The Federal Board of Revenue (FBR) has recently issued updates to the Customs Act, 1969, incorporating changes introduced through the Finance Act, 2019. The amendments primarily focus on the determination of customs values for the collection of duties and taxes on imports or exports of goods under Section 25 of the Customs Act.
Section 25: Value of Imported and Exported Goods
1. Transaction Value
The customs value of imported goods, subject to the provided provisions, is determined as the transaction value – the actual price paid or payable for the goods when sold for export to Pakistan. Certain conditions must be met for this, including no restrictions on the use of goods by the buyer, no conditions affecting the value, and no direct or indirect accrual of proceeds to the seller from any subsequent resale, disposal, or use.
2. Determining Customs Value
To determine the customs value, certain elements may be added to the actual price paid for imported goods. These include the cost of transport, loading and unloading charges, insurance costs, commissions, cost of containers, packing costs, and the value of goods and services supplied by the importer for use in connection with the production and sale of the imported goods.
3. Adjustments for Related Parties
If the buyer and seller are related, adjustments may be necessary to ensure the transaction value aligns with market conditions. The examination of circumstances surrounding the sale is crucial, and adjustments may be made based on test values such as sales to unrelated buyers, customs value of identical or similar goods, and computed value.
4. Fall-Back Method
If the customs value cannot be determined through the mentioned methods, a fall-back method, based on a flexible application of the valuation methods, is employed. This is used when there is insufficient information available for adjustments.
5. Power to Determine Customs Value
The Director of Customs Valuation has the authority, on his own motion or upon reference, to determine the customs value of any goods. The customs value determined is applicable until revised or rescinded by the competent authority.
6. Utilizing Data Exchange Information
Information or data available through data exchange mechanisms can be utilized for the purpose of assessment, including valuation, enhancing the efficiency of the customs valuation process.
7. Power to Take Over Imported Goods
The Customs authorities have been granted the power to take over imported goods if there are suspicions that the declared value is not the actual transactional value. This involves entertaining offers from other parties to purchase the goods at a substantially higher value than the declared customs value.
8. Revision of Determined Value
In case the customs value has been determined by the Director of Valuation, a revision petition may be filed before the Director-General of Valuation within thirty days. Any ongoing proceedings before courts or other authorities will be referred to the Director-General for a decision.
Conclusion
The recent updates to the Customs Act aim to streamline the process of determining customs values, ensuring accuracy, fairness, and transparency in the assessment of duties and taxes on imported and exported goods. These changes provide a comprehensive framework for customs valuation, taking into account various factors and scenarios to arrive at a reasonable and accurate customs value. Importers, exporters, and relevant authorities are advised to familiarize themselves with these amendments to ensure compliance and smooth transactions.
