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Valuation Updates
Whey Powder
US$ 0.70/Kg,US$ 0.64/Kg,US$ 0.61/Kg
Origins USA,Uruguay,Argentine,Turkey


Soap Noodles
US$ 0.825/Kg,US$ 0.600/Kg
Origins All Origins


Sauces/Salad Dressing/Mayonnaise/Mustard and Tomato Ketup
US$ 3.00/Kg,US$ 1.85/Kg
Origins All Origins


Latex Rubber Threads
US$ 2.60/Kg,US$ 2.70/Kg
Origins Malaysia/Thailand


HRC/CRC & GP (Secondary Quality)
US$ LMB Prices
Origin All Origins


Master Batches
US$ 2.97/Kg,US$ 2.29/Kg,US$ 4.36/Kg
Origin All Origins


Welding Electrode(MS,SS,Bronze)
US$ 0.70/Kg,US$ 0.78/Kg,US$ 0.82/Kg
Origins China,All Others Origins


Types Of Euro Cake
US$ 2.00/Kg,US$ 1.80/Kg,US$ 2.05/Kg
Origin All Origins


Almonds
US$ 2.90/Kg,US$ 2.75/Kg,US$ 2.90/Kg
Origins USA,Australia,Other Origins


Networking Cables
US$ 2.50/Kg,US$ 4.00/Kg
Origins China,Taiwan,Other Origins


Old & Used Auto Parts
US$ 710/Pc,US$ 524/Pc
Origin All Origins


Knob & Handle Door Lock,Door Handle Thumb Action Lock
US$ 2.60/Kg,US$ 3.00/Kg
Origins China,Other Origins


Non-Carbon Releasing Paper,Art Card/Coated Board/Paper & Light Weight Coated Papers
US$ 1.42/Kg,US$ 1.43/Kg
Origins China,Indonesia


Bopet/Holographic & Pet Sequin Film
US$ 1.80/Kg,US$ 1.85/Kg
Origins China,Other Origins


Energy Drinks
US$ 1.25/Litre,US$ 0.81/Litre,US$ 1.71/Litre
Origins Austria,Thailand,Uk


Medical Items/Equipments
US$ 3.50/Kg,US$ 2.50/Kg,US$ 0.18/Pc
Origin China


Aluminium Utensils
US$ 5.00/Kg,US$ 3.50/Kg
Origin China


Hand Tools (Low End Brands) Made Of Iron & Steel
US$ 1.70/Kg,US$ 2.13/Kg
Origins China,Other Origins(excluding Europe & USA)


Glass Tubing of a Kind for the Manufacture of Ampoules
US$ 1.00/Kg,US$ 1.75/Kg
Origins China,Europe


Glass Lid for Cookware
US$ 1.20/Kg
Origin China


Ginger & Garlic
US$ 0.825/Kg,US$ 0.61/Kg,US$ 1.00/Kg
Origins China,Indonesia,India


Ladies Hand Bags,Shoulder Bags,Purses & Clutches
US$ 14.00/Doz,US$ 10.00/Doz
Origin China


PE Tarpaulin(Finished & Un-Finished)
US$ 2.80/Kg,US$ 2.55/Kg,US$ 2.68/Kg
Origins Korea,China,Vietnam


Stainless Steel Sheets/Coils/Circles(Secondary Quality)
US$ 1.30/Kg,US$ 1.10/Kg,US$ 1.01/Kg
Origins Japan/Europe,India,China


Replacement Auto Parts
US$ 8.53/Pc,US$ 10.22/Pc,US$ 5.07/Pc
Origins China,Malaysia,Indonesia


Led Bulb & Led Tube Light
US$ 0.41/Pc,US$ 0.52/Pc,US$ 0.68/Pc
Origin China


One Side Coated Duplex Board
US$ 0.59/Kg,US$ 0.60/Kg,US$ 0.63/Kg
Origins China,Hongkong,Korea,USA


Uncoated Offset Paper for Writing,Printing & Photocopying
US$ 0.85/Kg,US$ 0.78/Kg,US$ 0.77/Kg
Origins Australia,Brazil,China


Dry Battery Cell
US$ 0.050/Pc,US$ 0.045/Pc,US$ 0.013/Pc
Origins China,Other Origins


Ball Bearings & Taper Bearings
US$ 3.40/Kg,US$ 2.90/Kg
Origin China


Plain Particle Board & Primed,Melamined & Veneered Moulded Fiber Door Skin
US$ 0.26/Kg,US$ 0.55/Kg
Origins Far East,China,Malaysia,Turkey


Sorbitol Solution 70%
US$ 0.570/Kg,US$ 0.615/Kg
Origins India,Indonesia/China






Notice Board

17-10-2017 Tuesday 11:30 A.m Importer/ FPCC&I KCC&I/ Manufacturer - Honey

18-10-2017 Wednesday 11:00 A.m Importer/ FPCC&I KCC&I/ Manufacturer - Cameras

19-10-2017 Thursday 11:00 A.m Importer/ FPCC&I KCC&I/ Manufacturer - Liquid Milk,UHT Milk,Flavoured Milk,Lacnor Milk

