OAS

Andean Community Commission

DECISION 378: Customs Valuation



THE COMMISSION OF THE CARTAGENA AGREEMENT

CONSIDERING Decisions 326 and 364 and the Board's Proposal 277;

WHEREAS:

Decision 326 approved the Andean rules on Customs Valuation, which adhere to the Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade;
Decision 364 partly modified Decision 326;

As a result of the Uruguay Round, an Agreement was approved on the implementation of Article VII of the General Agreement on Tariffs and Trade 1994, Annex to the Agreement on the World Trade Organization;

It is advisable to have available one sole text setting out provisions relating to the determining of the customs value of merchandise imported by Member Countries:

HEREBY DECIDES:

Article 1: For the purposes of customs valuation, Member Countries shall be governed by the present Decision and by the terms set out in the text of the "Agreement on Implementation of Article VII of the 1994 General Agreement on Tariffs and Trade 1994 (Valuation Agreement of GATT 1994) that appears as Annex to the present Decision.

Article 2: Member Countries, as permitted by paragraph 2 of Annex III to the Valuation Agreement of GATT 1994, may value goods based on minimum or referential prices or values in a limited and transitional basis.

Regarding goods for which Member Countries have adopted unified mechanisms of price bands, minimum or referential prices or values shall be determined according to international quotations seen in the relevant markets and shall be used as the basis for the application of the corresponding ad-valorem or specific additional duties.

Article 3: The inversion of valuation methods established in Articles 5 and 6 of the Valuation Agreement of GATT 1994, foretold in Article 4 of same, shall only take place in the event that the customs administration accedes favorably to the petition presented by the importer for this purpose.

Article 4: The valuation method set out in Article 5, number 2 of the Valuation Agreement of GATT 1994 shall be applied according to the provisions of the Explanatory Note to said article, whether or not the importer requests same, when the imported goods or other imported goods of an identical or similar nature, are not sold domestically in the same state in which they were imported. The customs value shall be determined based on the unit price corresponding to the merchandise's greatest volume of sales, after its transformation, to buyers in the Subregion having no connection with the importer. To this end, the value added for transformation shall be taken into account, as well as the deductions foreseen in letter a) of paragraph 1 of Article 5 of the Valuation Agreement of GATT 1994.

Article 5: All the items described in paragraph 2 of Article 8 of the Valuation Agreement of GATT 1994 shall form part of the customs value except the expenses of unloading and handling in the port or place of importation, provided that they are distinct from the total transport expenses.

Should any of said items be free of charge or carried out by the importer's own means or services, their value should be calculated according to the normally applicable premiums or tariffs. In the absence of any information about these tariffs or premiums, the transaction value shall be disregarded and the valuation carried out by the following methods established by the Valuation Agreement of GATT 1994.

Article 6: For the purposes of Article 8, number 2 of the Valuation Agreement of GATT 1994, "place of importation" shall be understood to be the first customs office on the territory of the Member Country in which the merchandise shall be submitted to customs formalities.

Article 7: Interests earned by virtue of a financing agreement concerted with the buyer and relating to the purchase of the imported merchandise, shall not be considered part of the customs value, provided that:

a) The interests are differentiated from the true price paid or to be paid for said merchandise;

b) The financing agreement has been concerted in writing; and,

c) When required, the buyer can demonstrate:

  • that such merchandise is really sold at the price declared to be the one actually paid or to be paid; and
  • that the interest rate claimed does not exceed the level applied to this type of transaction in the country and at the time during which financing has been facilitated.

The above shall be applicable, even in cases in which the seller or other individual or company is the one providing the financing. Moreover, should it prove justified, said requisites shall be applied to cases in which the merchandise is valued by a method other than that of the transaction value.

Should any of the requisites set out in the present article be lacking, the sum claimed as interest shall be considered to form part of the transaction value.

Article 8: With respect to the terms set out in Article 9 of the Valuation Agreement of GATT 1994, the exchange rate shall be that valid on the date of acceptance of the declaration of dispatch to consumer.

To this end, the exchange rate shall be the rate for the sale of foreign currency that is converted into national currency, that is duly published by the competent authorities.

