Calculations of Royalties and deduction of buying commission, in the Valuation of goods under the Customs Valuation Rules, 1988

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....ify as under :- 2. Under the GATT Valuation Agreement and the Valuation rules (Rules 9(1)(c)) royalties and licence fee are to be added to the invoice value only if they relate to the imported goods and are paid as a condition of sale of the goods. It is possible to identify such royalties on verification of the contracts. In majority of the cases it could be quantified and allocated to individual consignments or per unit of the imported goods for addition to invoice value. If it is not quantifiable, then the provisions of Rule 9(3) will operate, which says that addition to the price of imported goods under this rule, which is part of Rule 4, shall be made on the basis of objective and quantifiable data. When the royalty or licence fee m....

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.... from the invoice value. Moreover, if the invoice is raised by the agent then the agent becomes the seller of the goods and the agent's invoice value should be regarded as the transaction value. Buying commissions are usually billed separately by the agents independent of the invoice and the same is not to be added for valuation. 5. The Board desires that the above clarification may be brought to the notice of all officers for guidance. OFFICE OF THE COLLECTOR OF CUSTOMS : CUSTOMS HOUSE : MADRAS-600001. S.MISC. 54/88-SVB From The Addl. Collector of Customs, Custom House, Madras-1. To, Shri N. Sasidharan, Deputy Secretary, Central Board of Excise & Customs, New Delhi. Sir, Subject : Difficulties in t....

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....nvolving financial participation it is felt that sometimes invoice value is less than what it should have been and that compensatory payments are made by way of royalty payments. In all such cases because of the exclusiveness of the agreement it is difficult to obtain "test values" for establishing transacion value under Rule 4 and make suitable additions under Rule 8 read with Rule 9 of the new Valuation Rules, 1988. The position is made more complex in view of the interpretative note to Rule 9(1)(c). As per the said interpretative note, payment made towards the right to reproduce the imported goods should not be added to the price actually paid. It is difficult to pinpoint whether the royalty payment is made towards the right to reprod....