20-10-2017 Friday 11:00 A.m Importer/ FPCC&I KCC&I/ Manufacturer - Soft/Hard Wood Teek/Swan Timber

23-10-2017 Monday 11:30 A.m Importer/ FPCC&I KCC&I/ Manufacturer - Toffee/Candy/Compound Chocolate/Sugar Confectionery

26-10-2017 Thursday 11:00 A.m Importer/ FPCC&I KCC&I/ Manufacturer - ISO Propyl Alcohol,N-Paropanol

26-10-2017 Thursday 11:30 A.m Importer/ FPCC&I KCC&I/ Manufacturer - Safety/Paper & Scarf Pin

26-10-2017 Thursday 11:30 A.m Importer/ FPCC&I KCC&I/ Manufacturer - Methylene Chloride,Propylene Glycol
 
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PcVAG User Manual
 

 

FREQUENTLY ASKED QUESTIONS
( Method Wise)

FAQs Method wise

Method 1

 (1) What is Method 1?

a) It is the first Method you must try. It is called the “transaction value”.

b) It is the normal Method of valuation which applies to over 90% of importations liable to ad valorem customs duty.

 (2) What is meant by “transaction value”?

This is the price paid or payable by the buyer to the seller for the goods when sold for export to Pakistan .

 (3) What if there is no sale?

This rules out Method 1. You must try Method 2.

 (4) How do I arrive at the customs value?

 a) You base it on the price actually paid or payable by the buyer to the seller for the goods. This means the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods. It includes all payments made or to be made as a condition of sale of the imported goods by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller. Thus periodic payments (such as monthly, quarterly, annually) or “one off” payments by the buyer to the seller for the imported goods must be taken into account (for example tooling charges, engineering fees, development costs).

 b) The buyer of the imported goods need not necessarily be established in the country of importation.

 (5) What evidence of the price paid or payable must I produce?

 A copy of the seller’s invoice or other document against which payment will be made. This will include telex or similar messages used instead of invoices.

 (6) What if Customs has doubts about the transaction value?

 Where we have doubts that the declared transaction value represents the total amount paid or payable, we will ask you for more information. If those doubts continue we shall notify you (in writing if you request) of the grounds for those doubts before making a final decision about the acceptability of the declared value. You will be given a reasonable opportunity to respond. Then we will make a final decision and notify you of it in writing.

 (7) What if the sale is subject to any restrictions?

If the sale is subject to conditions which restrict your freedom to dispose of or sell the goods as you wish you may not be able to use Method 1

 (8) What if I am related to the seller of the goods?

The fact that you are related to the seller of the goods does not mean that Method 1 cannot be used. The price paid or payable is still acceptable unless as a result of the relationship you get a reduced price .

 (9)What does “related” to the seller mean?

Persons (natural or legal) are related if:

  • they are officers or directors of one another’s businesses
  • they are legally recognised partners in business
  • they are employer and employee
  • any person directly or indirectly owns, controls or holds 5% or more of the outstanding voting stock or shares of both of them
  • one of them directly or indirectly controls the other
  • both of them are directly or indirectly controlled by a third person
  • together they directly or indirectly control a third person, or
  • they are members of the same family

 (10) If I’m an intermediary (such as a selling agent) or branch office can I use Method 1?

You may be able to use Method 1.

 (11) Does it matter whether I pay the seller direct?

No. You can pay a third party if the seller says so.

 (12) Does it matter whether I pay in cash?

No. You can also pay by letters of credit or negotiable instrument.

 (13) What items must I add to the price paid or payable?

You must add the following to the price you pay (unless they are already included):

(a) Delivery costs. The costs of transport, insurance, loading or handling connected with delivering the goods to the Pakistan border must be included.

(b) Commissions. Certain payments of commission and brokerage, including selling commission, must be included.

But you can exclude buying commission if it is shown separately from the price paid or payable for the goods

(c) Royalties and licence fees. You must include these payments when they relate to the imported goods and are paid by you as a condition of the sale to you of those goods.

(d) Goods and services provided free of charge or at reduced cost by the buyer. If you provide, directly or indirectly, any of the following, you must include in the customs value any part of the cost or value not included in the price charged to you by the seller:

(i) materials, components, parts and similar items incorporated in the imported goods including price tags, tags, labels

(ii) tools, dies, moulds and similar items used in producing the imported goods, for example, tooling charges. There are various ways of apportioning these charges

(iii) materials consumed in producing the imported goods, for example, abrasives, lubricants, catalysts, reagents etc which are used up in the manufacture of the goods but are not incorporated in them, or

(iv) Engineering, development, artwork, design work and plans and sketches carried out outside the Pakistan and necessary for producing the imported goods. The cost of research and preliminary design sketches is not to be included.