Article 9: When a declaration has been presented and the Customs Office have reasons to doubt the veracity or accuracy of the data or documents presented as proof of said declaration, they may request the importer to provide a complementary explanation as well as documents or other proofs that certify that the declared value represented the total quantity effectively paid or to be paid for the imported merchandise, adjusted according to the provisions of Article 8 of the Valuation Agreement of GATT 1994.

Should, once the complementary information has been received, or in the absence of any reply, the Customs Office have any reasonable doubts regarding the truth or accuracy of the declared value, it may, taking into account the provisions of Article 11 of the Valuation Agreement of GATT 1994, decide that the customs value of the imported goods shall not be determined according to the provisions of Article 1 of same.

Before adopting a definite decision, the Customs Office shall communicate to the importer, in writing if so requested its reasons for doubting the veracity or accuracy of the data or documents presented and shall give same a reasonable chance to respond thereto. Once the final decision is adopted, the Customs Office shall communicate same in writing to the importer, indicating the reasons for such a decision.

In order to apply the Valuation Agreement of GATT 1994, a Member Country may help another country according to mutually agreed upon terms.

Article 10: According to the terms set out in Consultative Opinion 19.1 of the Technical Committee on Customs Valuation, when determining the value, under any of the methods foreseen by the Valuation Agreement of GATT 1994, the burden of the proof shall be governed by what is fixed by domestic laws of the Member Countries.

Article 11: Information of a confidential nature that is supplied to the customs authorities for the effects of valuation, shall not be revealed without the consent of the person or government that has supplied them except in those cases where it proves necessary to reveal same within the framework of jurisdictional or administrative procedures.

Article 12: In those cases where it proves necessary to delay the final determination of the value, the importer may withdraw the merchandise by providing sufficient guarantee to cover the payment of customs duty to which they would eventually be subject, by a bond, deposit or other means, in the form and with the surety demanded by the domestic laws of the Member Countries.

Article 13: According to the Explanatory Note of Article 15, paragraph 4 (e) of the Valuation Agreement of GATT 1994, it shall be understood that one person controls another when, in fact and by right the former has the power to impose limitations, impart directions or exercise any other determinant capacity measures on the decisions or management of the latter.

Article 14: For the purposes of the terms set out in Article 15, paragraph 4 (h) of the Valuation Agreement of GATT 1994, two persons will be deemed to be members of the same family, if they are united by the link of parenthood or by blood or affinity, to the farthest degree permitted by national law of the Member Countries, to accede to the succession, be it in an excludable form or in concurrence with other relatives.

Article 15: With respect to the terms set out in Article 11, paragraph 3 of the Valuation Agreement of GATT 1994, when the petitioner is notified of the contentious administrative or judicial decision, same shall also be informed as to whether or not he has the right to file any other appeal on any of these instances before a higher body.

Article 16: Making use of the option conceded by Article 20, paragraph 2 of the Valuation Agreement of GATT 1994, the Member Countries may delay the application of Article 1, paragraph 2, (b) (iii) and of Article 6 of same, for a period of three years from the time at which the present Decision came into force.

Article 17: The Cartagena Agreement Board shall constitute a subregional data bank for the purposes of customs valuation, regardless of those established by each Member Country, which shall permit the widest interchange of periodically up-dated information.

Article 18: The Customs Valuation Committee is to be created as a Working Group of the Council on Customs Matters, which same shall be constituted by a titular representative and one or more alternates from each Member Country and with the purpose of analyzing problems relating to customs valuation.

Said Committee shall meet, ordinarily, once a year, and extraordinarily each time same is requested by the Commission, the Board, the Council on Customs Matters or any of their members.

The Board shall act as the Committee's Technical Secretariat.

Other responsibilities, functions and organization shall be established by the Committee through its internal regulations.

Article 19: The Member Countries, in their intra-subregional relations may hold conversations with the purpose of resolving discrepancies that might arise from the application of the present Decision. The initiation of said conversations as well as the results thereof, shall be communicated to the Board and in no case may they impair the commitments assumed under the Cartagena Agreement.

