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Levy of customs duty thereon GATT Code of Valuation - Inclusion in
assessable value of interest charged on deferred payment, made by Indian
importer to foreign supplier of goods
Circular No. 20 dated 17th June
1997
The issue
regarding whether interest charged to importers by foreign suppliers under
deferred payment scheme, should form part of assessable value or not, has been
considered by the Board. Board has also considered decision No. 3.1 on 26.4.84
of the Committee on Customs Valuation, of the then Customs Cooperation Council,
regarding treatment of interest in the Customs value of imported goods.
2. After
examining various related issues, it has been decided by the Board that in the
normal course, interest charged on deferred payment is not to be added in the
assessable value provided that: -
(a) In such
situations, the interest element has no clear nexus with, or bearing on, the
value of the goods;
(b) Such
interest charges are shown separately in the invoice;
(c)
There is no financing agreement/ arrangement or any special relationship,
between the importer and the exporter,influencing the pricedeclared;
and
(d) The price
declared is the price actually paid or payable in the ordinary course of trade.
3. It
is also clarified that where there is evidence to indicate a nexus between the
price of goods and the interest element, and where circumstances also indicate
that this element has also influenced this selling price, then the interest
element would become includible in the assessable value, subject to each case
being decided on its own merit.
4. These
instructions are issued in modification of Board's earlier instructions on the
subject, issued from fn. 3/12/57-Cus.VI, dated 27th July 1957. (Copy enclosed
for ready reference).
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