Export value declared more than the books value

[THYAGARAJAN KALYANASUNDARAM]

Dear experts,

One of my clients who exported the capital goods after usage of 10 years in their factory, exported the same to other country and value quoted 100 times morethan the book value(wdv). What is the pros and cons. Now he got the notice from the customs department for the reasons for the value quoted higher than the book value.

Can anyone suggest me on this.

Thanks in advance.

[KASTURI SETHI]

Dear Sir,

1. Over-valuation will earn more foreign exchange for our country. Hence Govt. is liberal in exports.

2.The exporter will avail more export benefits.

3. Over-valuation may result in obtaining inadmissible duty drawback.

4.Over-valuation of export goods are liable to confiscation but here the goods have been exported and hence cannot be confiscated.

5. Transaction value under Section 15 of CGST Act has to be accepted.

6. Burden of proof of valuation is cast upon the department----CESTAT in the case of Advance Exports reported as 2007 (8) TMI 64 - CESTAT, AHMEDABAD.

7. As per Rule 3 (2) of Customs Value (Determination Value of Export of Goods) Rules, 2007, transaction value will be accepted even if the buyer and seller are 'related persons', if the relationship has not influenced the price.

8. Pl. also go through Para No.3(b) and 7 of Customs Circular appended below:

DEPB scheme - Revised Guidelines for determination/Verification of present market value (PMV)

<$FFor subsequent modification/development see, Circular Nos. 79/98-Cus., dated 22-10-199823/99-Cus., dated 11-5-1999, 37/99-Cus., dated 24-6-1999 and 27/2000-Cus., dated 22-3-2000. >Circular No. 69/97-Cus., dated 8-12-1997

[KASTURI SETHI]

In continuation of my reply above, it is further suggested that over-valuation must be avoided. Such intentional step can land the exporter in trouble. You are well aware of FEMA.

Although export documents have been signed by GST Officers and Customs Officer, yet the exporter would not be safe from all angles.

Such step can open Pandora's box for the exporter.

AI Summary

Over-valuation of exports can trigger customs scrutiny and denial of incentives despite a declared transaction value.
Declared transaction value above book value may still be accepted under transaction value principles and Rule 3(2) if relationship did not influence price, with the departmental burden of proof to displace declared value; nevertheless, over-valuation risks denial of export incentives or duty drawback, potential confiscation consequences (limited if goods already exported), and FEMA scrutiny, so deliberate over-valuation should be avoided.