 
  WORLD TRADE  
ORGANIZATION  G/VAL/W/139 
14 October 2004 
 
 (04-4325) 
Committee on Customs Valuation Original:   English 
  
 
NOTIFICATION UNDER ARTICLE 22 OF THE CUSTOMS  
VALUATION AGREEMENT 
 
US questions regarding India's legisl ation related to customs valuation
 
 
 
 The following communication, dated 8 October 2004, is being circulated at the request of the Delegation of the United States.  
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Follow-up to India's response in G/VAL/W/133
 
 1. India's response to Question 2 states that the amendment in Rule 4(2) of the Indian Customs 
Valuation Rules "seeks to specify in clearer terms th e situations in which a customs officer may reject 
the declared value".  Please confirm whether this  means that the amendment makes clear that a 
customs officer must automatically reject the decl ared value for transactions between related parties 
because related party transactions, by their very nature, do not involve a generally understood 
definition of "fully competitive conditions".  If such rejection is not mandatory, please clarify how 
discretion is exercised under the amendment to Ru le 4(2), and indicate the criteria utilized by a 
customs officer to make the determination as to whether the transaction was conducted under "fully 
competitive conditions".  2. Regarding related party transactions, US e xporters have reported recent experiences with 
regard to a valuation practice on imports into Indi a that involves a certain ad valorem tariff add-on 
(e.g., one percent) that is automatically applied to related party transacti ons.  Could India please 
confirm this practice regarding the transaction value involving related party transactions, and 
elaborate on its domestic legal basis as well as its  consistency with the WTO Agreement on Customs 
Valuation.  3. In Question 9, the United States asked, with regard to India's amendment in Rule 4(2), who 
determines "abnormal discount or reduction" from th e ordinary competitive price?  What are the 
criteria?  What types of prices ar e used for comparison as an "ordinar y competitive price"? Is there a 
difference from "normal discount or reduction"?  In the context of their applicability to the operation 
of the amendment in question, the United States again asks India to provide specific elaboration of (a) 
the criteria for determining "abnormal discount or redu ction" from ordinary price;  (b) the difference 
between "ordinary competitive price" and "normal discount or reduction". 
 
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