii) arbitrary or fictitious values.

 Rule 10 (1): 
The following elements are required to be added to the value to determine the transaction Value.

 (i) Commissions and brokerage, except buying commissions. 
(ii)Cost of Container / packing etc.,
 (iii) Engineering / development / artwork, design work etc. 
(iv) Royalties and license fees, related to the imported goods with a condition of sale on such (imported) supplied goods. 

Rule 10 (2) 
The Value of the imported goods shall be the value of such goods, for delivery at the time and place of importation and shall include.(if not already included) 

(a) The Cost of transport. 
(b) Loading / Unloading / Handling changes. 
(c) The cost of insurance. 
If the cost of transport (freight) is not ascertainable, it shall be @ 20% of FOB. If the cost of insurance is not ascertainable, it shall be 1.125% of FOB. However, in respect of imports by Air, the freight shall be limited to 20% of the FOB price of the supplier, wherever the Air freight exceeds 20% 

Rule 12 
This Rule details the scope and powers of customs officer the circumstances in which transaction value could be rejected by the officer of customs. Rejection of declared value done if 

(i) Contemporaneous value significantlly higher
 (ii)Abnormal discount 
 iii)Special discounts 
 iv)Mis declaration of description, quality, quantity, coo, year of manufacture
 v) Non-declaration of brand, grade, specification 
 vi) Fraudulent manipulated documents.

Lesson 2 .Shipping Bill / Bill of Export

Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing shipment. A shipping bill is issued by the shipping agent and represents some kind of certificate for all parties, included ship's owner, seller, buyer and some other parties. For each one represents a kind of certificate document.

5 types of Shipping Bills

There are four main types of shipping bills in India. Duty free shipping bills, Dutiable shipping bill, Shipping bill under Duty draw back, Ex-bond shipping bills.One more is Coastal Shipping Bill.

(1) Free Shipping Bill: 

It is used in case of goods which neither attract any duty nor entitled for duty drawback. It is printed on simple white paper.

(2) Dutiable Shipping Bill: 

It is used in case of goods, which attract export duty. It may or may not be entitled to duty drawback. It is printed on yellow paper.

(3) Drawback Shipping Bill: 

It is used in case when refund of duties is allowed on the goods exported. Generally, it is printed on green paper, but when the drawback claim is paid to a bank, then it is printed on yellow paper.

(4) Shipping bill for Shipment Ex-Bond: 

It is used in case of imported goods for re-export and which are kept in bond. It is printed on yellow paper.

(5) Coastal Shipping Bill: 

It is used in case of shipment that is moved from one port to another port, by sea, within India. It is not an export document. When bill goods are sent by sea, it is called Shipping Bill and it is Airway bill when goods are sent by air.

THE FOLLOWING DOCUMENTS ARE REQUIRED FOR THE PROCESSING OF THE SHIPPING BILL:

1. GR FORMS (IN DUPLICATE) FOR SHIPMENT TO ALL THE COUNTRIES.
2. FOUR COPIES OF THE PACKING LIST MENTIONING THE CONTENTS, QUANTITY , GROSS AND NET WEIGHT OF EACH PACKAGES.
3. FOUR COPIES OF INVOICES WHICH CONTAINS ALL RELEVENT CONTENTS, PARTICULARS LIKE NUMBER OF PACKAGES, QUANTITY, UNIT PRICE, TOTAL FOB, TOTAL CIF FULL VALUE  AND FULL DESCRIPTION OF GOODS ECT.
4. CONTRACT NO. LETTER OF CREDIT NUMBER, PURCHASE OREDER NUMBER OF THE OVERSEAS BUYER.
5. AR4 (BOTH ORIGINAL AND DUPLICATE) AND INVOICE.
6. INSPECTION / EXAMINATION CERTIFICATE.

Source -http://howtoexportimport.com/5-types-of-Shipping-Bills-4368.aspx

Lesson1-preparation of various kinds of bills of entry in customs

A bill of entry is an acknowledgement for the duty paid on imports. 

Bills of Entry should be of one of three types.   

Out of these, two types are for clearance from customs 

while third is for clearance from   warehouse.

Bill of entry for home consumption:

 This form, called ‘Bill of Entry for Home Consumption’, is used when the imported goods are to be cleared on payment of full duty. Home consumption means use within India. It is white coloured and hence often called ‘white bill of entry’.