The Member Countries may not submit the solution of the conflicts derived from the application of the present Decision, to a jurisdictional body other than the Court of Justice of the Cartagena Agreement.

Article 20: Those rights and obligations relating to customs valuation, corresponding to importers and the customs administration, not expressly mentioned in the present Decision or in the Valuation Agreement of GATT 1994, shall be governed by the provisions of the respective domestic legislations of the Member Countries.

Article 21: The terms set out in the present Decision, as well as the rules foreseen in the Valuation Agreement of GATT 1994, shall not be utilized to resolve cases relating to dumping or subsidies. The prevention or correction of distortions deriving from their existence shall be resolved according to the terms established in Decision 283 of the Cartagena Agreement Commission or by those replacing or modifying same.

Article 22: Decisions 326 and 364 of the Commission are hereby derogated.

Given in the city of Santafé de Bogota, Colombia, on the nineteenth day of the month of June in the year nineteen hundred and ninety-five.


ANNEX

AGREEMENT ON IMPLEMENTATION OF ARTICLE VII OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994

GENERAL INTRODUCTORY COMMENTARY

1. The primary basis for customs value under this Agreement is "transaction value" as defined in Article 1. Article 1 is to be read together with Article 8 which provides, inter alia, for adjustments to the price actually paid or payable in cases where certain specific elements which are considered to form a part of the value for customs purposes are incurred by the buyer but are not included in the price actually paid or payable for the imported goods. Article 8 also provides for the inclusion in the transaction value of certain considerations which may pass from the buyer to the seller in the form ofspecified goods or services rather than in the form of money. Articles 2 through 7 provide methods of determining the customs value whenever it cannot be determined under the provisions of Article 1.

2. Where the customs value cannot be determined under the provisions of Article 1 there should normally be a process of consultation between the customs administration and importer with a view to arriving at a basis of value under the provisions of Article 2 or 3. It may occur, for example, that the importer has information about the customs value of identical or similar imported goods which is not immediately available to the customs administration in the port of importation. On the other hand, the customs administration may have information about the customs value of identical or similar imported goods which is not readily available to the importer. A process of consultation between the two parties will enable information to be exchanged, subject to the requirements of commercial confidentiality, with a view to determining a proper basis of value for customs purposes.

3. Articles 5 and 6 provide two bases for determining the customs value where it cannot be determined on the basis of the transaction value of the imported goods or of identical or similar imported goods. Under paragraph 1 of Article 5 the customs value is determined on the basis of the price at which the goods are sold in the condition as imported to an unrelated buyer in the country of importation. The importer also has the right to have goods which are further processed after importation valued under the provisions of Article 5 if the importer so requests. Under Article 6 the customs value is determined on the basis of the computed value. Both these methods present certain difficulties and because of this the importer is given the right, under the provisions of Article 4, to choose the order of application of the two methods.

4. Article 7 sets out how to determine the customs value in cases where it cannot be determined under the provisions of any of the preceding Articles.

Members,

  • Having regard to the Multilateral Trade Negotiations;
  • Desiring to further the objectives of GATT 1994 and to secure additional benefits for the international trade of developing countries;
  • Recognizing the importance of the provisions of Article VII of GATT 1994 and desiring to elaborate rules for their application in order to provide greater uniformity and certainty in their implementation;
  • Recognizing the need for a fair, uniform and neutral system for the valuation of goods for customs purposes that precludes the use of arbitrary or fictitious customs values;
  • Recognizing that the basis for valuation of goods for customs purposes should, to the greatest extent possible, be the transaction value of the goods being valued;
  • Recognizing that customs value should be based on simple and equitable criteria consistent with commercial practices and that valuation procedures should be of general application without distinction between sources of supply;
  • Recognizing that valuation procedures should not be used to combat dumping;

Hereby agree as follows:

PART I
RULES ON CUSTOMS VALUATION

Article 1

1. The customs value of imported goods shall be the transaction value, that is the price actually paid or payable for the goods when sold for export to the country of importation adjusted in accordance with the provisions of Article 8, provided:

(a) that there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which:

(i) are imposed or required by law or by the public authorities in the country of importation;
(ii) limit the geographical area in which the goods may be resold; or
(iii) do not substantially affect the value of the goods;

(b) that the sale or price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued;

(c) that no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Article 8; and

(d) that the buyer and seller are not related, or where the buyer and seller are related, that the transaction value is acceptable for customs purposes under the provisions of paragraph 2.

