OFFICE OF THE COMMISSIONER
OF CUSTOMS (IMPORT)
JAWAHAR CUSTOM
HOUSE, NHAVA SHEVA
DIST. RAIGAD,
F.
No. S/26-Misc-83/04 VI
Date: 13.08.08
STANDING ORDER NO. 36 / 2008
Sub: Valuation Guideline -
valuation of imported
Unbranded Furniture – reg.
Background
In
the Tariff Conference of Chief Commissioners held on 16.06.06 it was decided
that the standing orders issued by various Custom Houses need to be renewed by
the DG/Valuation based on information and data received from the respective
Chief Commissioners for issued of suitable valuation guidelines for all India
application by all Custom Houses uniformly. Accordingly, the Directorate
General of Valuation (DGOV) has studied valuation practices of imported
furniture (CTH 9403) for review.
Present Practice
2. The Commissioner of Customs (Import),
JNCH, Nhava Sheva, had
mentioned about cut off prices for various types of furniture. From the letter
it is understood that benchmark prices of Rs.35 per kg. are
being applied for the valuation of unbranded furniture from
Findings of DGOV Study
3. The
DGOV has analyzed the valuation trend of imported furniture on the basis of
NIDB data and carried out the data analysis . The DGOV,
Mumbai along with JNCH Officers and DGOV Zonal offices have conducted market
survey and the findings are as below :-
i) The declared value of
imports from China and South East Asia are significantly lower than the
declared values of imports from European countries (Italy, France etc.),
ii) The
declared values of unbranded furniture are found to be significantly lower than the declared values of branded
furniture; the prices of established brands are higher than the lesser known
ones.
iii) It is
difficult to make comparison of prices as the furniture imported are mostly of
wide varieties and varied specifications.
iv) Furniture prices have a broad
relation to the material from which they are made of and within the same
material (e.g. wooden furniture of solid wood and MDF), the quality and design
affect the price substantially
v) The
prices also depend on the purpose for which the furniture is intended.
Rev val guideline
180608final.doc - 5 -Attention: ( e.g. office, Household , Assembly hall etc.,)
vi) There
are also furniture of composite materials and made to
order furniture for which the design and craftsmanship command a high premium.
4. On the basis of the
study, DGOV has tried to identify some of the broad
categories of imported furniture and the
details are set out below –
i) Office Furniture
like Seating, Desking, OPOS (Open Plan Office System)
& Storage.
ii) Home
Furniture like Bed Room, Living Room, Dining Room, Kitchen, Study Room &
Kids Room.
iii) Furniture
of Special Solutions like Marine Solutions.
iv) Laboratory Furniture.
5. The
major anomaly in the present Valuation practices is that irrespective of
the design, quality, brand, finish,
ornamentation, specification or usage or material composition of the furniture,
the valuation is mainly on weight basis.
This leads to a situation where high end products made of solid wood or
other expensive materials and those exquisitely or ergonomically designed are
being valued and are placed on the same footing with coarse and ordinary
fragile furniture made of pressed wood or MDF. The trade also appears to have
accepted this system as reflected in the manner of invoicing.
6. Material composition: The
value of furniture changes based on the material used in it. The furniture may
be of wood, metal, plastic, glass, leather etc. It could be a combination of
one or more of these materials also.
Apart from the core material used stated above, it could also have add
on covering material such as glass (e.g. on dining table), leather (e.g.
leather sofa set), textile material (e.g. sofa upholstery) etc. In fact the
furniture in CTH 9403 is divided on the material composition as follows:
a. 9403 10
to 9403 20 – Metal furniture
b. 9403 30 to 9403 60-Wooden
furniture
c. 9403 70- Furniture of
Plastics
d. 9403 81 – Furniture of Bamboo
or Rattan
e. 9403 89 – Furniture of other
materials including cane, osier or similar materials.
Hence the material used makes
a heavy impact on the value of imported furniture. It is well known fact that the weight of
metal furniture is more than the weight of plastic furniture. However some of
the furniture articles made of plastic may have higher retail price than the price
of comparable article made from iron or steel. Even teak wood furniture will be
costlier than metallic furniture of comparable weight. Similarly furniture made
of teak from
7. Usage of Furniture: The
value of imported furniture also very much depends on the usage of furniture.
