customs valuation

1
NATIONAL TRAINING ON CUSTOMS VALUATION FOR
ETHIOPIA CUSTOMS COMMISSION

• 
  

NATIONAL LEGISLATION and WTO AGREEMENT ON
CUSTOMS VALUATION TRAINING
By Daniel Asrat
2
(No Transcript)
3

CHAPTER I. OVERVIEW OF THE WTO VALUATION
AGREEMENT(GATT 1994)
4
INTRODUCTION

• DEFINITION OF CUSTOMS VALUATION
• It is the procedure applied to determine the
  value of imported goods for the purpose of
  levying
• ad valorem customs duties.
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5
IN
INTRODUCTION Cont...
Customs duties may be calculated with reference
to
1. Ad valorem rates
or
2. Specific rates

• or a combination of the two.

6
WHY CUSTOMS VALUATION?

• To determine the value of imported goods for the
  purpose of levying ad valorem duties

Customs Value
Duty Rate
Customs Duty

X
Customs Valuation
Classification
Rules of Origin
7
2.2. ????? ?? ??? ??????

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  ?????
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• ??? ????? ?????

8

• Article VII of the GATT(1947) -general principles
  for an international system of valuation.
• Article 7
• Among 23 contracting parties

9

• 1950s- normal price(notional) not market price
• Use of domestic price
• Use of arbitrary valuation sys
• Price of like good in ctry of importation
• Use of official minimum value
• Use of CV to combat dumping
• Lack of transparency in valuation method
• Inadequate facilities for appeal against decision
  made by custom authority
• CIF

10

• TV accepted when declared value was higher than
  the listed value.
• Downward variations were only taken into account
  up to 5-10 per cent.
• Dissatisfaction among traders, until the notional
  price was adjusted by the customs.

11

• TRV(1979),positive system of Customs Valuation
  based on PAPP and Transaction Value
• Intended to provide a fair, uniform and neutral
  system for the valuation of goods for customs.
• This differs from the notional value of BVD.
• TRV Code was signed by more than 40 contracting
  parties.

12

• To improve, clarify, or expand the Tokyo round
  code as appropriate
• To win acceptance among the GATT parties
• 1/3 GATT contracting parties and 123 countries
  had signed the agreement.
• Focus on Tokyo round codes, developing countries
  in Implementing the agreement based on studies of
  their existing customs procedures and the use of
  minimum values

13

• Uruguay round1986- 1994 resulted in the
  WTO-ACV in 1994, as an international agreement on
  CV.
• The Tokyo Round Code(GATT) was replaced by the
  WTO Agreement on Implementation of Article VII of
  the GATT 1994 following conclusion of the Uruguay
  Round.
• This Agreement is essentially the same as the
  Tokyo Round Valuation Code.

14

• A fair, uniform and neutral system that precludes
  the use of arbitrary or fictitious customs
  values.
• The basis for valuation should, to the greatest
  extent possible, be the transaction value of the
  goods being valued.
• CV based on simple and equitable criteria
  consistent with commercial practices .
• Valuation procedures should not be used to combat
  dumping.

15

• further objectives of the WTO-ACV and secure
  additional benefits for developing countries
• Delay in application for up to 5 years
• Stay the application of Art.4 of the ACV
• Delay application of the Computed Value Method
  for 3 years

16
OBJECTIVES OF THE AGREEMENT Cont...

• The basis of valuation to the greatest extent
  possible should be the transaction value.
• Simple and equitable criteria consistent with
  Commercial Practices.
• Valuation procedures should not be used to combat
  dumping.

17
OBJECTIVES OF THE AGREEMENT Cont...

• Retention of the Price reference database as a
  risk management tool
• Greater Uniformity and Certainty
• To preclude the use of arbitrary and fictitious
  customs values

18
Brief History of Developments of International
Standards for Customs
Article VII of the GATT 1947
Set principles, but little guidance regarding
their practical application
JPN 1972
JPN 1981
JPN 1995
Notional Concept
Positive Concept
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VALUATION SYSTEMS

• BDV
  ACV

-- Based on Notional Concept - Based on assumed
conditions the merchandise to be valued would be
sold - Arbitrary administration - Lacking
transparency - Not responsive to todays
international trading environment
Based on Price Actually Paid or Payable -
Fair - Uniform - Neutral system - Conforming
with commercial realities - Precludes the use of
arbitrary and fictitious values
20
Brief History of the GATT/WTO Agreement on Customs Valuation Brief History of the GATT/WTO Agreement on Customs Valuation
Year Activities in International Negotiations
1947/ Jan.1 , 1948 GATT treaty establishment(Article VII of the GATT principles for customs valuation)
December, 1950 Brussels Definition of Value BDV(notional concept of valuei.e. goods are valued based on their normal price
Nov. 1971 Report GATT Committee on Trade in Industrial products (draft principles interpretative notes on valuation rules)
Sep.1973 April.1979 Tokyo Round Negotiations (positive concept of value i.e. actual price paid for the imported goods under competitive market.)
Nov. 1, 1979 GATT Valuation Code Protocol
Jan. 1, 1981 GATT Valuation Code Enters into Force
Sep.1986 April,1994 Uruguay Round Negotiations (focus on concerns of developing countries, Annex III)
Last 1994 WTO-ACV(The agreement on implementation of article VII of GATT 1994)
Jan.1, 1995 WTO ACV and ministerial declarations takes effect.
21
EygMK êU xtMN µêE dT

1. ?1989 E.C
2. ?1989-1992 E.C (Book- Price lists)
3. ?1992 1996 E.C ??? ???? ?? SGS -Society
   General de Surveillance ???? ???????? ??? ???
   ???? ???? ???? ??? ?????

