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Circular No. 20/ 97- Cus.
dated 17/6/97
 
fn.. 467/ 5/ 96 - Cus. V
 
Government of India
Ministry of Finance
Department or Revenue, New Delhi
 

Subject :    GATT Code of Valuation - Inclusion in assessable value of interest charged on deferred payment, made by Indian importer to foreign supplier of goods - Levy of customs duty thereon.

        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 price declared; 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).

                                                                                                                                      Sd /-
(A.S. Bedi)
Under Secretary to the Govt. of India