Normally value declared by the foreign sender on the parcel is taken value for assement of duty. If this declared value of goods appears to be low than the prevailing price in the International market, then the customs department may reject this value . Various rules are there to determine the value of the imported goods which are based on WTO guidelines. As you are aware that any transaction will have various factors such as brand,quantity,discount,related or unrealted party, free gift, country of origin,place of import,etc, which may affect the price of the imported goods.
The Parliamentry Act and Government rules and interepretation of law by Honourable Court ,Tribunal,Appellate authority and practice of the day become the basis of the valuation.
To be more simple, what is actual price you paid to your foreign supplier through legally recognised channel of foreign remittance. If you produce the evidence to the Customs department that you have paid this much only to your supplier then the customs department will accept the price of the imported goods.But if you produce evidence of payment sent through PayPal,where you have paid only in Indian rupees to the PayPal,then, the departmnet may not accept this has a valid remittance.Be Careful!!
As reday reference, you may glance through relevant portion of the Indian Customs of Law ,which is reproduced below,to get feeling of Valuation subject.
The imported value of parcel goods is determined as per Section 14 of the Customs Act 1962 and CUSTOMS VALUATION (DETERMINATION OF PRICE OF IMPORTED GOODS) RULES, 1988. Various rulesThe section 4 of this rule defines :Transaction value. —
``(1)The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules``.
The rule 9 is produced
``9)Cost and services. —
(1)
In determining the transaction value, there shall be added to the price actually paid or payable for the imported goods, —
(a)
the following cost and services, to the extent they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods, namely:-
(i)
commissions and brokerage, except buying commissions;
(ii)
the cost of containers which are treated as being one for customs purposes with the goods in question;
(iii)
the cost of packing whether for labour or materials;
(b)
the value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of imported goods, to the extent that such value has not been included in the price actually paid or payable, namely:-
(i)
materials, components, parts and similar items incorporated in the imported goods;
(ii)
tools, dies, moulds and similar items used in the production of the imported goods;
(iii)
materials consumed in the production of the imported goods;
(iv)
engineering, development, art work, design work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods;
(c)
royalties and licence fees related to the imported goods that the buyer is required to pay, directly or indirectly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable;
(d)
the value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues, directly or indirectly, to the seller;
(e)
all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller to the extent that such payments are not included in the price actually paid or payable.
(2)
For the purposes of sub-section (1) and sub-section (1A) of Section 14 of the Customs Act, 1962 (52 of 1962) and these rules, 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 -
(a)
the cost of transport of the imported goods to the place of importation;
(b)
loading, unloading and handling charges associated with the delivery of the imported goods at the place of importation; and
(c)
the cost of insurance :
Provided that —
(i)
where the cost of transport referred to in clause (a) is not ascertainable, such cost shall be twenty per cent of the free on board value of the goods;
(ii)
the charges referred to in clause (b) shall be one per cent of the free on board value of the goods plus the cost of transport referred to in clause (a) plus the cost of insurance referred to in clause (c);
(iii)
where the cost referred to in clause (c) is not ascertainable, such cost shall be 1.125% of free on board value of the goods;
Provided further that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods :
Provided also that where the free on board value of the goods is not ascertainable, the costs referred to in clause (a) shall be twenty per cent of the free on board value of the goods plus cost of insurance for clause (i) above and the cost referred to in clause (c) shall be 1.125% of the free on board value of the goods plus cost of transport for clause (iii) above.
(3)
Additions to the price actually paid or payable shall be made under this rule on the basis of objective and quantifiable data.
(4)
No addition shall be made to the price actually paid or payable in determining the value of the imported goods except as provided for in this rule`.`
It will be useful for every body if we start making our data base of value declared to the Customs and accepted for valuation of the parcel goods.This will act as a refernce for future import by other person too.