22

• ?1996 2005 E.C (CD format excel price)
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  ?????? ?/?? ????? ??????? ?? ?? ???? ?? ??? ?????
  ????? ?/?/??? ?? ?????? ????? ???
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23

• êU l!tmNlT yqrbN êU lmwsN ks bðT ytStÂgÇ yxND
  xYnT wYM ytmúúY ãCN êU bdNB lNR yÃúYbT dT
  xLnbrWMÝÝ
• xSmÀãC TKKl¾ ½ GL XÂ yãCN Ñl mGlÅ bs!StM
  XNÄ!ÃqRb xÃSgDDM½

24

• ? 2005 ??? (ECVS)
• BY CDAC
• yx!TùÃ êU mr Ä b_at_Z RT
• Ethiopian Customs Valuation System (ECVS)
• ???? ????? ?? ??? ??????? ????
• Valuation Details Declaration (VDD)/
• ygb! ãC yêU Ä b_at_Z RT
• ywÀ ãC yêU Ä b_at_Z RT

25
????? ?? ??? ???? ???
ECVS
CD Price data base
ECVS-G2
26
STRUCTURE OF THE AGREEMENT
27
STRUCTURE OF THE AGREEMENT

• General Introductory Commentary
• Part I Rules on Customs Valuation A.117
• Part II Administration, Consultations and
  Dispute Settlement A.1819
• Part III Special and Differential Treatment
  A.20
• Part IV Final Provisions A.2124

28
STRUCTURE OF THE AGREEMENT Cont
Annex I Interpretative Notes Annex II
Technical Committee on Customs Valuation Annex
III Special Provisions for Developing Countries
29
Comparison of Ethiopian CV Reg158/2011 with the
WTO-ACV
S.No Description of the provision Ethiopian Reg158/2011 WTO-ACV
1 Transactional Value method Art. 5 adj. with Art. 13, Art.1 adj. with Art.8
2 Transactional Value of Identical Value method Article 8 Article 2
3 Transactional Value of Similar Value method Article 9 Article 3
4 Deductive Value method Article 10 Article 5
5 Computed Value method Article 11 Article 6
6 Fallback method Article 12 Article 7
7 Cost to be included in Customs value Article 14 Article 8
8 Certain charges not to be included in the Customs value Article 15 Annex-1,Interpretative notes, note to Article 1
30
Comparison of Ethiopian CV Reg158/2011 with the
WTO-ACV
S.No Description of the provision Ethiopian Reg158/2011 WTO-ACV
9 Currency conversion Art. 39 Art. 9
10 Confidentiality Article 41 Article 10
11 Obligation to publish laws. Article proc89/4 Article 11
12 Obligation to provide a guarantee system. Article proc117/5 Article 12
14 Defines certain words and terms. Article 2 Article 14
15 Right of importers to written explanation. Article 38/2 proc99/2 Article 15
16 Rights of customs administrations Article 32 35/2 5/2 Pro 99/1 Art.16 Annex-1,Interpretative notes, note to Article 1
31
Article 18 INSTITUTIONS
GENEVA
BRUSSELS
SWITZERLAND
BELGIUM
32
Article 18 INSTITUTIONS Cont

• Committee on Customs Valuation composed of
  representatives from each of the Members.
• The Committee established in WTO handles the
  trade policy aspects of the Agreement.
• The WTO Secretariat shall act as the Secretariat
  to the Committee.

33
Technical Committee on Customs Valuation (TCCV)
INSTRUMENTS
34
CHAPTER II. TRANSACTION VALUE
35

Introduction

• General introductory Commentary states that
• The basis for customs value should be wherever
  possible, the transaction value of the imported
  goods being valued and that

36
Introduction Cont

• Transaction value is the price actually paid or
  payable for goods when sold for export to the
  country of importation adjusted in accordance
  with Article 8, provided certain conditions.
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37
Components of PAPP
PAPP Price Actually Paid or Payable
Made already at the time of customs valuation.
Not yet made at the time of customs valuation but
already agreed to be made.
ACV precludes the use of arbitrary or fictitious
customs values (no basis)
38
Definition and Interpretation of Transaction
Value and related terms (Articles 1 8)
Transaction Value
PAPP (Art.1)
Adjustments (Art. 8)


Total payments made or to be made by the buyer to
or for the benefit of seller.
All payments actually made or to be made as a
condition of sale of the imported goods,
The payments need not necessarily take the form
of a transfer of money.
Payments may be made directly or indirectly.
39
IS PAPP Invoice Price ?

• Maybe, but not always

PAPP Invoice Price
40
IS PAPP Invoice Price ?

• Maybe, but not always

Case 2
Importer (Buyer) A
Exporter (Seller) B
Advance payment 3,000 c.u
20 Feb 2016
Invoice with goods 27,000 c.u 25 Apr.2016
Payment 27,000 c.u 24 May 2016
(Country I)
(Country X)
PAPP ? Invoice Price
41
Concept of Sale

• No definition of sale in the ACV but
• In general, a transfer of ownership of the
  goods for some type of consideration
• Advisory Opinion 1.1
• the term sale should be interpreted as
  widely as possible

42
Meaning of Sale for Export

• when sold for export to the country of
  importation (Article 1)
• An Actual International Transfer of goods
  (Advisory Opinion 14.1)

43
Illustration of Sale for Export to the country
of importation

• Advisory Opinion 14.1 Example

(Country X)
(Country I)
?Contract of sale (_at_ 5.75 c.u.)
Seller S
Importer A
Sale for Export to the country of importation
?Contract (_at_ 5 c.u.)
Manufacturer M
44
Illustration of Sale for Export to the country
of importation Cont
Country X
Country I
Storage
Seller Sale Buyer
Shipment of goods
45
Illustration of Sale for Export to the country
of importation Cont

• Commentary 22.1

Illustration of series in sales situation
(Country Z )
(Country X)
6).Sept. 5 Payment
Distributor B
Manufacturer C
2).July 12 B-C Sales Contract (first sale)
1).July 10 A-B Sales Contract (last sale)
3).Aug.10 Goods
Sale for Export to the country of importation
5).Sept.1 Payment 10,000
Importer A
7).Oct.5 Payment 1,200
4).Aug.20 Customs Entry
(Country I)
No relationship A, B or C
46
Example of Cases of No Sale (A.O. 1.1)

• Free consignments
• gifts, samples, promotional items, etc.

47
Illustration of Cases of No Sale Cont

• Goods imported on consignment

(Country E)
(Country I)
?Consignment Sale Agreement
Agent X
Producer P
?50 Carpets for sale by auction
?Payment
?50 Carpets
500,000 c.u. (Xs costs remuneration)
?500,000 c.u.
Auction Participants
48
Example of Cases of No Sale Cont.

