Implementation of WTO Agreement on Customs Valuation

The directorate of valuation1 recently conducted an international course on customs valuation spanning over a month during May 2000. The participants included senior managerial level officials from the customs administrations of 18 commonwealth countries. The course was fully funded by the commonwealth secretariat and was supported by other international organisations like the WTO and UNCTAD. The faculty for the course was drawn from India except for two experts from the UK and Cameroon who dealt with two special topics – one relating to treatment of royalties and licence fees and the other relating to related party transactions and transfer pricing. The fact that the participants were responsible for implementing the WTO Agreement on Customs Valuation (ACV) in their respective countries and that they were all eager to learn from India’s rich implementing experience contributed to the success of the course.

The second important factor that set apart this course from similar courses conducted by WTO, WCO2 and Customs Administrations of developed countries was its practical dimension. The participants could visit and see the working of three custom houses at Mumbai, Nhava Sheva and Sahar Air Cargo Complex. A number of case studies highlighting actual cases of underinvoicing and overinvoicing were also presented to the participants. These cases included cases of fraudulent re-invoicing in third countries, double invoicing with the connivance of the foreign suppliers, misdeclaration of description, quantity and quality of imported goods to suppress value, overvaluation of exempted and low-rated imports to transfer hard currency abroad and overvaluation of exports to get additional export incentives. The participants were particularly surprised to notice that valuation frauds were also committed by large multinational corporations as well as by exporters from the developed countries.