The types of furniture identified on the basis of usage are (i) Office Furniture (ii) Home Furniture and (iii) Special
Solutions. In each category, there are wide variations such as in bedroom set,
living room set etc. in respect of home furniture. In office furniture there
will be multiple designs of chairs, seats and lounge furniture depending where
it is to be used viz. public place, training room or multipurpose office space.
Again in desking, the desks may be for conference,
office canteen or classroom etc. Open Plan Office System (OPOS) can be
differentiated as desk, tile or panel based. Similarly, a range of storage
furniture is available. There are special category furnitures
also meant for marine solution or laboratories.
8. Comparative Weight-Value
Study: The DGOV has also compared the market survey
result with the valuation practice of imported furniture. In most cases the
market prices had no relation to the assessed values. For example, unbranded
dining tables imported from
Suggested Valuation Approach
9. It is clear that the price of furniture
depends on various factors such as material composition, design, usage, etc., It is therefore important to gather information concerning
full details of the type of furniture by carefully scrutinizing the documents.
In many cases there are different varieties and models in the same consignment
which require detailed declarations of each category.
Therefore identifying the type of furniture through documents, declaration and
examination are prerequisites to check the declared value. It may be ensured
that the importer declares these specific details. It is also suggested that the examination staff may
be instructed to verify these details.
10. Another important aspect is the
identification of branded furniture and designer furniture which are of high
value. In these cases careful scrutiny of contracts/ purchase orders and market
verification would be desirable. While valuing
each furniture items, care should be taken to capture
the full details in the EDI System so that the basis of such valuation will be
available in the NIDB for guidance to other Custom Stations.
11. Scrutiny
of price declaration: The declared value of branded furniture may be compared
with the price mentioned in the price lists of reputed manufacturer’s of
branded furniture. Manufacturer’s
invoice may be called for checked for imports from other sources. In case of
unbranded furniture, market survey may be conducted to ascertain the local
selling price. It is advised that such
market surveys may be conducted at least once in three months. In the absence
of reliable prices of contemporaneous imports, the declared value may be
compared with values arrived at from local market price by working backwards as
per the deductive Value Method of Rule 7 of CVR’07.
12. Based
on the market survey the price range and, minimum cut off price of certain
commonly imported items was worked out by the DGOV to the extent of 50% of the
market price. The detailed Calculation for allowing the various deductions of
cost was also indicated in the DGOV Guidelines ( Para
11 of DGOV Guidelines).
13. The
various cost elements for arriving at the Minimum Assessable Value for
furniture items imported for Mumbai market, were considered in consultation with DGOV
and representatives of major importers at JNCH. It was concluded after analysis
of relevant data that the following details and cost elements need to be taken
in account for the local conditions :
Selling
price : Rs. 100/-
Sales tax
12.5% selling price : Rs.
11.11
Inclusive in Selling Price 88.89……………(a)
Octroi 7% on Selling price : Rs. 6.54
Inclusive in Selling Price 82.35……….…..(b)
Retailer’s
MOP 15% : Rs
12.35
69.99……….…...(c)
10%
wholesaler’s MOP : Rs.
6.99
63.00…………..(d)
15% misc expenses : Rs.
9.45
53.55……….….(e)
Duty
31.70% : Rs.
12.68
40.66 (rounded off to
40 )
The major difference in cost elements compared to DGOV
Guidelines is addition of 12 % towards Miscellaneous
expenses which represent
transportation, storage and other
services. The retailer’s margin was also enhanced from 10% to 15%.Accordingly, the
Minimum assessable value has been arrived at 40% of the retail sale price. It is again emphasized that it is the minimum assessable
value for cases when the declared value is not found
acceptable and no other valuation method is applicable.