• Goods imported by intermediaries, who do not
  purchase the goods and sell them after
  importation
• Goods imported by branches which are not separate
  legal entities (merely a transfer from one office
  to another)
• Goods imported under hire or leasing contract

49
Example of Cases of No Sale Cont.

• Goods supplied on loan, which remain the property
  of the exporter
• Goods (waste or scrap) imported for destruction
  in the country of importation (exporter pays
  importer for services of destruction)
• Goods which are subject of a barter system
  (examine case by cases basis)

50
waste or scrap
51
Component of PAPP Cont

• Cost elements to be considered with PAPP
• Invoiced amount
• Indirect payment
• Advance payment
• Credit
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  ????
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52
Deductions from the Customs Value
53
Deductions from the Customs Value

• Rules for Deduction
• The cost should be distinguished from the price
  actually paid or payable
• the charge is included in the PAPP 
• the goods are actually sold at the price declared
  as the PAPP
• the charges are actually incurred by the buyer
• the deduction should be based on objective and
  quantifiable data

54
Deductions from the Customs Value Cont

• Activities Undertaken by the Buyer on his/her
  own Account
• Advertising
• Warranty
• Market studies and research
• Participation in trade fairs and exhibitions
• Preparation of show rooms
• Testing

55
Deductions from the Customs Value Cont

• Legal Deductions (Post import cost/charges)
• Charges for construction, erection, assembly,
  maintenance, or technical assistance undertaken
  after importation, e.g., industrial plant,
  machinery or equipment
• Cost of transport after importation
• Duties and taxes of the country of importation

56
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  ???????
•  

57
Component of PAPP Cont

• Other Factors that may
• or may not Influence PAPP
• Price below the prevailing market prices.
• Goods subject to export subsidies or bounties.
• Goods sold at dumped prices
• Goods not in accordance with the contract.
• Split shipment

58
Restrictions, Conditions and Related Parties
59
Conditions for use of Transaction Value Method

• Transaction value method
• can be used only if
• there are no restrictions as to the disposition
  or use of the goods by the buyer. (Art. 1.1 (a))
• The sale or price is not subject to some
  conditions or considerations for which a value
  cannot be determined with respect to the goods
  being valued.

60
Conditions for use of Transaction Value Method
Cont

• No part of the proceeds of any subsequent resale,
  disposal or use will accrue directly or
  indirectly to the seller, unless an appropriate
  adjustment can be made in accordance with the
  provisions of Article 8
• The buyer and the seller are not related , or
  where they are related, the importer can
  demonstrate that the transaction is not
  influenced by the relationship

61
(Declared Value) ???? ??? ??? ?????

• ???????? ????? ????? ????? ?? (Declared Value)
  ???? ?????? ?????? ??? ???? ??? ??? ????? ????
  ???? 90(1)(?)-(?) ?????? ?????? ????? ??/??? ???
  ??? ???? ??? ??? ??????? ?????? ??? ?? ?? ????
  ??? ???? ???-

62
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  ???? ????
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  ??????? ????? ??????
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  ??? ??? ???? ??? ???? ???? ???? ??? ????? ????
  ???? ?? ?? ????? ??? ???? ???? 5 / ?10 ??? ????

63
Decision in Writing

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64
(No Transcript)
65
ghdgjhu

66
Conditions for use of Transaction Value Method
1st Restriction

• there are no restrictions as to the disposition
  or use of the goods by the buyer. (Art. 1.1 (a))
• Examples of restrictions
• Buyer is allowed to use the goods only for
  display
• The buyer is allowed to use the goods only for
  charitable purposes.
• 90/1/? ??? ?????? ???? ??? ??????????? ??? ???
  ?????? ?????? ??? ???? ???? ???? ??????

67
Conditions for use of Transaction Value Method
1st Condition

• Exception to use of 1st condition
• are imposed or required by law or by the public
  authorities in the country of importation. (Art
  1.1 (a) (i))
• Limit the geographic area in which the goods may
  be resold (Art 1.1 (a) (?))
• Do not substantially affect the value of the
  goods (Art 1.1 (a) (?))

68
Examples of restrictions that may not lead to
rejection of Transaction value
69
A condition of the sale is that the buyer in
country x cannot sell or dispose of the imported
goods in any neighbouring country
limits the geographical area in which the goods
can be sold
70
Conditions for use of Transaction Value Method
2nd Condition
The sale or price is subject to some condition
or consideration for which a value cannot be
determined with respect to the goods being
valued. (Art. 1.1 (b)) 1)The seller established
the price of the imported goods on condition that
the buyer will also buy other goods in specified
quantities 90/1/? ???? ??? ??? ??? ???? ?????
????? ??? ????
71
10 Photocopiers for 1000 each
50 Fax machines for 100 each

• Sale of Fax machines subject to a condition.
• Not possible to establish how the condition has
  affected the value of the fax machines.

72
Conditions for use of Transaction Value Method
2nd Condition Cont
2)The price of the imported goods is dependent
upon the price or prices at which the buyer of
imported goods sells other goods to the seller of
the imported goods 3. The price is established
on the basis of a form of payment extraneous to
the imported goods, such as where the imported
goods are semi-finished goods which have been
provided by the seller on condition that he will
receive a specified quantity of the finished goods
73
Conditions for use of Transaction Value Method
3rd Condition
No part of the proceeds of any subsequent
resale, disposal or use of the goods by the buyer
will accrue to the seller and an appropriate
adjustment cannot be made under Article 8. (Art.
1.1 (c)) 90/1/? ???? ????? ???? ???? ?????? ???
????? ?? ????? ???? ?? ?? ??? ????? ????
74

Conditions for use of Transaction Value Method
4th Condition
The buyer and seller are related, and the
transaction value is not acceptable under the
provisions of paragraph 2. (Art. 1.1 (d)) 90/1/?
????? ??? ???? ?????
75
Related parties
76

Related Parties Article 15.4

• Officers or directors in business
• Legaly recognized patners in business
• Employer and employee
• Shareholders
• Directly or indirectly controls the other
• Both controlled by third person
• Both control a third person
• Members of the one family

77
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  ??????? ????
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• ????? ?? ?????? ????? ??? ?? ???? ?????? ???? ???
• ??? ???? ??? ????? ??? ??? ???? ???? ?????

