| Date: |
19-04-1996
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| Notification No: |
Customs Circular No 23/1996
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| Issuing Authority: |
Indian Customs
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| Type: |
Circular
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| File No: |
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| Subject: |
Value Based Advance Licencing - Over valuation of import items in the application for Advance Licence
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Value Based Advance Licencing - Over valuation of import items in the
application for Advance Licence
Circular No. 23 dated 19th
April 1996
Commissioner of
Customs, Bombay has informed that in a number of cases the exporters while
applying for Value Based Licences often state inflated unit prices in the
application in order to obtain a licence for a higher CIF value so long as they
are able to meet the value addition prescribed. The licences so obtained are,
subsequently, used for importing inputs at prevailing international prices with
the result that quantities far in excess of requirements for export production,
based on which the entitlement to CIF was calculated, can be imported. Thus, in
addition to the flexibility permitted under the scheme for importing any one or
more inputs upto full CIF value of licence except for sensitive items, the
exporters through above modus operandi take unintended benefits
under the Scheme.
2. In
terms of rule 2(1) of the Foreign Trade (Regulation) Rules, 1993,
"value" has the same meaning assigned to it as under Section 2(41) of
the Customs Act, 1962. Therefore for the purpose of obtaining Value Based
Advance Licence, the exporters are required to declare prevailing international
prices, which correspond to valuation as per Customs Act. Since the Licencing
Authorities while issuing VABAL indicate quantity and value of all inputs in the
DEEC Book (though quantity restrictions apply only for sensitive items), the
unit price declared for obtaining licence can be determined from the DEEC Book.
In all such cases where the variation between the price declared at the time of
actual import is above 20%, the importer should be asked to substantiate such
valuation and justify the the CIF price declared in the application before the
Licencing authority were the then prevailing international prices. In case
importer is not able to justify the correctness of prices declared before the
Licencing authorities, the matter should be referred to the concerned Licencing
authority for corrective action being taken at their end. Director General,
Foreign Trade has also been requested to issue suitable instructions in this
regard.
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