 (e) Containers and packing. Include:

  • the cost of containers which are treated for customs purposes as being one with the goods being valued (that is not freight containers the hire-cost of which forms part of the transport costs), and
  • the cost of packing whether for labour or materials.

Where containers are for repeated use, for example, reusable bottles, you can spread their cost over the expected number of imports. If a number of the containers may not be re-exported, this must be allowed for.

(f) Proceeds of resale. If you are to share with the seller (whether directly or indirectly) the profit on resale, use or disposal of the imported goods you must add the seller’s share to the price paid For example, if the seller is to have 30% of the profit which you receive, this is to be added to the price paid or payable. If at the time of importation the amount of profit is not known, you must request release of the goods against a deposit or guarantee.

(g) Export duty & taxes paid in the country of origin or export. When these taxes are incurred by the buyer they are dutiable. However, if you benefit from tax relief or repayment of these taxes they may be left out of the customs value.

 (h) Discounts. These can only be left out where they relate to the imported goods being valued and there is a valid contractual entitlement to the discount at the material time for valuation. Discounts (such as contingency or retroactive discounts) related to previous importations cannot be claimed in full on the current importation.

(i) Quantity or trade discounts. You can leave out these discounts where earned. In other words the price paid or payable net of these discounts is acceptable. If you are related to the seller the discounts will also be allowed if that relationship has not affected the price of the goods .

(ii) Cash and early settlement discounts. You can also leave out these discounts on the following basis:

  • when the payment reflecting the discount has been made at the time of entry to free circulation
  • if the payment has not been made at the time of entry to free circulation, it will be allowed at the level declared provided it is a discount generally accepted within the trade sector concerned
  • if the discount is higher than is generally accepted within the trade sector concerned it will only be accepted if you can demonstrate, where required, that the goods are actually sold at the price declared as the price actually paid or payable and the discount is still available at the time of entry to free circulation.

NOTE. If you never take advantage of a cash discount and always pay the gross contract price for the goods, the discount may become liable for inclusion in the customs value at the time of entry to free circulation.

(i) Dividends. You can leave out dividend payments you make to the seller.

(j) Marketing activities related to the imported goods. You are not required to include in the customs value the cost of the following activities which you carry out at your own expense:

  • advertising
  • promotion, or
  • guarantee or warranty services.

In addition any payments that you make towards general marketing support which are not related to imported goods, should not be included.

NOTE. The cost of marketing activities borne by the seller are to be included in the customs value even if they are charged separately from the invoice price for the goods.

(i) Buying commission. You may leave out fees or brokerage paid to your agent for representing you outside the Pakistan   in buying imported goods, providing the commission is shown separately from the price paid or payable for the goods.

NOTE. Buying commission is to be included in the value for VAT.

(j) Export quota and licence payments. You may leave out payments for buying export quotas and licences.

 (k) Interest charges. These may be left out if they are payable under a financing arrangement for buying the imported goods, providing the charges are shown separately from the price paid or payable for the goods.

(l) Rights of reproduction. Payments for these rights may be left out if they are shown separately from the price paid or payable for the goods.

(m) Post-importation work. You may leave out charges for:

  • construction work
  • erecting
  • assembling
  • maintaining, or
  • giving technical help

for goods such as industrial plant, machinery or heavy equipment. The work may be carried out before or after importation so long as it is carried out as part of the installation of the imported goods and the charge must be shown separately from the price paid or payable for the goods.

(n) Management fees. You can leave out management fees that you pay to the seller. This would include general service fees for administration, marketing, accounting, etc., that are not related to the imported goods.

 

(14) What can I do if, at the time of entry, I cannot arrive at a value for an item that:

 I must add to the price paid or payable, or

 I may leave out of the customs value?

You can ask us to agree to a Method for arriving at an appropriate amount to add or exclude at the time of entry. This could involve the use of average values or a percentage addition or deduction and be subject to periodic reviews.

Method 2

 (15) What is Method 2?

It is the second Method you must try. It is based on the customs value of identical goods exported to the Pakistan   at or about the same time as the goods to be valued.

 (16) What is meant by “identical goods”?

These are goods produced in the same country as those being valued.

They must also be the same in all respects, such as physical characteristics, quality and reputation. Minor differences in appearance do not matter. If the producer of the Method 2 goods does not produce Method 1 goods, another producer’s goods may be used for comparison.

(17) What if there are no identical goods?

This rules out Method 2. You must try Method 3.

(18) How do I arrive at the customs value?

You base it on a customs value of identical goods already accepted by Pakistan   Customs under Method 1. Where there is a sale at the same commercial level and in the same quantity this must be used.

If more than one value is available use the lowest.

(19) What if there are no sales at the same level or in the same quantity?