2.  

(a) In determining whether the transaction value is acceptable for the purposes of paragraph 1, the fact that the buyer and the seller are related within the meaning of Article 15 shall not in itself be grounds for regarding the transaction value as unacceptable. In such case the circumstances surrounding the sale shall be examined and the transaction value shall be accepted provided that the relationship did not influence the price. If, in the light of information provided by the importer or otherwise, the customs administration has grounds for considering that the relationship influenced the price, it shall communicate its grounds to the importer and the importer shall be given a reasonable opportunity to respond. If the importer so requests, the communication of the grounds shall be in writing.

(b) In a sale between related persons, the transaction value shall be accepted and the goods valued in accordance with the provisions of paragraph 1 whenever the importer demonstrates that such value closely approximates to one of the following occurring at or about the same time:

(i) the transaction value in sales to unrelated buyers of identical or similar goods for export to the same country of importation;
(ii) the customs value of identical or similar goods as determined under the provisions of Article 5;
(iii) the customs value of identical or similar goods as determined under the provisions of Article 6;

In applying the foregoing tests, due account shall be taken of demonstrated differences in commercial levels, quantity levels, the elements enumerated in Article 8 and costs incurred by the seller in sales in which the seller and the buyer are not related that are not incurred by the seller in sales in which the seller and the buyer are related.

(c) The tests set forth in paragraph 2(b) are to be used at the initiative of the importer and only for comparison purposes. Substitute values may not be established under the provisions of paragraph 2(b).

Article 2

1. 

(a) If the customs value of the imported goods cannot be determined under the provisions of Article 1, the customs value shall be the transaction value of identical goods sold for export to the same country of importation and exported at or about the same time as the goods being valued.

(b) In applying this Article, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the customs value. Where no such sale is found, the transaction value of identical goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or a decrease in the value.

2. Where the costs and charges referred to in paragraph 2 of Article 8 are included in the transaction value, an adjustment shall be made to take account of significant differences in such costs and charges between the imported goods and the identical goods in question arising from differences in distances and modes of transport.

3. If, in applying this Article, more than one transaction value of identical goods is found, the lowest such value shall be used to determine the customs value of the imported goods.

Article 3

1.  

(a) If the customs value of the imported goods cannot be determined under the provisions of Articles 1 and 2, the customs value shall be the transaction value of similar goods sold for export to the same country of importation and exported at or about the same time as the goods being valued.

(b) In applying this Article, the transaction value of similar goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the customs value. Where no such sale is found, the transaction value of similar goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributable to commercial level and/or to quantity, shall be used, provided that such adjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or a decrease in the value.

2. Where the costs and charges referred to in paragraph 2 of Article 8 are included in the transaction value, an adjustment shall be made to take account of significant differences in such costs and charges between the imported goods and the similar goods in question arising from differences in distances and modes of transport.

3. If, in applying this Article, more than one transaction value of similar goods is found, the lowest such value shall be used to determine the customs value of the imported goods.

Article 4

If the customs value of the imported goods cannot be determined under the provisions of Articles 1, 2 and 3, the customs value shall be determined under the provisions of Article 5 or, when the customs value cannot be determined under that Article, under the provisions of Article 6 except that, at the request of the importer, the order of application of Articles 5 and 6 shall be reversed.

Article 5

(a) If the imported goods or identical or similar imported goods are sold in the country of importation in the condition as imported, the customs value of the imported goods under the provisions of this Article shall be based on the unit price at which the imported goods or identical or similar imported goods are so sold in the greatest aggregate quantity, at or about the time of the importation of the goods being valued, to persons who are not related to the persons from whom they buy such goods, subject to deductions for the following:

(i) either the commissions usually paid or agreed to be paid or the additions usually made for profit and general expenses in connection with sales in such country of imported goods of the same class or kind;
(ii) the usual costs of transport and insurance and associated costs incurred within the country of importation;
(iii) where appropriate, the costs and charges referred to in paragraph 2 of Article 8; and
(iv) the customs duties and other national taxes payable in the country of importation by reason of the importation or sale of the goods.

