1. 1 Presentation on UR Decision on Cases where Customs Administrations Have Reasons to Doubt the Truth or Accuracy of the Declared Value Shashank Priya Director, Trade Policy Division

2. 2 Cases where Customs Have Reasons to Doubt the Truth or Accuracy of the Declared Value 1994 UR Ministerial Decision Where Customs Administration has reason to doubt the truth or accuracy of the particulars or of documents produced in support of declaration, Customs Administration may ask importer for further explanation If reasonable doubt still persists, it can be deemed that value cannot be determined under Article 1 (transaction value)

3. 3 Background Customs code of Tokyo Round came into force on 1 January 1981 Accepted by all Developed countries Among Developing countries only accepted by Argentina, Brazil and India after invoking delayed period of 5 years Most other Developing countries showed reluctance to accede to it during 1980s

4. 4 Difficulties Raised CCC Technical Committee discussed problems Whether it was possible for Customs administrators to reject a declared value on the grounds that it was lower than the prevailing market price for identical goods (Pakistan, 1981) Developed countries took a stand that Article 17 of ACV read with paragraph 7 of the protocol should be adequate to deal with problem of under valuation

5. 5 Article 17 of ACV Nothing in this Agreement shall be construed as restricting or calling into question the rights of Customs administration of the country of importation as to how the Customs value of the importers goods was determined Paragraph 7 of Protocol acknowledged that it may be necessary for Customs to make additional enquiries, for example aimed at verifying that the elements of value declared or presented to Customs … are complete and correct. It further stated that in such enquiries Customs have the right to expect the full cooperation of importers in these enquiries.

6. 6 UR proposal by India Article 1 read with Article 17 of ACV put the burden of proof of establishing the inaccuracy of the declared price on Customs administration. This posed following difficulties: - When the declared price is less than that noticed in a series of transactions immediately preceding the relevant one; - When the declared price is less than that noticed for transactions involving identical goods imported directly from the country of manufacture

7. 7 UR proposal by India (contd.) Therefore, adequate flexibility needs to be provided to enable the Customs administration to shift the burden of proof to the importer at least in the cases of the type described above. India particularly referred to rampant collusion between unrelated parties for under invoicing which led to considerable revenue loss (8-10% for India) The existing Article 1 of ACV encouraged such collusive behavior as importers were certain that Customs would not be able to reject the declared collusive prices Hence in cases of reasonable grounds to believe that importer has misrepresented the transaction value, it should be open to Customs to require the importer to produce evidence to establish the correctness of the declared value

8. 8 Negotiating Process Indian proposal supported by Brazil Developed countries showed indifference as they were unwilling to alter the main discipline of the ACV India clarified that they did not press for the amendment of ACV- would be satisfied with a Decision or Understanding that clarified the provisions On this basis the UR Decision came about- also called Decision on Shifting the Burden of Proof (SBP)

9. 9 Text of Decision on SBP When a declaration has been presented and where the Customs administration has reason to doubt the truth or accuracy of the particulars or of documents produced in support of this declaration, the Customs administration may ask the importer to provide further explanation, including documents or other evidence, that the declared value represents the total amount actually paid or payable for the imported goods, adjusted in accordance with the provisions of Article 8. If, after receiving further information, or in the absence of a response, the Customs administration still has reasonable doubts about the truth or accuracy of the declared value, it may, bearing in mind the provisions of Article 11, be deemed that the Customs value of the imported goods cannot be determined under the provisions of Article 1.

10. 10 Text of Decision on SBP (contd.) Before taking a final decision, the Customs administration shall communicate to the importer, in writing if requested, its grounds for doubting the truth or accuracy of particulars or documents produced and the importer shall be given a reasonable opportunity to respond. When a final decision is made, the customs administration shall communicate to the importer in writing its decision and the grounds therefore

11. 11 Implementation of Decision on SBP India- Rule 10 A of Customs Valuation Rules,1988 incorporated on 19-2-1998: (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the value of such imported goods can not be determined under the provisions of sub- rule(1) of rule 4. (2) At the request of an importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub –rule (1)

12. 12 Implementation of Decision on SBP (contd.) Korea Article 30 (4): …where it is difficult to accept it (declared value) as Customs value for reasons, such as its significant difference with the transaction values of identical or similar goods as prescribed by the Presidential Decree, the Customs collector may ask the liable duty payer to provide data providing the truthfulness of the declared value in accordance with the Presidential Decree. Where the liable duty payer does not provide the data required under Paragraph 4, or where it is difficult to accept the declared value as Customs value just on the basis of data provided by the liable duty payer, the Customs collector shall determine the Customs value not by the methods under Paragraphs 1 and 2, but by those prescribed in the provisions of Articles 31 to 35.

13. 13 Implementation of Decision on SBP (contd.) Oman: Section 30:The Customs authorities need not determine the customs valuation of imported goods on the basis of the transaction value method if, in accordance with the procedure set out in paragraph 2, they are not satisfied, on the basis of reasonable doubts, that the declared value represents the total amount paid or payable as referred to in Article 3 of the Customs Management Decree Annex….. Where the Customs authorities have doubts described in paragraph 1 they may ask for additional information in accordance with Section 29 (4). If those doubts continue, the Customs authority must, before reaching a final decision, notify the person concerned, in writing if requested, of the grounds for those doubts and provide him a reasonable opportunity to respond

14. 14 Thank You