You may use sales at a different commercial level or in different quantities. But when arriving at the customs value you must take into account any effect these differences have on the price.

(20) Are there any other differences I must take into account?

Yes. You must take account of differences between the costs of delivering the identical goods and delivering the goods to be valued.

 (21) What evidence must I produce?

A copy of, or the necessary data to enable us to trace, an import entry (with supporting documents) for identical goods where Method 1 has been accepted by us or another Pakistan Customs administration. This entry must relate to identical goods exported at or about the same time as the goods to be valued. This is to ensure that the goods to be valued and the identical imported goods will have been exported within a timescale in which the price of the goods would not have changed.

(22) What if identical goods are to be valued under both Method 1 and Method 2?

If some of the goods are sent free of charge, and they are entered on the same import entry, the evidence provided with that entry can be used to establish both the customs values.

We may need a copy of the producer’s price list where differences for level or quantity have to be taken into account.

Method 3

 (23) What is Method 3?

It is the third Method you must try. It is based on the customs value of similar goods exported to the Pakistan at or about the same time as the goods to be valued.

(24) What is meant by “similar goods”?

These are goods which differ in some respects from the goods being valued but they:

  • are produced in the same country
  • can carry out the same tasks, and
  • are commercially interchangeable.

Where similar goods are not made by the producer of the goods to be valued, you can use similar goods produced by a different person.

 (25) What if there are no similar goods?

This rules out Method 3. You now have a choice to either try Method 4 or Method 5

 (26) What are the conditions for using Method 3?

The conditions are the same as for Method 2.

 Method 4

 (27) What is Method 4?

It is the fourth Method you can try. It is based on the selling price of the goods in the Pakistan .

Remember that Method 5 can be tried before Method 4 if you wish.

 (28) How do I arrive at the customs value?

The customs value is based on the price of each item (unit price) at which:

  • the imported goods
  • identical imported goods, or
  • similar imported goods,

are sold in the Pakistan   in the condition as imported to customers unrelated to the seller. The unit price must relate to sales in the greatest aggregate quantity at or about the time of the importation of the goods to be valued.

You must be able to produce details of the sales in the greatest aggregate quantity at the time of entry into free circulation.

In the Pakistan Customs this is known as “Method 4(a)”.

 (29) What if there is no sale at or about the time of importation?

a) You can base the customs value on the unit price of the actual sales of the imported goods that take place up to 90 days after importation.

b) As you cannot establish the customs value until the goods have been sold you must request release against a deposit.

In the Pakistan Customs this is known as “Method 4(b)”.

 (30) What if the goods are not sold in the Pakistan in the condition as imported?

If you want to, you can base the customs value on the price at which the goods are sold after processing.

But you cannot do this if the goods:

  • lose their identity (unless you can accurately and easily establish the value added by the processing), or
  • keep their identity but form a minor part of the goods sold.

 (31) What if there are no sales to unrelated persons in the Pakistan ?

This rules out Method 4. You must try Method 5 if you have not already considered it.

 (32) How do I arrive at the “sale in the greatest aggregate quantity”?

You add together the number of items sold at each price. The largest number of items sold at one price is the greatest aggregate quantity.

 (33) What deductions must I make from the unit price?

You must deduct the following:

  • either the commissions usually paid or agreed to be paid or the addition usually made for profit and general expenses in connection with sales in the Pakistan   of imported goods of the same class or kind
  • the usual costs of transport, insurance and associated costs incurred within the Pakistan , and
  •  Pakistan customs duties and internal taxes payable in the country of importation.

Also if the goods are sold after processing deduct the value added by the processing carried out in the Pakistan .

 (34) Can I deduct my actual profit and general expenses?

Yes unless your figures are out of line with those usual for sales in the Pakistan of imported goods of the same class or kind.

 (35) What if Customs challenge the deduction I have made?

We will produce other relevant information relating to additions for profit and general expenses made by importers of goods identical or similar to those to be valued. Therefore you should have available information to show that the deduction you have made is “usual” by comparison with importers within your trade sector.

 (36) What is meant by “goods of the same class or kind”?

This term means goods which fall within a group or range of goods produced by a particular industry or sector of industry. It includes identical and similar goods. The goods need not have been imported from the same country as the goods being valued.

 (37) What evidence must I produce?

  •  (a). You must produce with the import entry one of the following showing the unit price in the greatest aggregate quantity:
    – a sales invoice
    – a price list current at the time of importation, or
    – other evidence as agreed with us.

Unless an overall percentage deduction has been agreed with us, we also need details of the actual deductions claimed.

  •  (b).– At the time of importation. You must give a reasonable estimate of the final sales value for deposit purposes. This estimate must be supported by a pro-forma invoice, statement of value or other evidence.
    – Adjusting the deposit. You do not have to wait until all the goods are sold to establish the customs value. Once you have sold enough to arrive at the unit price you must send copies of the sales invoices and a copy of your calculations to NIDAC. Unless an overall percentage deduction has been agreed with us, we will also need details of the actual deductions claimed. Duty will either be taken to account, refunded or called for.