78

Establishing Relationship Influence on Price 15.4

• Circumstances of the Sale 1.2(a)
• If the price was settled in a manner consistent
  with the normal pricing practices of the industry
  in question or
• the price was settled in a manner consistent with
  the way the seller settles prices for sales to
  buyers who are not related to him or
• if the price is adequate to ensure recovery of
  all costs plus a profit which is representative
  of the firms overall profit realised over a
  representative period of time in sales of goods
  of the same class or kind

79
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• ????
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  ?????? ???????-
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  ????? ?????
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  ?????
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  ?????? ??? ????? ?? ???? ?????? ??? ?? ?????? ???
  ????? ???? ???? ???? ??????

80

Establishing Relationship Influence on Price
Cont5.4

• Test Values 1.2(b)
• The declared value closely approximates to one of
  the following previously accepted values,
  occurring at or about the same time, where buyer
  and seller are not related
• the transaction value of identical or similar
  goods 
• the deductive value of identical or similar
  goods 
• the computed value of identical or similar goods
• Differences in commercial and quantity levels,
  Article 8 elements, other costs incurred, should
  be taken into account. Test values should not be
  used as substitute values.

81
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?????? ???????

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  ???? ???? ???? ??? ?????? ?? ????? ?? ?? ?????
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  ??? ??? ????? 5 (3) (?) ???? ?????? ????
• ?/ ?? ?? ????? ?? ????? ???? ???? ??? ?????? ????
  ?? ?? ??? ???? ???? ?? ???? ?5 ?? ????? ????
  ?10 ????? ??? ? ???
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  ?????? ???? ?? ??? ???? ???? ?? ???? ?5 ?? ?????
  ???? ?10 ????? ????

82
2/??????? ???? ?????? ??????? ???? ????? ????
???? ?-

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  ???? ??? ???? ???
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• ?) ?????? ??? ????? ????? ???? ????? ????
  (INCOTERMS) ?
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  ????? ??? ????? ????? ?????
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  ??? ????? ???
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• ?) ????? ?? ????? ?? ?? ??????? ????? ???? ???
  ????? ?? ???? ???? ????? ????? ???? ???????? ??
  ?????

83
CHAPTER III. ADJUSTMENT (Art 8)
84
Definition of Adjustments (Art. 8)
Adjustments is a value added to the price
of the imported goods of the buyer but are not
included in the price actually paid or payable
for the goods .
The Adjustments Must be based onAccording to Art
8.3
OBJECTIVE DATA (based solely on facts)
QUANTIFIABLE DATA (capable of being measured by
using real or actual numbers and figures.)
Art 8 can not be based on judgment, estimation,
best-guess or personal experience.
85

Rules for Additions

• the costing elements are not already in the price
• the costing elements have been actually incurred
  by the buyer in connection with the imported
  goods
• they are enumerated in Article 8
• they are based on objective and quantifiable data
  (Article 8.3)
• No additions shall be made to the PAPP except
  those in Article 8.1 and Article 8.2 (a), (b) and
  (c) (Article 8.4)
• What is added largely depends on the terms of sale

86
14. ???? ????? ???? ????? ?? ??? ??????? ????

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  ?????? ????? ??????-
• ?) ?????? ?? ??? ???? ???? ?? ???? ????? ???????
  ?????? ???? ???
• ?) ?????? ???? ?? ???? ??? ?? ????? ?????? ????
  ???
• ?) ?? ?????? ????? ?? ?? ????? ????? ???? ???
• ?) ???????? ??? ??? ??????? ??? ????

87
Article 81. 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
Types of Adjustments
Inclusions

1.(Compulsory Adjustments)
2. (Optional Adjustments)
Article 8 2. The legislation of each WTO Member
shall provide for the inclusion in or the
exclusion from the customs value, in whole or in
part, of the following³

• 8.1 a) Commissions and Packing
• i) Selling Commissions and brokerages
• ii) The cost of Containers,
• iii) The cost of packing
• 8.1. b) Assists,
• 8.1.c) Royalties License Fees,
• 8.1. d) Proceeds of any subsequent resale

8.2.(a) Cost of transport, 8.2.(b) Loading,
Unloading, Handling
Charges. 8.2.(c) Insurance
88
2/ ???? ????? ???? ????? ??? ????? ?? ??????
?????-

• ???? ????? ???? ??? ????? ?????? ??? ?????? ??
  ??? ???????
• ??? ???? ????? ????? ???? ?????? ???? ????
• ????? ????? ??? ????? ??? ????? ???
• ????? ???? ??? ?????? ?? ?????? ???
• ????? ??? ???? ??? ???? ????? ????? ?????
  ????????????????????? ????????? ??????? ???
• ???? ???? ????? ?????? ?? ???? ??????? ??????
  ???? ??? ??? ???? ????????
• ????? ??? ????? ??? ??????? ??? ????? ????? ?? ??
  ??? ????? ?? ?????? ????? ???????

89
????..

• ???? ?? ????? ???????? ????? ????? ?? ??????
  ????? ??? ????? ????? ?????
• ???? ???? ?? ???? ?? ????? ???? ?? ????? ?????
  ??? ????? ???

