value. If buyer has made, directly or indirectly, any payment to seller as a condition of sale, such payments should be included.

Interest, demurrage not addible Addition of value of computer software Valuation of old machinery and old cars Conditions for accepting transaction value as assessable value Interest on deferred payment, demurrage at port is not required to be added. However ship demurrage is to be added. Value of computer software loaded on machine is to be added to value of machinery. Old machinery and old cars are often valued on basis of depreciated value, though such method has no sanction of law. Transaction Value, i.e. the price at which the goods are actually sold is the primary method and is expected to be used in majority of cases. It can be rejected only for special circumstances in section 14(1) and rule 3(2). The special circumstances in section 14(1) are (a) Buyer and seller should not be relatedand (b) Price should be the sole consideration for the sale. As per rule 3(2) of Valuation Rules, conditions for accepting transaction value are (a) There should be no restriction on buyer for disposal of goods (b) sale or price should not be subject to a condition or consideration for which value cannot be determined (c) There should be no further consideration to seller of which adjustment cannot be made (d) Buyer and seller should not be related unless the transaction value is acceptable under rule 3(3). Methods of valuation in customs The methods of valuation for customs methods are as follows Transaction Value of Imported goods [Section 14(1) and Rule 3(1)], Transaction Value of Identical Goods [Rule 4], Transaction Value of Similar Goods [Rule 5], Deductive Value which is based on identical or similar imported goods sold in India [Rule 7], Computed value which is based on cost of manufacture of goods plus profits [Rule 8] and Residual method based on reasonable means and data available [Rule 9]. The methods are to be applied sequentially. The major distinction between identical goods and similar goods is that the identical goods should be same in all respects, except for minor differences in appearance, while in case of similar goods, it is enough if they have like characteristics and like components and perform same functions. In both the cases, quality and reputation (including trade mark reputation) should be same, goods should be from same country, engineering/development work should not be free.

Distinction between identical goods and similar goods

Valuation of Export goods