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HMRC internal manual

Guidance on the Audit of Customs Values

Method 1 (transaction value): meaning of the term restricted

It is usually quite clear what constitutes restrictions of a legal or geographical nature. Restrictions which do not substantially affect the value of the goods can be harder to define. WCO Comm 12.1 gives three examples.

Two cases in which the value is not substantially affected are an embargo on displaying motor cars before a specified date or a cosmetics manufacturer stipulating that a particular distribution chain of house to house sellers is used.

A restriction that would substantially affect the value of the goods is one not usual in the trade. For example, where a machine is sold at a nominal price on the condition that it is only used for charitable purposes.