90
Types of Adjustments Cont
Exclusion

According to Art 8.1 a) (i) Buying commissions is
excluded from the Customs value. ?) ??? ?????
The term "buying commissions" means fees paid by
an importer to the importer's agent for the
service of representing the importer abroad in
the purchase of the goods being valued. (Note to
Art. 8.1 (a) (i))
91
The intermediaries (Agents)
1.Buying Commissions and buying agents
2.Selling Commissions and Selling Agents
3.Brokerage and Brokers or Independent Agents
92

Role of the Buying Agent

• Represents the Buyer
• Finds Suppliers
• Obtains samples from the Suppliers
• Arranges for transport costs

93
Cont role of Buying Agent
Role of the Buying Agent Cont.

• Negotiates lowest price

• Helps prepare documents
• Consolidates shipments

94
Buying Agent
Supplier
Buyer
95

Role of the Selling Agent

• Represents the Seller
• Finds customers (Buyers)
• Maintains samples
• Arranges for transport costs

96
Role of the Selling Agent Cont

• Negotiates highest price
• Helps prepare documents
• Separate shipments
• Prepares invoices

97
Selling Agent
Supplier
Buyer
98

Role of the Independent Agent (Broker)

• Acts for both the Buyer and the Seller
• Connects both parties to the transaction
• Specializes in certain types of goods
• Finds buyers for his goods

99
Role of the Independent Agent (Broker) Cont

• Confirms all sales
• Negotiates his own terms of sale
• Arranges for the shipping of the goods

100
Cost of Containers and Packing
101
Cost of Container Art.8.1. (a)(ii)

• Container refers to packaging and labeling
  used to
• Store
• Transport products such as cartons, bottles,
  cans, perfume bottles
• Cost not value is added

102
Cost of Container Art.8.1. (a)(ii) Cont

• Adjustments are made on cost of Containers when
  they are
• Incurred by the buyer
• ???? ????? ???? ??? ????? ?????? ??? ?????? ??
  ??? ???????
• They are not already included in the
• PAPP

103
Examples of Containers
Crate
Empty Container
Bottle
jerrican
104
Types of Containers Art.8.1(a)(ii)

• Containers can be categorized into
• Non Re-usable (classifiable together with the
  goods)
• (96/?/2)????? ????? ??? ????? ??? ????? ???
• Re-usable(classified separately from the goods)

105
Cost of Parking Art.8.1(a)(iii)

• the cost of packing whether for labour or
  materials
• (96?/3) ????? ???? ??? ?????? ?? ?????? ??

106
ASSISTS
107
Assists Article. 8.1. (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.
108

ASSISTS
1.Meaning of Assists
2.Categories of Assists
3.Valuation of Assists
109

Meaning of Assists

• Assists means
• The cost or value of goods and services
• Supplied directly or indirectly
• By the buyer
• For free of charge or
• At reduced cost
• To the seller or producer
• For use in connection with the production and
  sale for export of the imported goods.

110

Categories of Assists

• i) Materials, components, parts and
  similar items incorporated in the
  imported goods e.g. raw materials, finished
  components
• ii) Tools, dies, molds and similar items used in
  the production of the imported goods e.g. hand
  held drill,

111
Categories of Assists Cont

• iii) Materials consumed in the production of the
  imported goods e.g. fuel, chemicals
• iv) Engineering, development, artwork,
• design work plans and sketches
  undertaken elsewhere other than in the country of
  importation and necessary for the production of
  the imported goods.

112
Addition of Assists

• The Assists should only be added to the PAPP
• i) not already included in the PAPP,
• ii) supplied by the Buyer either free of charge
  or at reduced cost,
• iii) supplied directly or indirectly by the Buyer
  to the Seller,
• iv) for use in the production and sale for export
  of imported goods.
• v) Based on objective and quantifiable data
  

113
(96 ?) ????? ?? ?? ????? ?????

• ?????? ????? ?? ?? ?????? ???
• ?????? ???? ??? ?????????? ?? ?????? ??? ????
• ?????
• ????
• ??? ???????
• ??? ?????
• ??? ???? ????? ???

114
(No Transcript)
115
Royalties and License Fees
116

Royalties License Fees

• Royalty or License fee covers payments made
  for the right
• To use,
• Re- produce
• Sell a given product.

117
Royalties License Fees Cont

• Add to PAPP if
• it is related to the imported goods,
• it is a condition of sale,
• Paid directly or indirectly
• it is not already included.
• Must be based on objective and quantifiable data.

118
Royalties License Fees Cont

• Do not add to PAPP if
• it is a right to reproduce the imported goods in
  the country of importation
• it is a right to distribute or resell the goods
  provided not a condition of sale

119
Royalties License Fees Cont

• Do not add to PAPP if
• Payment based on partly imported goods and partly
  other factors which do not relate to imported
  goods, e.g.
• Where imported goods are mixed with domestic
  ingredients and are no longer identifiable
• b) Where the royalty payment cannot be
  distinguished from the financial arrangements
  between the buyer and seller
• However, where the PAPP includes a
  royalty/licence fee, there is no provision under
  the Agreement to deduct

120
14. ????? ??? ????? ???? ????? ?? ??? ???????
????

• ?) ?? ??? ??? ??? ?? ????? ??? ??????? ?? ???
  ???? ????? ???? ?? ????? ????? ???? ??? ?? ???
  ??? ??? ??? ???? ?? ????? ??????
• ?) ????? ???? ??? ?? ??? ??? ??? ?????? ????? ???
  ???? ??? ???? (2) ??? ?? (?) ???? ???? ?????
  ????? ??? ???? ??? ?????? ???? ?? ?? ??? ?????
  ???? ???? ??????
• ?) ??? ???? ??? ???? (2) (?) ?? (?) ??????? ????
  ????? ??? ?? ???? ??? ????? ???? ??? ?? ??? ???
  ??? ???? ??? ??? ?? ??? ???? ??? ????? ??? ?????

121

Types of royalties and license fees

-1.Patents
-2.Trademarks
-3.Copyrights.
122
Patent

• Is a document
• issued by a government office
• describes an invention
• creates a legal right on it

123
Patent Cont

• Invention is a novel idea
• which results from an inventive activity
• capable of industrial application.

124

Example of the Patent
The director of the United States Patent and
Trademark Office Has receive an application for a
patent for a new and useful invention, the title
and description of the invention are enclose, the
requirements of law have been complied with
125
Trademarks

• A trade mark is
• a sign which is used by a business to set its
  business activities (whether be a product or
  serviced based on business) apart from those of
  its competitors.

126
Trademarks Cont

• A trade mark is a business main
• brand name but it can also be its
• Business name
• Product names
• Sub brands
• Logos and symbols
• Colours. Etc.

127
Examples of Trademarks
Some famous examples of trademarks
Coca Cola
versace
addidas
Puma
128
Copyright

• Is a reserved right which protects the holder
  from unauthorized use of his work from
  reproduction, copying or translation.

