The 6 methods of customs valuation come from the WTO Customs Valuation Agreement and are given effect in India through the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, read with Section 14 of the Customs Act, 1962. What most guides omit is the mapping: each method corresponds to a specific rule, running from Rule 3 through Rule 9. The methods must be applied strictly in sequence, and you may only move to the next method when the preceding one cannot be applied.
There is one permitted departure from the sequence, and it is narrower than commonly stated.
Here is how the six methods map to the CVR, 2007:
Rule 6 is the linking provision that directs you onward when value cannot be determined under Rules 3, 4, and 5.
In the vast majority of imports, Rule 3 settles the matter. The transaction value is accepted provided there are no restrictions on the buyer’s use or disposition of the goods, the sale or price is not subject to a condition for which a value cannot be determined, no part of the proceeds of resale accrues to the seller, and the buyer and seller are not related, or if related, the relationship did not influence the price. Where the buyer and seller are related, this last condition is what triggers a Special Valuation Branch examination.
The 6 methods of customs valuation must be applied in strict hierarchical order. You cannot skip to a later method because it produces a more convenient figure. There is a single exception: at the request of the importer, and with the approval of the proper officer, the order of application of the Deductive Value method under Rule 7 and the Computed Value method under Rule 8 may be reversed. The reversal applies only to those two methods.
Rule 12 is a separate provision and it is frequently misunderstood. It does not create a valuation method. It empowers the proper officer, where there is reason to doubt the truth or accuracy of the declared value, to seek further information from the importer and, after giving an opportunity to be heard, to reject the declared value. Only once the transaction value has been rejected does the officer proceed sequentially through Rules 4 to 9. Rejection under Rule 12 is the gateway, not the destination. Guidance is issued by CBIC.
Related-party imports sit under Rule 3(3). Where the buyer and seller are related, the transaction value is still accepted if the circumstances of the sale show the relationship did not influence the price, or if the importer demonstrates that the declared value closely approximates the transaction value of identical or similar goods sold to unrelated buyers in India, the deductive value for identical or similar goods, or the computed value for identical or similar goods. These are called test values. If none can be demonstrated, the case is examined by the SVB.
At JPARKS INDIA, we help importers establish and defend the correct valuation method. We build arm’s length pricing evidence for related-party imports, assemble test values under Rule 3(3), contest improper rejections of declared value under Rule 12, and manage the full SVB process where a reference arises. We also handle SVB registration end to end. Having served 500+ importers and exporters since 2018, we keep valuation defensible. Book a free consultation to review your position.
They are Transaction Value (Rule 3), Transaction Value of Identical Goods (Rule 4), Transaction Value of Similar Goods (Rule 5), Deductive Value (Rule 7), Computed Value (Rule 8), and the Residual or Fallback Method (Rule 9).
Yes. The methods apply in strict hierarchical order. The only permitted departure is that, at the importer’s request and with the proper officer’s approval, the order of the Deductive Value and Computed Value methods may be reversed.
Rule 3 of the Customs Valuation Rules, 2007, the transaction value, read with Section 14 of the Customs Act, 1962. It settles the vast majority of imports, subject to the conditions in Rule 3(2).
Rule 12 allows the proper officer to reject the declared value where there is reason to doubt its truth or accuracy. It is not a valuation method. Once the declared value is rejected, valuation proceeds sequentially through Rules 4 to 9.
Under Rule 3(3), transaction value is accepted if the relationship did not influence the price, or if the importer demonstrates test values based on identical goods, similar goods, deductive value, or computed value. Otherwise the SVB examines the case.
