Simpler rule on landing charges
such transaction value shall include "in addition... any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf”. Accordingly, the CVR has been notified.
Rule 3(1) of the CVR says “subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10”. Rule 10(2) of CVR mandates addition of the cost of transport of the imported goods to the place of importation; loading, unloading and handling charges associated with the delivery of the imported goods at the place of importation (known as landing charges) and the cost of insurance. The landing charges are fixed at one per cent of the CIF vale of the goods. The proposed amendment omits this stipulation.
The proposed amendment, however, retains landing charges at Rule 10(2)(a) that reads, “the cost of transport, loading, unloading and handling charges associated with the delivery of the imported goods to the place of importation”. The critical and subtle change here is substitution of the word at with to, which means landing charges at ports, airports, inland container depots (ICD), etc, will not form a part of the assessable value.
The other changes proposed include limiting cost of insurance till the place of importation; rewording the provisions where the free on board (FOB) value is not ascertainable but the sum of FOB value of the goods and the cost of insurance or the sum of FOB value of goods and the cost of transport and landing charges are ascertainable; extending the exclusion of cost of insurance, transport and landing charges associated with transhipment to another customs station for all sea/air consignments and defining place of importation as the customs station where the goods have been brought for being cleared for home consumption or in the case of goods to be removed to a bonded warehouse, the customs station from where goods are to be removed for the purpose of deposit in a warehouse.
These welcome changes will bring in the concept of charging duty on all costs till the place of importation but excluding the delivery costs at the port/airport/ICD and, thus, align CVR with article 8.2 of the World Trade Organization’s Agreement on Customs Valuation.