129
Copyright Cont

• It protects works like,
• literary musical,
• artistic, photographic works,
• maps technical drawings
• and motion pictures.

130
Example of Copyright

• - Miriam Makeba discography of CDs

- Titanic movie
- Wole Soyinka conversations with Wole Soyinka
131
PROCEEDS OF RE-SALE
132
Proceeds Art. 8.1 (d)

• In determining the customs value under the
  provisions of Article 1, there shall be added to
  the PAPP for the imported goods

133
Proceeds Art. 8.1 (d) Cont

• the value of any part of the proceeds of any
  subsequent resale,
• disposal or use of imported goods that
• accrues directly or indirectly to the
• seller.
• (96/?) ????? ??? ????? ???? ??????? ????? ?????
  ??? ????? ?????

134
Proceeds Art. 8.1 (d) Cont
Article 1 The customs value of imported goods
shall be the transaction value, that is the PAPP
for the goods when sold for export to the country
of importation adjusted in accordance with the
provisions of Article 8, provided (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
135
Proceeds Art. 8.1 (d) Cont
Article 13 If, in the course of determining the
customs value of imported goods, it becomes
necessary to delay the final determination of
such customs value, the importer of the goods
shall nevertheless be able to withdraw them from
customs, if, where so required, the importer
provides sufficient guarantee in the form of a
surety, a deposit or some other appropriate
instrument, covering the ultimate payment of
customs duties for which the goods may be liable.
The legislation of each Member shall make
provisions for such circumstances.
136
Transport Costs and Associated Charges
137
Optional Adjustments (Article 8.2)
Article 8 2. The legislation of each WTO
Member shall provide for the inclusion in or the
exclusion from the customs value, in whole or in
part, of the following³
cost of transport
loading, unloading and handling
cost of insurance.
138
Cost of Transport

• Costs associated with
• physical movement of goods from the factory of
  manufacture through the port of loading to the
  port of discharge in the country of importation.
• (96 ?/4) ????? ??? ???? ??? ???? ????? ?????
  ????? ????????????????????? ????????? ??????? ???
• ???? ???? ????? ?????? ?? ???? ??????? ??????
  ???? ??? ??? ???? ????????

139
Cost of Transport Cont

• Such costs or charges include

• Inland freight (trucking),
• Rail freight,
• Ocean freight,
• Air freight.

140
Cost of transport to the port or place of
importation
buyer/Importer
141
INCOTERMS USED IN INTERNATIONAL TRADE
142
TERMS OF DELIVERY OF GOODS INCOTERMS USED IN
INTERNATIONAL TRADE

• INCOTERMS (International Commercial Terms)
• Are codified description of terms of delivery of
  goods between seller and buyer
• Describe points at which responsibility for costs
  and liability for goods pass from the seller to
  the buyer
• Each of the 13 Incoterms has a brief name and
  also a 3-alpha character code e.g. EXWORKS
  EXW
• (2/3)????? ?? ??? ????? ???? ??? ????? ?? ???
  ????? ??? ?? ??? ???? ??????? ??? ????? ????
  ?????? ???? ??? ????? ????? ??? ?????? ???? ???
  ??? ??? ????? ???? ????? ??? ???? ????? ??.??.??
  ??? ??? ????? ????? ???? ??? ????

143
TERMS OF DELIVERY OF GOODS INCOTERMS USED IN
INTERNATIONAL TRADE

• Sequence of terms broadly follows the sequence of
  movement of the good , commencing at the place of
  origin and moving progressively to the place of
  destination and
• They do not touch
• - the question of terms of payment for the
  goods and
• - method of payment for the goods
• (25) ??????? ????? ??? ???????? ??? ??? ?????
  ???????? ?????? ?? ??????? ?????? ??????? ?????
  ?????? ???? ?????-
• (25 4/?) ???? ???? ??? ??? ?? ??? ??? ??? ????
  ??? (INCOTERMS)

144
TERMS OF DELIVERY OF GOODS INCOTERMS USED IN
INTERNATIONAL TRADE (Cont.)
GROUP CODE DESCRIPTION
E Departure EXW Ex works
F Main carriage unpaid FCA FAS FOB Free carrier Free alongside Free on Board
C Main carriage paid CFR CIF CPT CIP Cost and Freight Cost, Insurance and Freight Carriage paid to .. Carriage and Insurance paid to .
D Arrival DAF DES DEQ DDU DDP Delivered at Frontier Delivered Ex Ship Delivered Ex Quay Delivered Duty Unpaid Delivered Duty Paid
145
(No Transcript)
146
TERMS OF DELIVERY OF GOODS INCOTERMS USED IN
INTERNATIONAL TRADE (Cont.)

• FOB Free on board
• Seller fulfills his obligation to deliver when
  the goods have passed the ships rail at the
  named port of shipment and
• Buyer has to bear all costs and risks of loss or
  damage to the goods from that point.
• (2/6) ? ??.?.? ?? (FOB Price) ??? ???? ???? ??
  ?? ??? ??? ??? ????? ??? ?? (???) ??? ???? ?????
  ??? ????? ?? ??? ????

147
TERMS OF DELIVERY OF GOODS INCOTERMS USED IN
INTERNATIONAL TRADE (Cont.)

• CIF Cost, Insurance and Freight
• Seller pays transportation and related costs to
  the CIF point (normally the port of entry) and
• In addition, seller has to procure marine
  insurance against buyers risk of loss or damage
  to the goods during transportation.
• (2/7)??.??.?? ?? (CIF price) ??? ???? ???? ??
  ?? ??? ??? ??? ???? ??? ?? ??? ??? ??? ???? ?????
  ??? ????? ?? ?? ???? ??? ????? ?????? ???? ??
  ????? ??? ???????? ?????? ?????? ????? ??
  ???????? ?? ??? ????

148

Loading, Unloading Handling

• Loading unloading include costs or charges
  for the movement of goods to or off from any
  conveyance (vessel, truck or aircraft).

149
Handling costs or charges include

• preparation of manifests
• preparation of bills of landing
• preparation of customs
• documents,
• obtaining export licenses, etc.

