Customs Value

The value customs uses to calculate duty. Under the WTO valuation framework the primary basis is the transaction value: the price actually paid or payable for the goods when sold for export to the importing country.

That price is then adjusted. Certain costs must be added if not already included - commissions, packing, royalties, assists, and freight and insurance depending on whether the country values on a CIF or FOB basis. India and most of the world value on CIF; the United States on FOB, which is why the same shipment can carry different customs values in different destinations.

Where transaction value cannot be used - no sale, related parties affecting the price, restrictions on use - a hierarchy of alternative methods applies in a fixed order. Valuation is enforced as strictly as classification, and understating it is treated as an evasion of duty rather than a clerical error.