15. Accordingly, the
minimum cut off, prices of certain commonly imported items
based on the DGOV
Guidelines is as under. These prices are
for the bare minimum furniture without embellishments.
|
SR.NO. |
Description |
Material |
Weight (kgs) |
Retail Price(RSP)(Rs) |
RSP/Kg(Rs) |
Assessable Value/Kg(Rs) |
|
1. |
Shoe
Rack |
MDF |
25-35 |
2500-4500 |
100-120 |
40-48 |
|
2. |
Computer
Table |
MDF/PB |
25-50 |
2500-6000 |
100-120 |
40-48 |
|
3. |
Bed |
MDF |
80-150 |
8000-15000 |
100 |
40 |
|
4. |
Show Case with /- light fitting and glass |
MDF |
100-150 |
20500-35000 |
205-234 |
82-94 |
|
5. |
Bed set
,Double bed,wardro-be 2/3 door,side
table and dressing table |
MDF |
200-300 |
35000-55000 |
175-183 |
70-73 |
|
6. |
Bed set
,Double bed wardrobe 2/3 door, side table and dressing table |
MDF/PU lamination/ veneer lamination / Deco paint |
200-300 |
40000-80000 |
200-266 |
80-106 |
|
7. |
Dinning
Table glass top with six chairs |
Glass
top(12.15mm) Rubber wood/MS chrome plated |
50-100 |
6500-25000 |
130-250 |
52-100 |
|
8. |
Dinning
Table marble top with six chairs |
Marble
top |
100-150 |
14500-40000 |
145-266 |
58-106 |
|
9. |
Centre
Table |
Glass
and MS(chrome) |
15-30 |
2000-3000 |
100-133 |
40-53 |
|
10. |
Sofa
set |
Composite
leather (Metal or wood) |
100-200 |
20000-48000 |
200-240 |
80-96 |
|
11. |
Leather
Sofa hot (3+1+1) |
Finished
natural Leather |
75-150 |
60000=100000 |
666-800 |
266-320 |
|
12. |
Sofa L-
shaped |
PU
Fabric |
100-150 |
10000-16000 |
175-200 |
70-80 |
|
13. |
Kids
Furniture (Bunk Bed Study table ,chairs and wardrobe) |
MDF |
100-200 |
30000-50000 |
250-300 |
100-120 |
|
14 |
Executive
high back chair |
MS +
rubber |
15-25 |
3000-6000 |
200-240 |
80-96 |
|
15 |
Office
Table |
MDF/ PB |
10-1250 |
1500-25000 |
150-166 |
60-66 |
16. Where the reference table does not have reference of the type of goods imported along with
corresponding Retail sale price, then the assessment of Minimum Assessable
Value will be done on the basis of the
retail sale price, wherever made available by the importer, duly backed by the
documentation, on 40 % of the Retail sale price. These calculations will be
reviewed from time to time taking into account the local market conditions.
17. If importer
fails to give the retail sale price,
duly backed by the documentation, then assessment will be made on the basis of
the reference table covering the items in nearest resemblence
of description/category.
18.For Customs to reach a fair valuation, importer/CHA shall
provide :
a)
Detailed
description of goods in Bill of Entry along with material of manufacture.
b)
Approximate
weight per piece/set.
c)
Retail
d)
Any
other documentation to support his claim.
19. For uniform
application of these instructions to ensure similar practices to be followed in
all formations for assessment, it shall be necessary to have-
-
Weighment of all containers of imported furniture of importers not
having
organized retail
chain shall be done &
-
Random
weighment of containers of imported furniture of
importers having organized retail chain ,
To avoid misdeclaration of weight, as assessment on the basis of
these instructions, is based on weight and Market Retail Price of the imported
furniture.
20. These guidelines may be followed with
immediate effect.
Sd/-
(SANJEEV BEHARI)
Commissioner of Customs
JNCH, Sheva.
Copy to:
- A.D.G. , Directorate General of Valuation, Mumbai
-
Commissioner of Customs ( Import) NCH, Mumbai.
-
Commissioner of Customs (EP) NCH, Mumbai.
-
Commissioner of Customs ( Import) ACC, Mumbai.
- Commissioner of Customs (EP) ACC,
Mumbai.