In the fresh fruit and vegetable and cut flowers trade the account sales procedure may be used as a basis for arriving at the duty payable.

Method 5

 (38) What is Method 5?

It is the fifth Method you can try. It is based on the costs of production of the goods. Usually it can only be used where the importer and supplier are related.

 (39) How do I arrive at the customs value?

The customs value is a built-up value. It is based on the sum of the following:

  • the cost or value of materials and fabrication or other processing used in producing the imported goods including:
    – the items detailed in paragraph 3.15(d) if supplied by the buyer, directly or indirectly. Even if the work listed in paragraph 3.15(d)(iv) is carried out in the Pakistan  you must include the value of the work in the customs value if you charge the producer of the goods to be valued for that work; and
    – containers and packing 
  • an amount for the producer’s profit and general expense, plus
  • the cost of transport, insurance and loading or handling connected with delivering the goods to the  Pakistan border.

 (40) What evidence must I produce?

You must be able to get information about the cost or value of the items. This information must be based on the producer’s commercial accounts. These accounts must follow the general principles of accounting, which apply in the country where the goods are produced.

 (41) What other evidence is required?

You must also be able to get information about the producer’s profit and general expenses. The amount to be added must be in line with the usual figures for profit and general expenses for producers in the country of exportation of the goods:

  • of the same class or kind, and
  • for export to the Pakistan .

(42) What if Customs challenge the producer’s figures for profit and general expenses?

We will produce other relevant information relating to figures for profit and general expenses reflected in sales by other producers who export to the Pakistan . Such figures will relate to producers of identical or similar goods in the same country of export as the goods to be valued.

Method 6

 (43) What is Method 6?

It is the final Method and is called the “fall-back” Method.

(44) How do I arrive at the customs value?

You must arrive at the customs value by using reasonable means consistent with the WTO Valuation principles.

You do this where possible by adapting Methods 1 – 5 flexibly to fit unusual circumstances:

Examples

  • Methods 2 or 3. The customs value could be based on the transaction value of identical or similar imported goods produced in a country other than the country of exportation of the goods being valued.
  • Method 4(b). The 90 days limit for sales could be extended.
  • The customs value could be based on the price that would have been paid for the goods if they had been purchased (perhaps by reference to the export price list for sales to the Pakistan issued by the supplier). This approach would be consistent with WTO valuation principles.

(45) If I cannot use Method 1, how else can I arrive at the customs value?

You can try:

  • Methods 2 or 3 if you import or have knowledge of imports of identical or similar goods under Method 1
  • Method 4  if you sell the goods or identical or similar goods to unrelated customers in the Pakistan , or
  • Method 5  if you can get the detailed costings.

 (46) What if I cannot use any of these Methods?

The customs value can be based, for example, on the price you would have paid the supplier if you had bought the goods.

(47) What evidence must I produce under Method 6?

  • A copy of the supplier’s current export price list for goods sold to the Pakistan
  • a statement from the supplier of the value of the goods, or
  • other evidence as agreed with us.

(48) How do I arrive at the Customs value?

When you import goods that you have rented or leased, there will be no sale between the supplier and yourself. However, prior to being rented or leased, the goods may have been subject to a sale. Thus it may be possible to use Method 1. Otherwise Methods 2 to 5 should be tried. Nevertheless, in most cases, Method 6 will be appropriate.

(49) Can I use a cash price?

Sometimes a cash price is quoted in the rental or leasing agreement in case you wish to purchase the goods at a later date. However, this cash price may be artificially high to encourage the renting or leasing of the goods. Alternatively it may be an option to buy when the goods are effectively second hand. Thus such a cash price does not constitute a sale and cannot be used under Method 1.

(50) How do I arrive at a value using Method 6?

You multiply the annual rental or leasing cost by the expected economic life of the imported goods.

Where the rental or leasing cost includes interest it is necessary to calculate the “cash” price of the goods. This is done by using a formula. There are two formulae which can be used, depending on whether payment is made in advance or arrears.

Delivery costs

(51) What are “delivery costs”?

These are:

  • the cost of transport
  • the cost of insurance (including global or blanket policies)
  • loading and handling charges
  • container charges (for example when hired for transportation of the imported goods)
  • terminal charges (charges for a variety of services in connection with the handling/storage of freight containers at container depots), and
  • any other charges involved in carrying the goods from one place to another.

(52) Are all of the costs to be included in the customs value?

No. Only costs up to the place of introduction of the imported goods into the customs territory of the Pakistan are to be included.

Remember you must include in the customs value all inland transport and associated costs in the country of export.

(53) Is the cost of insuring the goods against loss or damage in transit to be included in the customs value?