Bill of Entry for warehousing  
If the imported goods are not required immediately, importer may like to store the goods in a warehouse without payment of duty under a bond and then clear from warehouse when required on payment of duty. 
This will enable him to defer payment of customs duty till goods are actually required by him. This Bill of Entry is printed on yellow paper and often called ‘Yellow Bill of Entry’. It is also called ‘Into Bond Bill of Entry’ as bond is executed for transfer of goods in warehouse without payment of duty. 
Bill of Entry for ex-bond clearance 
 The third type is for Ex-Bond clearance. This is used for clearance from the warehouse on payment of duty and is printed on green paper. 
The goods are classified and value is assessed at the time of clearance from customs port. Thus, value and classification is not required to be determined in this bill of entry. 
The columns in this bill of entry are similar to other bills of entry. However, declaration by importer is not required as the goods are already assessed.



http://www.cbec.gov.in/resources//htdocs-cbec/customs/forms_pdf/22.pdf

Grant of CBLR licence

Grant Of licence 

(1) The Commissioner of Customs shall, on payment of fee of five thousand rupees grant  licence in Form B to an applicant who has passed the oral examination within two months of the date of declaration of the said results.

(2) The applicant who has been granted licence under sub- regulation (1) shall be eligible to work as Customs Broker in all Customs Stations subject to intimation in Form C to the Commissioner of Customs of the Customs Station where he intends to transact business. A copy of this intimation shall also be sent to the  Commissioner of Customs who has issued the licence in Form B.

 Execution of bond and furnishing of security.-
(1) Before granting the licence under regulation 7, the Commissioner of Customs shall require the successful applicant to enter into the bond in Form D and where specified a surety bond in Form E for due observance of these regulations and furnish a bank guarantee, a postal security or National Saving Certificate in the name of Commissioner of Customs for an amount of five lakhs rupees for carrying out the business as Customs Broker.


(2) In cases where a postal security or National Saving Certificate is furnished, the benefit of interest accruing thereon shall accrue to the Customs Broker concerned.  

Period of validity of a licence.-
(1) A licence granted under regulation 6 shall be valid for a period of ten years from the date of issue and shall be renewed from time to time in accordance with the procedure specified in sub-regulation (2):

            Provided that a licence granted to a Customs Broker, authorised under the Authorised Economic Operator Programme referred to in Board's Circular No. 28/2012-Customs dated 16.11.2012, shall not require renewal till such time the said authorisation is valid.

(2) The Commissioner of Customs may, on an application made by the licensee before the expiry of the validity of the licence under sub-regulation (1), renew the licence for a further period of ten years from the date of expiration, if the performance of the licensee is found to be satisfactory with reference, inter alia, to the obligations specified in this regulation including the absence of instances of any complaints of misconduct.

(3) The fee for renewal of a licence shall be five thousand rupees.

 Licence not transferable.-
Every licence granted or renewed under these regulations shall be deemed to have been granted or renewed in favour of the licensee, and no licence shall be sold or otherwise transferred.

CBLR Exam format

 The examination may include questions on the following 

(a) preparation of various kinds of bills of entry, bills of export, shipping bills, and other clearance documents;

(b) arrival entry and clearance of vessels;

(c) tariff classification and rates of duty;

(d) determination of value of imported and export goods;

(e) conversion of currency;

(f) nature and description of documents to be filed with various kinds of bills of entry, shipping bills and other clearance documents;

(g) procedure for assessment and payment of duty including refund of duty paid;

(h) examination of goods at Customs stations;

(i) prohibitions on import  and export;

(j) bonding procedure and clearance from bond;

(k) re-importation and conditions for free re- entry;

(l) drawback and export promotion schemes including Special Economic Zone scheme;

(m) offences under the Act;

(n) provisions of the allied Acts including the

 Indian Explosives Act, 1884 (4 of 1884), 
Destructive Insects and Pests Act 1914 (2 of 1914), Dangerous Drugs Act, 1930 (2 of 1930), 
Drugs  and Cosmetics Act, 1940 (23 of 1940), 
Central Excise Act, 1944 (1 of 1944), 
Copy Right Act, 1957 (14 of 1957), 
Trade and Merchandise Marks Act 1958 (43 of 1958), 
Arms Act 1959 (54 of 1959), 
Patents Act, 1970 (39 of 1970), 
Narcotics Drugs and Psychotropic Substances  Act, 1985 (61 of 1985), 
Foreign Trade (Development and Regulations) Act, 1992 (22 of 1992), 
Foreign Exchange Management Act, 1999 (42 of 1999), Design Act, 2000 (16 of 2000) and 
Food Safety and Standard Act, 2006 (No. 34 of 2006) in so far as they are relevant to clearance of goods through customs;

(o) provisions of Prevention of Corruption Act , 1988 (49 of 1998);

(p) procedure for appeal and revision applications under the Act; and

(q) on line filing of electronic bills of entry and shipping bills vide the Indian Customs and Central Excise Electronic Commerce or Electronic data  interchange  gateway (ICEGATE)  and Indian Customs Electronic data Interchange System (ICES).