150
Example of Loading and Unloading
151

Cost of Insurance

• Includes costs or charges
• that cover any risk on the goods being
  transported from the place of manufacture in the
  country of exportation to the country of
  importation.

152
Insurance cost include

• Land insurance

• Marine insurance
• Air insurance

153
Addition of Insurance

• The inclusion of insurance in the customs value
  is limited to insurance costs incurred for the
  transportation, loading, unloading and handling
  of the goods to the place of import
• In some cases the importer may state that neither
  he/she or the seller insured the goods. If there
  is evidence to support this, then it is not
  necessary to include an amount for insurance
  under Article 8.2

154
CHAPTER IV. OTHER METHODS OF VALUATION
155
Introduction

• Where the customs value cannot be determined
  under Article 1(Transaction value method), the
  customs value will be determined under Article 2
  through Article 7.
• (5/3?/) ??????? ????? ??????? ???? ??? ???? ???
  ???? (?) ?? ?????? ?? ??? ????? ????? ????? ?????
  ?? ????? ??? ????? ?? ????????
• -

156
Transaction Valuation of Identical and Similar
Goods
157

• CUSTOMS VALUETV(PAPP)ADJU.
• CUSTUMS VALUE TV(IDENTICAL )ADJU.
• CUSTUMS VALUE TV(SIMILAR)ADJU.
• CUSTUMS VALUE TV(DEDACTIVE )ADJU.
• CUSTUMS VALUE TV(COMPUTED )ADJU.

158
(If the customs value of the imported goods
cannot be established using Method 1)
THE TRANSACTION VALUE OF IDENTICAL GOODS (METHOD
2)
The customs value shall be the transaction value
of identical goods sold for export to country of
importation and exported at or about the same
time as the goods being valued.
159
Introduction Cont
The value of identical goods must be a
previously accepted transaction value.
160
8.???? ???? ???? ?? ????? ??
??????-8/1/ ????? ?? ????? ?? ????? ?? ????
????? ???? ???? 91 ??????? ???? ??? ????? ???
????? 90 ??? ??? ?????? ???? ??? ?? ?????? ??? ??
??? ???? ????? ????? ????? ???? ???? ???? ????
???? ?????? ???????? ????? ??????? ??? ??? ?????
??? ??? ????????
161
Definition of Identical goods

• These are goods, which are
• the same in all respects,
• including physical characteristics,
• quality and reputation,
• produced in the same country

162
Definition of identical goods Cont
Minor differences in appearance shall not
preclude goods otherwise conforming to the
definition from being regarded as identical. The
minor differences in appearance would include the
following
163
IDENTICAL GOODS
THE SAME IN
MINOR DIFFERENCES
COLOUR
PHYSICAL CHARACTERISTICS
SIZE
QUALITY
LABEL
REPUTATION
PATTERN
164
Requirements for transaction value of identical
goods method

• Goods are exported at or about the same time as
  the goods being valued.
•  Goods are sold at the same commercial level and
  same quantity.
• Where costs and charges under Article 8(2) are
  included, appropriate adjustments should be made.

165
Requirements Cont

• If more than two values are found, the lowest of
  such values should be considered
• (8/5/) ????? ?????? ?? ???? ?? ??? ???? ??? ???
  ?????? ??? ????? ?? ?????? ???? ?????? ???? ??
  ??? ?????? ?????? ??? ????? ??? ????? ????
  (Weighted Average) ???? ????? ??????

166
Conditions for transaction value of identical
goods method

• A sale at the same commercial level and in same
  quantities
• A sale at the same commercial level but in
  different quantities
• A sale at a different commercial level but in the
  same quantities

167
Conditions Cont

• A sale at a different commercial level and in
  different quantities is exported at or about the
  same time as the goods being valued.

If more than one transaction value of identical
goods is found, the lowest should be used.
168
2/ ??? ???? ??? ???? (1) ???? ????? ??? ????
????? ????? ???? ???? 91 ??? ???? (2) ?????-

• ?) ????? ??? ??? ???? ??? ?? ?????? ??? ??????
• ?) ????? ???? ???? ??? ???? ??? ?? ?????? ???
  ???? ???
• ?) ????? ???? ???? ??? ????? ?????? ??? ?????
• ??? ???? ????? ???? ???? ??? ???? ???? ????????
  ??? ???? ?????? ????? ?? ??? ??? ??? ??? ????
  ????? ????? ?? ???? ???? ??????

169
Commercial Levels
END USE
WHOLESALE
RETAIL
170
Example
ARE THESE BICYCLES IDENTICAL ?
ASSEMBLED
UNASSEMBLED
171
The answer is

• Commentary 1.1
• Example No 3.
• Yes

172
sells his product to all who buy at least 1,000
pieces at USD 6/pc and does not otherwise vary
his price.
173
Example 1

• Steel sheets of identical chemical composition,
  finish and size imported for different purposes.
• Answer
• Although the importer is to use some of the
  sheets for automobile bodies, and others for
  furnace liners, the goods are nevertheless
  identical

174
SUSPICION IS A FUNNY THING
175
THE METHODS
1. Transaction Value
2. Transaction Value of identical goods
3. Transaction Value of similar goods
Each method must be tried in
sequential order
176
(If the customs value of the imported goods
cannot be established using Method 1 - 2 )
The Transaction Value of Similar Goods (METHOD 3)
The customs value shall be the transaction
value of similar goods sold for export to the
country of importation and exported at or about
the same time as the goods being valued.
177
9. ?????? ???? ?? ????? ?? ?????
1/ ???? ?? ??? ???? ???? 5 ?? 8 ???? ???? ?????
???? ???? 92 ??????? ???? ??????? ????? ????
????? ?? ????? ??? ????? 90 ??? ??? ?????? ????
??? ?? ?????? ??? ?? ??? ???? ???? ????? ?????
???? ???? ?????? ????? ?????? ??????? ?????
??????? ??? ??? ????? ??? ??? ????????
178
Similar goods Cont
The value of similar goods must be a previously
accepted transaction value.
179
Definition of similar goods
Similar goods means goods which, although not
alike in all respects, have like characteristics
and like component materials, which enable them
to perform the same functions and be commercially
interchangeable 
180
Definition of similar goods Cont

