When damaged goods are imported their valuation depends on the time at which they were damaged. It may be the buyer’s intention to import partially or totally damaged goods, in which case the price paid or payable may be an acceptable basis of value. However, if the goods are damaged after agreement of the contract but before entry into free circulation the customs value should take suitable account of the damage (Article 145 of the CCIP refers).
Damaged goods with nil value
Provided the damaged goods have not been used (other than for initial testing) and are destroyed, re-exported or abandoned within the terms of Article 238.2 of the Code, there is no liability to duty. For such importations, a repayment claim must be made within 12 months (longer in exceptional cases). The normal evidential requirements must be met.
Partially damaged goods
Where the goods are re-exported, abandoned or destroyed, as above, there is no liability to duty. If the importer accepts the damaged goods, they must be valued under the normal rules.
Any of the methods are theoretically possible, although the price paid for undamaged goods is not an acceptable basis of value. In practice, one of two methods is likely to be the most efficient way of arriving at a suitable value.
|1.||The customs value may be based on a renegotiated price taking account of the damage. It should be borne in mind that this price may reflect either an element of compensation by the seller, or the fact that the seller wishes to avoid the expense of having the goods returned, or both.|
|2.||The full price originally paid or payable, reduced by an amount equal to any one of the following:|
- estimate of a surveyor independent of the buyer or seller
- cost of repair or refurbishment or
- insurance settlement.
|An insurance settlement may not be accurate as the goods may have been under or over insured. However, even if the price paid to the seller is unchanged and the insurance company makes good the difference, the damage must be taken into account.|
Partially damaged goods (intentionally imported)
There are occasions where partially damaged goods are intentionally imported. In some cases there will be a price paid which can be used to establish the basis of value. Sometimes the only payments made are the costs of importing the goods (that is, freight and insurance). In such cases the goods must have a value to make it viable to import them. A case study is provided in GACV43050.
It should be noted that waste is sometimes imported for disposal. Where the only payment is made by the exporter for the disposal of waste, a nominal value is acceptable (see also GACV45050).
Note: Further guidance on the subject of ‘damaged goods’ is provided in WCO EN 3.1. There are also the following legal precedents:
- ECJ Case No C-183/85 (HJ Repenning GmbH)
- ECJ Case No C-59/92 (Ebbe Sonnichsen GmbH).