Yes. You must include the cost of insurance for the goods up to the place of introduction into the Customs Territory of the Pakistan .  However, if you pay a premium which covers the whole journey, the cost of insurance after the  Pakistan border does not have to be included in the customs value provided you separately distinguish this element. Also, where there is separate cover for the journey after the Pakistan border, the cost of this separate insurance cover does not have to be included in the customs value.

Remember if your insurance covers more than one importation, or relates to other items as well as the imported goods, the cost of that insurance must be apportioned and the appropriate amount included in the customs value.

(54) Can I leave out container terminal costs?

Yes, if they are separately charged and are for a container terminal in the  Pakistan

(55) Can I leave out a currency adjustment factor?

Where an additional charge is billed by an agent, rather than the shipping line/carrier of the goods, it may be left out of the customs value, subject to evidence being produced to substantiate the actual total cost of transporting the goods. In all other situations the charge is dutiable.

(56) Which rate of exchange must I use?

The Pakistan Goods declaration program automatically calculate the exchange rate at the time of filing of GD.

(57) How do I arrive at the customs value of goods reimported after process outside the Pakistan ?

(a) The processor charges you for the cost of the process.

The customs value will be based on the cost of the process.

All of the following items must be included in the customs value if not already in the processor’s charge:

  • the value of the exported goods (where the goods are purchased from an unrelated person, the cost of acquisition is to be used. Where the goods are produced by yourself or a related person, the cost of production is to be used)
  • the value of any material rejected, lost or wasted before, during or after the process, and
  • any third country customs duty or similar levy.

Outward freight and insurance are not to be included in the built-up value. The exception to this is when the temporarily exported goods are invoiced “CIF” and the outward freight and insurance is not separately distinguishable. Then the outward freight and insurance is includible in the built-up value.

(b) The processor does not charge you for the cost of the process.

As no payment is made Method 1 cannot be used. You must try either:

  • Methods 2 or 3 if you import identical or similar processed goods under Method 1
  • Method 4 if you sell the processed goods or identical or similar processed goods to unrelated customers in the Pakistan  
  • Method 5 if you can get the detailed costings of the processed goods, or
  • Method 6 if you cannot use any of these Methods. The customs value can be based on the charge that would have been made for the process.

(58) How do I arrive at the customs value of the imported replacement products?

  • Charge made for the replacement products. You must try Method 1 . The customs value will be based on the charge made for the replacement products. If this charge has been reduced to take account of the value of the exported goods, you must add back the amount of the reduction to arrive at the customs value. If you do not know the amount of the reduction you must include in the customs value the FOB export value of the exported goods.
  • No charge made for the replacement products. No duty is due on goods which have been repaired or replaced free of charge under warranty or similar arrangement. Relief is allowed on all costs involved including outward and return freight and insurance.

(59) Must I include royalty or licence fees?

No. These are regarded as charges for services received from outside the Pakistan . VAT is due on such payments at a later stage. Place of supply of services, gives you information on how to account for such supplies.

The price paid or payable for the goods. You may need to add or deduct certain costs.

(60) What items must I add to the price paid or payable?

You must add all of the following to the price you pay unless they are already included:

  • freight
  • insurance
  • all other costs, charges and expenses connected with the sale and delivery of the goods to the port or place of importation in the Pakistan , and
  • selling commission.

 (61) Must I leave out any items from the value for trade statistics?

Yes. The all of the following must be left out:

  • buying commission
  • selling commission incurred within the Pakistan
  • cost of transport within the , Pakistan and
  • duty or tax chargeable in the Pakistan .

 

 (62) What if there is no price paid or payable?

You have to arrive at a value using the rules set out in Pakistan Customs Rules. You must add the items listed if they are not already included.

(63) What if the goods have been processed or repaired outside the Pakistan ?

You need to include the cost of the process or repair and the value of the goods when exported.

(64) What must I do if the price or value of the goods is in foreign currency?

No need .

 Conditions for using Method 1

Before you can use Method 1 you must be able to satisfy all of the following conditions:

(a) There must be no restrictions as to the disposal or use of the goods by you except those which:

  • are imposed or required by law or by the public authorities in the Pakistan
  • limit the geographical area in which the goods may be resold, or
  • do not substantially affect the value of the goods.

Examples of restrictions which can be ignored:

  • an official licence is needed to trade in the imported goods
  • the goods can be sold only in the Pakistan , or
  • the goods cannot be sold before a certain date, for example cars which cannot be sold before the start of a model year.

(b) The sale or price must not be subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued.

Examples of conditions or considerations for which a value cannot be arrived at:

  • the seller fixes the price of the imported goods on condition that you buy other goods in specified quantities
  • the price you pay for the imported goods depends upon the price you charge the seller for other goods, or
  • the price you pay for the imported goods depends upon an agreement you make with the seller for example you import semi-finished goods on the understanding that you will send a specified quantity of the finished goods to the seller.

