Valuation of second-hand machinery: Circular No. 07/2020

To,

All Principal Chief Commissioners/Chief Commissioners of Customs,

Principal Directors General/Directors General of Customs,

Principal Commissioners/Commissioner of Customs.

Madam/Sir,

Subject: Valuation of second-hand machinery – for Customs

Representations have been received from trade regarding Circular No. 25/2015 – Customs dated 15th October 2015 on the valuation of second-hand machinery. For this purpose, the circular requires customs to rely upon inspection report either issued at the port of loading by overseas Chartered Engineer or issued upon import by a pre-shipment inspection agency(PSIA) notified by DGFT, or by a chartered engineer empanelled by the customs house where the DGFT approves PSIAs are not available.

2. It has been represented that the PSIAs empanelled by the DGFT are insufficient in number leading to delay in clearances. It has also been informed that PSIAs empanelled by DGFT are not qualified for upraising second-hand machinery.

3. In this regard, DGFT vide O.M. No. 01/93/180/51/AM-16/PC II(B)/E-1500/176 dated 3rd September 2019, has clarified that PSIAs are meant only for certifying that consignments of metal scrap are free of radioactive agents and explosives. The PSIAs are not required to be qualified as engineers. Also, ascertaining the age of a second-hand machine is an engineering exercise and can be performed only by a qualified engineer. Thus, certifying the age of machines is beyond the jurisdiction of PSIAs.

4. After due consideration of clarification from DGFT and representations by the trade, the board has decided that henceforth for inspection/appraisement of second-hand machinery, the following procedure shall be followed:

4.1 Where used second-hand machinery is sold for export to India and sale meets all the requirements of the requirements set out in Customs Valuation (Determination of Value of Imported Goods)Rules 2007, the price paid or payable for the goods to be used as the basis for determining the assessable value.

4.2 However, it is frequently the case that as part of an arrangement, separate from the contract of sale, the second-hand machineries are reconditioned, refurbished, modernized or otherwise improved prior to their importation into India.

Download the copy: