How to Fill the Declaration Form under Customs Valuation Rules, 1988

The Customs Valuation Rules of 1988 mandate that importers provide the correct valuation of their imported product to enable accurate assessments of possible taxes and levies, including all customs duty and IGST. Among the key requirements in complying with this assessment is the necessity of filing the declaration form, this form serves as proof of valuing the imported products to maintain transparency, to avoid undervaluation, and to comply with the international valuation principles.

Overview of Customs Valuation Rules, 1988

The Customs Valuation Rules of 1988 are aligned with the WTO Agreement on Customs Valuation and aimed to provide Indian customs valuation systems with a method of valuing imported goods that would support the collection of customs duties based on transaction value with the addition of specific adjustments.

The customs valuation system used in India utilises a hierarchical approach through the following steps:

1. Transaction Value
2. Transaction Values of Identical Goods
3. Transaction Values of Similar Goods
4. Deductive Value
5. Computed Value
6. Residual Method

The declaration form provides a basis to confirm and support the declared transaction value of the imported goods by providing necessary information needed to confirm the accuracy of the completed transaction form.

Why Is the Declaration Form Important?

An importer is required to submit a completed and accurate declaration form. The customs will use this information for:

• Determining whether the declared value is based on an arm’s-length basis.
• Confirming related party transactions.
• Determining whether the value includes any enhancement such as royalties, commissions, freight, insurance and assists.
• Detecting under valuation or misrepresentation.

Customs valuation has become significantly more stringent, especially in the electronics, machinery, chemical, and consumer goods sectors.

Structure of the Declaration Form

The Declaration Form under the Customs Valuation Regulations has sections for:

1. Importers and Consignees
2. Information related to invoices and contracts
3. Goods Descriptions and Values
4. Buyer and Seller Relationships
5. Transaction Value Adjustments
6. Any additional declarations or undertakings

Each of these sections is important in determining whether a particular value is accurate when establishing a value for import.

Guide to Filling the Declaration Form

Step 1: Importer and Consignee Details

List details as listed below:

• Importer’s exporter code
• Importer’s and Consignee’s Name and Address
• GSTIN Number if applicable

Consistency with the bill of entry and shipping documentation.

Step 2: Invoice and Contract Particulars

List:

• Commercial Invoice Number and Date
• Reference number on Purchase Order or Contract
• Country of Export and Origin

Attaching supporting documents such as invoices, packing lists, and contracts will help strengthen customs valuation documentation.

Step 3: Description and Declared Value of Goods

Clearly describe:

• Nature, Quantity and  Specifications of Goods
• Invoice Value in foreign currency
• Applicable Exchange Rate.

Vague descriptions lead to customs queries or valuation reassessment.

Step 4: Buyer and Seller Relationship Declaration

One of the important sections in respect of Customs Valuation India. Declaring:

• Are the buyer and Seller Related, as per Rule 2(2)
• Was the Relationship Influencing Price

If related, additional documentation may be needed, such as transfer pricing policies or comparable pricing data.

Step 5: Additions to Transaction Value

Declare if the invoice value includes or excludes:

• Freight and Insurance
• Royalty and Licence Fees
• Commissions and Brokerage
• Value of assets such as tools, dies, moulds, and designs supplied free or at reduced costs.

Failing to declare these is a common reason for disputes under the Customs Valuation Rules, 1988.

Step 6: Discounts and Post Import Adjustments

Specify the following:

• Any Trade Discount or Rebate
• Conditions Attached to Discounts
• Post Import Price Adjustments.

All the trade discounts or rebates must be agreed upon in advance.

Step 7: Declaration and Undertaking

The importer or the person legally representing the importer must sign and declare that:

• Information provided by the Importer is complete and accurate
• There is no other payment or consideration paid or to be paid other than what is disclosed

A false declaration can result in penalties, interest or prosecution under the Customs Act, 1962.