But you can ignore conditions or considerations relating to the production or marketing of the imported goods. For example, the fact that you provide the seller with engineering and plans undertaken in the Pakistan   does not prevent you using Method 1.

 Method 1 - Buyer and seller related

This Section assumes you are the buyer of the goods.

General information if you are related to the seller

If you are related to the seller, the price paid or payable can be accepted under Method 1 as long as you can show that the relationship has not affected the price.

One way you can do this is by applying the following “tests” for comparison purposes.

(a) You need to show that the price you paid to the seller is close to one of the following:

  • the transaction value of identical or similar  goods exported to the Pakistan , in sales between buyers and sellers who are unrelated
  • the customs value of identical or similar goods arrived at under Method 2 , or
  • the customs value of identical or similar goods arrived at under Method 3 .

Note. the “test” values must have been accepted by us at or about the same time as the importation of the goods to be valued.

(b) Alternatively you could provide information which demonstrates that either:

  • you and the seller trade with each other as though you are unrelated
  • you pay the same price as unrelated buyers in the Pakistan operating at the same commercial level and purchasing similar quantities of the goods, or
  • the price you pay is fully costed (arm’s length).

We may also decide to examine the circumstances surrounding the sale to determine whether the transaction value is acceptable.

In practice we are seeking assurance that you do not receive preferential treatment under the inter-company pricing arrangements because of your relationship with the seller. If, following enquiries, we have grounds to consider that the price is affected by the relationship, we will tell you what these grounds are. If you request, this will be in writing.

You will have a reasonable opportunity to respond. If it is finally concluded that the relationship has influenced the price, Method 1 cannot be used. Then you must try Method 2 .

(i) Transfer pricing

Transfer prices are the prices at which a multi-national enterprise (MNE) transfers physical goods and intangible property or provides services to related (associated or connected) enterprises.

The Pakistan Customs law require prices within a MNE to be set, for corporation tax and customs valuation purposes respectively, as if group members are not related. A transfer price may be used as the basis of a Method 1 value only and all relevant cost  are included in the dutiable value if paid separately from the transfer price of the imported goods.

(ii) Retrospective price adjustments (related or unrelated buyer & seller)

Situations may arise, whereby, for a variety of reasons, the price that you pay to the seller for the imported goods is revised or re-negotiated after the entry of the goods to free circulation. When this happens you must consider the customs valuation and customs duty implications.

Where, at the time of entry, there are contractual arrangements in place between you and the seller indicating the possibility of retrospective price adjustments, the invoice price for the goods concerned would, in effect, be provisional.

This means that you cannot arrive at a final value for customs duty at the time of entry. Therefore you should make security arrangements. Alternatively you can ask us to agree to an arrangement whereby you can pay customs duty outright at the time of entry. Such an arrangement would involve you giving an undertaking to notify us of any price adjustments. Then we would both adjust the customs duty payable upwards or downwards as appropriate, according to any agreed price adjustments subsequently notified.

Where there has been a retrospective price increase, we will treat this as part of the total payment made by you to the seller for the imported goods. The fact that you agree to pay such a price increase is regarded as confirmation that the contractual arrangements implied or there was an implicit understanding between you and the seller that such an adjustment may occur, when the goods were ordered or purchased. Thus we will issue a demand to you for the arrears of customs duty.

Where there has been a retrospective price decrease you may submit a claim for a refund of duty. Your claim must be accompanied by appropriate evidence including full details of the contractual arrangements as well as rebates received from and credits notes issued by the seller.

The key item of evidence is the contract between you and the seller. We accept that contracts may be verbal as well as written. However, in the case of a verbal contract we would seek alternative evidence, for example, reports of meetings, correspondence, etc between you and the seller. In cases of doubt we may request an affidavit from the parties to the verbal contract.

Where we are satisfied that the price decrease stemmed from contractual arrangements in force at the time of entry of the goods concerned to free circulation, an appropriate refund of duty will be made (subject to the normal rules). In particular the refund claim must be lodged with us within three years from the date of each relevant entry.

(iii) Goods imported to prior order

If a selling agent takes orders from customers in the Pakistan   on behalf of a third country seller and then imports to fulfill those orders, Method 1 can usually be used. The customs value will be based on the selling price (inclusive of that selling agent’s commission) to the Pakistani  customer.

This also applies where:

  • the contract provides for a supply of pre-ordered goods to be delivered to the customer at certain intervals to meet production requirements, and
  • the selling agent holds the customer’s pre-ordered stock for delivery on demand.

Note. Where you can use Method 1 in these circumstances it must be used.

(iv) Goods imported for sale from stock

Where a selling agent imports goods to sell later from stock held in the Pakistan   on behalf of the third country seller, Method 1 cannot usually be used and Methods 2 to 6 must be tried.

