Customs valuation is a customs procedure applied to determine the customs value of imported goods.If the rate of duty is ad valorem, the customs value is essential to determine the duty to be paid on an imported good.Therefore, the valuation procedure applied in any country plays an important role in determining duties and taxes of imported goods by its Customs Department.
Custom valuation practice has been made uniform across the world through the adoption of Article VII of the General Agreement on Tariffs and Trade (GATT) 1994, more commonly known as the WTO Agreement on Customs Valuation or the GATT Valuation Code. The Agreement makes ‘transaction value’ as the basis for customs valuation. According to the GATT Valuation Code, transaction value of the imported goods is the price actually paid or payable for the goods when sold for export to the country of importation, with certain adjustments.
Bangladesh, as a member of the World Trade Organization, adopted the Agreement on Customs Valuation, and accordingly follow the transaction value concept for its customs valuation purposes. Bangladesh has amended the Customs Act to accommodate GATT provisions (section 25 of the Customs Act). To download the Customs Act, 1969, click here.
Section 25 of the Customs Act, 1969 stipules that ‘the actual price, that is, the price actually paid or payable, or the nearest ascertainable equivalent of such price, at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in course of international trade under fully competitive conditions, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for sale or offer for sale shall be the value for customs assessment purpose’. This is basically the transaction value of the goods. The essence of transaction value is that,except in specified circumstances, customs value will be based on the actual price of the goods, which will generally be shown on the commercial invoice.
Methods and principles of determining customs valuation as elaborated in the GATT Valuation Code have been incorporated into Bangladesh Customs regulations through an SRO 57-Law/2000/1821/Cus date 23/2/2000. It is also known as The Customs Valuation (Determination of Value for Imported Goods) Rules, 2000. To download the rules, click here.
In situations where Customs value cannot be determined on the basis of the transaction valueor where the transaction value is not acceptable as the customs value because the price has been distorted as a result of certain conditions, Customs value will be determined using one of the following methods in hierarchical order:
- The transaction value of identical goods
- The transaction value of similar goods
- The deductive value method
- The computed value method
- The fallback method.
Despite the general use of transaction value for customs valuation, in the case of some goods, the Government often fixestariff values or minimum valuesfor the purpose of levying customs duties.