(b) If neither the imported goods nor identical nor similar imported goods are sold at or about the time of importation of the goods being valued, the customs value shall, subject otherwise to the provisions of paragraph 1(a), be based on the unit price at which the imported goods or identical or similar imported goods are sold in the country of importation in the condition as imported at the earliest date after the importation of the goods being valued but before the expiration of 90 days after such importation.

2. If neither the imported goods nor identical nor similar imported goods are sold in the country of importation in the condition as imported, then, if the importer so requests, the customs value shall be based on the unit price at which the imported goods, after further processing, are sold in the greatest aggregate quantity to persons in the country of importation who are not related to the persons from whom they buy such goods, due allowance being made for the value added by such processing and the deductions provided for in paragraph 1(a).

Article 6

1. The customs value of imported goods under the provisions of this Article shall be based on a computed value. Computed value shall consist of the sum of:

(a) the cost or value of materials and fabrication or other processing employed in producing the imported goods;

(b) an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to the country of importation;

(c) the cost or value of all other expenses necessary to reflect the valuation option chosen by the Member under paragraph 2 of Article 8.

2. No Member may require or compel any person not resident in its own territory to produce for examination, or to allow access to, any account or other record for the purposes of determining a computed value. However, information supplied by the producer of the goods for the purposes of determining the customs value under the provisions of this Article may be verified in another country by the authorities of the country of importation with the agreement of the producer and provided they give sufficient advance notice to the government of the country in question and the latter does not object to the investigation.

Article 7

1. If the customs value of the imported goods cannot be determined under the provisions of Articles 1 through 6, inclusive, the customs value shall be determined using reasonable means consistent with the principles and general provisions of this Agreement and of Article VII of GATT 1994 and on the basis of data available in the country of importation.

2. No customs value shall be determined under the provisions of this Article on the basis of:

(a) the selling price in the country of importation of goods produced in such country;

(b) a system which provides for the acceptance for customs purposes of the higher of two alternative values;

(c) the price of goods on the domestic market of the country of exportation;

(d) the cost of production other than computed values which have been determined for identical or similar goods in accordance with the provisions of Article 6;

(e) the price of the goods for export to a country other than the country of importation;

(f) minimum customs values; or

(g) arbitrary or fictitious values.

3. If the importer so requests, the importer shall be informed in writing of the customs value determined under the provisions of this Article and the method used to determine such value.

Article 8

1. In determining the customs value under the provisions of Article 1, there shall be added to the price actually paid or payable for the imported goods:

(a) the following, to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the goods:

(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 the imported goods, to the extent that such value has not been included in the price actually paid or payable:

(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, artwork, design work, and plans and sketches undertaken elsewhere than in the country of importation and necessary for the production of the imported goods;

(c) royalties and licence fees related to the goods being valued that the buyer must pay, either directly or indirectly, as a condition of 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.

2. In framing its legislation, each Member shall provide for the inclusion in or the exclusion from the customs value, in whole or in part, of the following:

(a) the cost of transport of the imported goods to the port or place of importation;

(b) loading, unloading and handling charges associated with the transport of the imported goods to the port or place of importation; and

(c) the cost of insurance.

3. Additions to the price actually paid or payable shall be made under this Article only on the basis of objective and quantifiable data.

4. No additions shall be made to the price actually paid or payable in determining the customs value except as provided in this Article.

Article 9

1. Where the conversion of currency is necessary for the determination of the customs value, the rate of exchange to be used shall be that duly published by the competent authorities of the country of importation concerned and shall reflect as effectively as possible, in respect of the period covered by each such document of publication, the current value of such currency in commercial transactions in terms of the currency of the country of importation.

2. The conversion rate to be used shall be that in effect at the time of exportation or the time of importation, as provided by each Member.

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