(v) If Method 1 is used

(a) “Sales” to branches – Where goods are imported either:

  • through a branch office which does not have a separate legal status of its own
  • directly by the supplier’s own employees, or
  • by a person or firm acting in the supplier’s name (for example, under Power of Attorney),

the transaction cannot be regarded as a sale.

The parties are regarded as being part of the same legal entity. A company cannot sell to itself and therefore the prices shown on inter-company transfer or accounting documents cannot be used to establish the customs value under Method 1. It may be possible to use an earlier sale, for example, if the supplier has purchased rather than manufactured the goods to be valued.

(b) Sales to prior order – Where the goods are imported to the prior order of Pakistan customers, the value can be established under Method 1 on the basis of the price actually paid or payable by the buyer (the customer in the Pakistan ) to the seller.

 (vi) Where Method 1 cannot be used

Where Method 1 cannot be used you must try Methods 2 to 6.

Where you can show that the intra-company invoice value between the head office and its branch or vice-versa represents a fully costed (arm’s length) price , this would be acceptable under Method 6. It is consistent with the principles and general provisions of the WTO Valuation Agreement.

 (vii) Buying commission and customs value

Buying commission is the term used for the fees paid by an importer to his agent for the services in representing him in the purchase of the imported goods.

Among the tasks undertaken by a buying agent are the following:

  • to find suppliers
  • tell the seller what you want
  • collect samples
  • inspect the goods
  • buy the goods on your behalf, or
  • arrange insurance, transport, storage and delivery of the goods.

The payment (commission) made to a buying agent can be left out of the customs value so long as the payment is shown separately from the price actually paid or payable for the goods.

Remember you must always include buying commission in the value for import VAT .

(65) Do I need evidence of buying commission?

Yes. In order to exclude the payment for buying commission from the customs value, the payment must be shown separately from the price for the goods on the documentation (for example invoice, valuation declaration) accompanying the entry to free circulation.

We may ask for further evidence of the contractual and trading arrangements between you and the other parties involved in support of any claim to leave out the amount for buying commission from the customs value. This may include the following:

  • a copy of the contract between you and your buying agent
  • a copy of the original seller’s invoice showing the price of the goods or, alternatively if this cannot be produced
  • a copy of the original seller’s contract of sale showing the price of the goods, or
  • copies of purchase orders, correspondence or other documentation which clearly evidence a bona fide buying agency arrangement.

If no evidence is available or the evidence produced is considered unsatisfactory, Customs may decide that no buying agency arrangement exists and the payments you make to the agent should be included in the customs value.

 Royalties and licence fees

This Section assumes you are the buyer of the goods.

 (66) What is a royalty or licence fee?

These terms describe payments to a person for use of that person’s patent or design rights, processes, trade marks, copyrights or for “know how”. Traders often have to pay for the right to manufacture, use or sell the licensor’s goods or for technical knowledge and assistance.

(67) When do I have to include such payments in the customs value?

Royalty or licence fees payable to the seller are to be included in the customs value as long as they both:

(a) relate to the imported goods, and

(b) are paid as a condition of the sale.

This rule does not apply where such payments are made for the right to reproduce the imported goods .

In addition a royalty or licence fee for the right to use a trade mark is only to be included in the customs value where:

  • the royalty or licence fee relates to goods which are resold in the same state or which are subject to only minor processing (such as diluting or packing) after importation
  • the goods are marketed under the trade mark, affixed before or after importation, for which the royalty or licence fee is paid, and
  • you are not free to obtain such goods from other suppliers unrelated to the seller.

(68) What if they relate partly to the imported goods and partly to other ingredients or component parts added, or services related to the goods after their importation?

You can apportion the royalty payment between dutiable and non-dutiable elements. The basis for the apportionment of the total payment can sometimes be found in the licence agreement or be obtainable from the licensor. Where this is not the case we recommend that you contact Customs.

Where apportionment is not possible because of a lack of relevant information, you cannot use Method 1. You must try Method 2 .

 (69) What if I pay a third party?

The conditions in are paid as a condition of the sale  equally apply. Except that payments made to a person who is not related  to the seller are only to be included in the customs value when the seller requires those payments to be made.

 (70) Can we help you?

We know from experience that trading arrangements involving payment of royalty or licence fees are complex and vary with each royalty or licence agreement. Therefore it is not possible to cover every situation in this Section.

 (71) How interest charges affect the customs value

Charges for interest under a financing arrangement entered into by you for the purchase of imported goods can be left out of the customs value as long as:

  • the charges are shown separately from the price actually paid or payable for the goods
  • the financing arrangement has been made in writing, and
  • where required by us, you can demonstrate that:
    – such goods are actually sold at the price declared as the price actually paid or payable (net of the interest charge), and
    – the claimed rate of interest does not exceed the level for such transactions prevailing in the country where, and at the time when, the finance was provided.

These provisions apply to Methods 1 – 6 .