Directorate General of Customs Valuation Karachi has revised customs values on the import of honey from all origins for accurate assessment of duties during the current winter season.
According to a valuation ruling issued here on Wednesday, the Directorate General earlier issued reference values for imported honey vide Valuation Database letter No 68 dated 31-10-2016. It is pertinent to mention here that no valuation ruling existed at that time and the subject goods were identified as being persistently under-invoiced at import stage. The import values were examined in the light of international prices and the local market, and it was observed that import values were not corresponding to market realities. Consequent to the issuance of reference values, a number of importers of subject goods requested for determination of Customs Values of imported honey under section 25-A of the Customs Act, 1969. In order to rationalise values of subject goods, an exercise was undertaken by the Directorate General of Customs Valuation, Karachi, to determine the Customs Values of subject goods in terms of Section 2S-A of the Customs Act, 1969.
A meeting was held with stakeholders of subject goods and representatives of Clearance Collectorates also participated. All the stakeholders strongly contended that a ruling under section 25A of Customs Act, 1969 be issued and the said valuation reference value-letter may be revisited in light of prevailing international and local market prices and also raised their issues regarding clearance vis-avis packing mode. It was also highlighted that subject goods are perishable items and therefore have a limited shelf life; consequently, near the expiry dates, these perishable items are sold in sales at discounted prices.
It was further contended by the traders that since the subject goods are mainly being sold on super and general stores, therefore, a lot more expenses (including shelf-rents, marketing expenses etc, notwithstanding honey does not get de-natured or expired in optimal conditions) are contributed at retail level which cannot be managed without adding extra value to the subject goods. The importers contended that all these factors may also be considered in determining value of subject goods. Prices are also verified on the basis of location of market in the city and date of expiry of the product in question. While determining the prices the factors like mode and nature of essential packing have also been taken into account.
The valuation methods provided in Section 25 of the Customs Act, 1969 were duly followed and applied sequentially to address the valuation issue at hand. Transaction value method provided in Sub-Section (1) of Section 25 was found inapplicable being not as per law and also because as per internationally prescribed regulations, the actual supplier invoices are mostly not found inside containers carrying the imported goods. Hence, the requisite information under the law was not available to arrive at the correct transaction value. Identical/ similar goods value method provided in Sub-Sections (5) & (6) of Section 25 ibid were examined for applicability to determine Customs value of subject goods, this data provided some references, however, it was found that the same cannot be solely relied upon due to the absence of absolute demonstrable evidence of qualities, and quantities of commercial level etc, and also it was observed that same importers provide misleading description while declaring goods, as other types and varieties of similar goods to avoid the application of valuation ruling. Information available was, hence, found inappropriate.
In line with the statutory sequential order of Section 25, the directorate then conducted a market inquiry using Deductive Value Method under Sub-Section (7) of the Section 25 of the Customs Act, 1969; however, it was found that the determination of Customs value could not be based solely upon this method either. Therefore, valuation method provided vide Section 25 (8) of Customs Act 1969, could not be applied as the conversion cost from constituent materials and allied expenses, at country of export were are not available. Finally, PRAL database, market information and international prices through web were examined thoroughly. All the information so gathered was utilised and analysed for determination of Customs Value of the subject good. Consequently, the Fall Back Method as provided under section 25(9) of the Customs Act, 1969 was applied to arrive at assessable customs values of honey.
In cases where declared/ transaction values are higher than the customs values determined in this ruling, the assessing officers shall apply those values in terms of Sub-Section (1) of Section 25 of the Customs Act, 1969. The customs values determined in the Valuation Ruling are for the descriptions and specifications as mentioned herein, HS Codes are mentioned for illustrative purposes so that valuation ruling values are made accessible to the assessing officers.
The assessment shall be finalised in the correct classifications after fulfilling request formalities relating to importability or other certifications required thereon. Furthermore, if a new brand is imported which is not covered in the instant ruling, and is required to be assessed on values other then mentioned herein, the clearance Collectorates may assess the same under section 25 of Customs Act, 1969 if convinced, otherwise may be forwarded to this Directorate General under the provisional assessment regime, the ruling added.