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Circular No. :467/5/96 Cus V Cir.No.20/97 Cus Dated : 17/6/1997
Valuation (Custom) GATT code of valuation Inclusion in assessable value of interest charged on deferred payment, made by Indian importer to foreign supplier of goods Levy of customs duty thereon
Circular No. 20/97-Cus., dated 17-6-1997
[From F. No. 467/5/96-Cus. V]
Government of India
Ministry of Finance (Department of Revenue)
GATT Code of Valuation - Inclusion in assessable Subject:value of interest charged on deferred payment, made by Indian importer to foreign supplier of goods - Levy of customs duty thereon.
The issue regarding whether interest charged to importers by foreign suppliers under deferred payment scheme, should form part of assessable value or not, has been considered by the Board. Board has also considered decision No. 3.1 on 26-4-1984 of the Committee on Customs Valuation, of the then Customs Cooperation Council, regarding treatment of interest charges in the Customs value of imported goods.
After examining various related issues, it has been 2. decided by the Board that in the normal course, interest charged on deferred payment is not to be added in the assessable value provided that :-
In such situations, the interest element has no clear nexus (a) with, or bearing on, the value of the goods;
Such interest charges are shown separately in the invoice; (b)
There is no financing agreement/arrangement or any special (c) relationship, between the importer and the exporter, influencing the price declared; and
The price declared is the price actually paid or payable in (d) the ordinary course of trade.
It is also clarified that where there is evidence to 3. indicate a nexus between the price of goods and the interest element, and where circumstances also indicate that this element has also influenced this selling price, then the interest element would become includible in the assessable value, subject to each case being decided on its own merit.
These instructions are issued in modification of Board’s 4. earlier instructions on the subject, issued from F.No. 3/12/57-Cus., VI, dated 27th July, 1957. (copy enclosed for ready reference)