• . When determining whether goods are similar,
  consider, among other factors
• the quality of the goods,
• their reputation and
• the existence of a trademark
•  
• In that regard, similar goods will be like the
  imported goods in the following respects

181
Definition of similar goods Cont

• (Goods which are not alike in all respects) BUT,
• Must have like characteristics
• Must have like component materials
• Must be able to perform the same functions
• Must be commercially interchangeable
• Must be produced in the same country
• Must be of similar quality and reputation
• Trademarks must be considered

182
Definition of similar goods Cont

• 4/ ??????? ????? ???? ????? ?????? ???? ?? ??????
  ???? ????? ???? ?? ????? ????? ?? ??? ?? ?????
  ?????? ???? ?? ?? ?????? ????? ??????
• 5/ ????? ?????? ?? ???? ?? ??? ???? ??? ???
  ?????? ??? ????? ?? ?????? ???? ?????? ???? ??
  ??? ?????? ?????? ??? ????? ??? ????? ????
  (Weighted Average) ???? ????? ??????

183
Common Requirements for Identical And Similar
PRODUCED IN THE SAME COUNTRY
EXPORTED AT OR ABOUT THE SAME TIME AS IMPROTED
GOODS
SAME COMMERCIAL AND QUANTITY LEVEL
WITH TWO OR MORE PRICES SELECT THE LOWEST PRICE
184
For Similar Goods

• The Quality of the goods
• Their reputation
• The existence of the trademark

185
Similar Goods
PHYSICAL CHARACTERISTICS
SAME FUNCTION
COMMERCIALLY INTERCHANGEABLE
COMPONENT MATERIALS
186
Example
100 SILK
BRAND X
DIOR
187

Example 2 Tulip bulbs of the same size but of
different varieties Answer They are not identical
goods however, because they produce flowers of
approximately the same size and shape and of the
same color, and they are commercially
interchangeable, they are therefore similar
goods.
188
Example 3

• Rubber inner tubes -same range of sizes, two
  different producers,
• the same country and different trademark, the
  same standard, are of the same quality enjoy
  equivalent reputations and are used by motor
  vehicle manufacturers in the country of
  importation.

189
Answer

• As the inner tubes
• bear different trademarks,
• they are not the same in all respects and should
  not be regarded as identical.
• Although not alike in all respects, the inner
  tubes do have like characteristics and component
  materials, which enable them to perform the same
  functions.
• As the goods are made to the same standard, are
  of the same quality, have equivalent reputations
  and carry a trademark, they should be considered
  similar, even though the trademarks are
  different.

190
EXAMPLE
X
X
191
EXAMPLE
X
Toyota
192
THE METHODS
1. Transaction Value
2. Transaction Value of identical goods
3. Transaction Value of similar goods
4. Deductive method
Each method must be considered in sequential order
193
DEDUCTIVE VALUE THE FOURTH METHOD
194
The Deductive Method(Method 4)

• The first three methods are based on the
  determination of the transaction value.
• If the customs value of goods cannot be
  determined under Article 1, 2 and 3.
• The customs value shall be determined under the
  provisions of Article 5.
• Importer may invoke Article 4 to reverse Articles
  5 and 6

195
Deductive Method Cont

• The customs value is based on the unit selling
  price in country of importation,
• Of the imported goods or identical or similar
  goods are sold,
• In the condition as imported,
• in the greatest aggregate quantity,
• At or about the time of the importation of the
  goods being valued.

196
Deductive Value

• DEDUCTED FROM THE SELLING PRICE AFTER IMPORTATION

197
Selecting The Price Cont

• Deductive method cannot be used if imported goods
  are
• used by the importer and not resold
• resold for export
• sold to far into the future
• sold to a related domestic buyer

198
Selecting The Price Cont

• If sale of imported goods cannot be used or is
  unavailable
• consider sales of identical or similar goods
• Article 5 does not provide for hierarchical order

199
10. ?? ?? ????? ?? ?????

• ???? 93 ??????? ???? ?????? ?? ?????? ?? ?????
  ????? ??? ?? ???? ????? ???? ???????? ????? ???
  ???? ??????? ?????? ??? ?????? ??? ???? ??? ???
  ??? ?? ??? ??? ??? ?? ??? ?? ??? ??? ??? 90 ???
  ?????? ??? ???? ??? ????? ?? ????? ??? ???? ???
  ?????? ??? ?? ?? ?????? ?? ???? ?????? ???? ?????
  ???? ??? ???? ??? ?? ????? ???????
• 2/ ??? ???? ????? ??? ?? ??? ??????? ????? ???
  ?? ??? ???? ???????? ????? ??? ??? ??? ????
  ?????? ???? ??? ????? ???? ??? ??????
• ?) ??? ??? ??? ???? ?? ????? ????? ??? ??????
  ??? ??? ???? ?? ????? ??? ??? ???? ??? ???? ??

200
Conditions

• Goods in condition as imported
• Removing export packing or simple repacking for
  the domestic market would not change the imported
  condition of the goods
• Natural changes such as evaporation, shrinking,
  normal weather etc. would also not change the
  condition of the goods

201
Conditions Cont

• At or about the time
• Reasonable period before importation, the day of
  importation, and a reasonable period after
  importation Article 5.1(a)

202
Conditions Cont

• Goods processed after import
• Article 5.2 provides for application of the
  deductive method after post importation further
  processing of the goods
• This is known as the superdeductive method
• Should be at the request of the importer unless a
  reservation has been entered into to allow
  Customs to waive importers right.

203
Deductive Value
EITHER COMMISSIONS OR PROFIT GENERAL EXPENSES
COST OF TRANSPORT AND INSURANCE AFTER IMPORT
COSTS INCLUDED UNDER ARTICLE 8.2
CUSTOMS DUTIES AND TAXES
204
Profit and General Expenses

• The amount of commission or profit and general
  expenses shall be determined on the basis of
  information prepared in a manner consistent with
  generally accepted accounting principles (GAAP).

205
Profit and General Expenses Cont

• Where the importers amounts for commission or
  profit and general expenses are inconsis