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HMRC internal manual

Guidance on the Audit of Customs Values

From
HM Revenue & Customs
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Assists: equipment supplied by or on behalf of the buyer

These items are provided by or on behalf of the buyer in order to facilitate the manufacture of the imported goods (for example tools, moulds, dies or processing machinery). The cost of the equipment (exclusive of the freight and insurance costs to the manufacturer’s premises if separately distinguished) is to be included in the customs value of the imported goods.

Apportionment

The cost may be apportioned over the total volume of goods produced (or to be produced) by the equipment. An allowance should be made for any items produced but not imported into the EC. Importers may experience difficulties in such an apportionment. The importer or declarant may opt to declare the full cost of the equipment on the first entry on which ad valorem customs duty is paid (see also CVS Conclusion 13).

Source of the equipment

If the buyer acquires the equipment from a seller not related to him at a given cost, the value of the equipment is that cost. If the equipment was produced by the buyer or by a person related to him, its value would be the cost of producing it. If the equipment had been previously used by the buyer, regardless of whether it had been acquired or produced by him, the original cost of acquisition or production would have to be adjusted downwards to reflect its use in order to arrive at the value of the equipment (Interpretative Note 2 to Article 32.1(b)(ii) of the Code in Annex 23 to the CCIP refers).

Note: The CVS in Comm 1, paragraph 3 has expressed the opinion that this provision should apply by analogy to the other provisions of Article 32.1(b).

Article 32.1(b)(iv) of the Code indicates that the value of engineering, development, artwork, design work etc in the EC is not to be included in the customs value.

Note: WTO Decision 2.1 states that ‘undertaken’ is to be understood as meaning ‘carried out’. Often, however, the value of such cost elements is included in the value of the equipment. The question which then arises is whether, when such cost elements are undertaken in the EC, their value should be excluded from the value of the equipment.

The WCO Technical Committee on Customs Valuation considered this question. The Committee noted that the value of the equipment is to be either the total cost of acquisition or the cost of producing it. Thus the Committee concluded that the value of engineering, development, artwork, design work etc included in the value of the equipment is part of the cost of acquisition or of production. Thus there are no grounds for excluding it. The WCO also indicated that this applies whether or not the activities are undertaken in the EC (WCO Comm 18.1 refers).