The Commissioner of Customs shall satisfy himself that the individual applicant or in cases where applicant is a firm or company its partner or Director or authorised employees who may be engaged for handling the customs work shall possess satisfactory knowledge of English and the local language of the Customs Station:

            Provided that in case of a person deputed to work extensively in the docks, knowledge of English shall not be compulsory. Knowledge of Hindi shall be considered as desirable qualification.

Who can be a Customs Broker?

Application for Customs Broker licence and eligibility:

Customs Brokers to be licensed.-

No person shall carry on business as a Customs Broker relating to the entry or departure of a conveyance or the import or export of goods at any Customs Station unless such person holds a licence granted under these regulations: 

Provided that no licence under these regulations shall be required by

(a) an importer or exporter transacting any business at a Customs Station solely on his own account;

(b) any employee of any person or a firm transacting business generally on behalf of such person or firm, and holding an identity card or a temporary pass issued by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be,: and

(c) an agent employed for one or more vessels or aircrafts in order solely to enter or clear such vessels or aircrafts for work incidental to his employment as such agent.

 Invitation of application

(1) The Directorate General of Inspection of Customs and Central Excise ( DGICCE) shall in the month of April of every year invite applications for conducting examination and subsequent grant of licence to act as Customs Broker in Form A by publication in two leading national daily newspapers in English and Hindi.  

(2) The application for a licence to act as a Customs Broker in a Customs Station in Form A shall be made to the  Commissioner of Customs having jurisdication over the area where the applicant intends to carry on his business.            

 Conditions to be fulfilled by the applicants.-

The applicant for a licence to act as a  Customs Broker  in a Customs Station, shall prove  to the satisfaction of the  Commissioner of Customs,  that :-

(a) he is a citizen of India;

(b) he is a person of sound mind;

(c) he is not adjudicated as insolvent;

(d) he has neither been convicted by a competent court for an offence nor any criminal proceeding is pending against him in any court of law; and

(e) he has  not been penalised for any offence under the Act, the Central Excise Act, 1944 and the Finance Act, 1994.

(f) an individual applicant or in case the applicant is a firm or company its partner or director or an authorised employee who may handle the Customs work shall:

(i) be a graduate from a recognised University, and

(ii) possess a professional degree such as Masters or equivalent degree in Accounting, Finance or Management, CA/MBA/LLB/ACMA/FCMA or Diploma in Customs Clearance work from any Institutes or University recognised by the Government or is having  at least  two years experience  in  transacting  Customs Broker  work as G-Card holder;

(g) he is a retired Group A officer from the Indian Customs and Central Excise Services having  a minimum of five years experience in Group 'A' service;

(h) the applicant has financial viability as evidenced by a certificate issued by a Scheduled Bank or such other proof acceptable to the Commissioner of Customs in terms of possession of assets of value of not less than five lakhs rupees:

            Provided that for the purpose of his satisfaction, the Commissioner of Customs may make enquiries as may be deemed fit.

 Examination of the applicant.-

(1) An applicant, who satisfies the requirements of regulation 6, shall be required to appear for a written as well as oral examination conducted by the DGICCE:

            Provided that an applicant who has already passed the examination referred to in regulation 9 of the Custom House Agents Licensing Regulation, 1984 and regulation 8 of the Custom House Agents Licensing Regulation, 2004 shall not be required to appear for any further examination.

(2) The written examination shall be conducted on specified dates in month of January of each year for which intimation shall be sent individually to applicants in advance before the date of examination and the result of the said examination shall be declared by end May each year.

(3) The applicant who is declared successful in the written examination shall be called for an oral examination on specified dates in month of June of each year, the result of which shall be declared in the month of July of each year.

(4) The applicant shall be required to clear written examination as well as oral examination.

(5) An applicant who fails to clear the oral examination within two years from date of declaration of result of the related written examination, shall be treated as having failed in the examination.  

(6) An applicant shall be allowed a maximum period of seven years from the date of original application within which he shall pass both written and oral examinations and no further extension shall be granted.

Who are Customs Brokers ?

Section 146 of the Customs Act, 1962 states that no person shall carry on business as an agent relating to entry or departure of a conveyance or the import or export of goods at any Customs station unless such person holds a licence granted in this behalf in accordance with regulations made in this regard by the Board. 

Thus, any person desirous to carry on business as a Customs Broker relating to entry or departure of a conveyance or import or export of goods at any Customs station is required to obtain a licence, which is referred to as the Customs Broker licence and the person concerned as the Customs Broker. 

 Section 146 of the Customs Act, 1962 read with the Customs Brokers Licensing Regulations (CBLR), 2013 governs the legal and procedural aspects of the grant of Customs Broker licence as well as the obligations and responsibilities of a Customs Broker. 

Every year, the Directorate General of Performance Management, Customs, Central Excise & Service Tax, conducts an exam for issuance of license to act as a Customs Broker. Only on successfully passing this exam will you be issued with the license.

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