To curb undervaluation of imported items, the Central Board of Indirect Taxes and Customs (CBIC) has proposed an additional liability along with specifying brands declaring lower value. There have been rising instances of undervaluation, especially for electronic goods and others imported from South East Asia and China.

The proposed norms are in response to an amendment made through Finance Act 2022. Section 14 was said to be amended to provide for rules enabling the board to specify the additional obligations of the importer for goods with incorrectly declared value, the criteria for selection of such goods, and the related checks. “This amendment is a measure to address the issue of undervaluation in imports,” an explanation to the amendment said.

The board has invited comments on the proposed norms on or before October 14, after which it will notify the final rules.

There will be a two-layer structure to examine the reference for undervalued goods and to make recommendations. One layer will be the screening committee comprising Director General (Valuation), Director General (Revenue Intelligence) and convenors of National Assessment Centre, while the second layer will be the evaluation committee with officers in the rank of Additional Director Generals from Revenue Intelligence, National Customs Targeting Centre and members of National Assessment Centre.

Once the board gets a reference from a government official about goods believed to be imported at lower value, it will be forwarded to the screening committee. If it merits detailed investigation, the evaluation committee will assess whether the “relevant class of goods or subset thereof may not be declared truthfully or accurately”, the draft says. This examination will rely on data analysis, trend in international prices, information received through stakeholder consultation or disclosures, and reports or certificates of experts, among others.

Based on the reports, the board may notify such goods as identified goods and the importer will be required to declare the value of goods using the Unique Quantity Code. He will also fulfil additional obligations. “Assessment of goods or the goods themselves shall be subjected to specified checks so as to enable and assist the importer to demonstrate the truthfulness and accuracy of the declared value,” the draft says. The importer may also be asked to furnish more information and documents to examine the truthfulness and accuracy of the declared value.

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