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Customs Act 1967

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Customs (Rules Of Valuation) Regulations 1999

In exercise of the powers conferred by subsection 142(35B) of the Customs Act 1967 [Act 235], the Minister makes the following regulations:

Citation And Commencement

1. (1) These regulations may be cited as the Customs (Rules of Valuation) Regulations 1999.

   (2) These Regulations come into operation on 1st January 2000.


Interpretation

2. In these Regulations, unless the context otherwise requires -

"computed value" means the value determined under regulation 9;

"country of export" means the country from which the goods are transported directly to Malaysia or, as the case may be, the country from which the goods are deemed to be transported;

"deductive value" means the value determined under regulation 8;

"goods of the same class or kind" means imported goods that

(a) are within a group or range of imported goods produced by a particular industry or  industry sector that includes identical goods or similar goods in relation to the goods being valued; and

(b) for the purposes of -

(i) regulation 8, were produced in any country and exported from any country; and

(ii) regulation 9, were produced in and exported from the country in and from which   the goods being valued were produced and exported;

"identical goods" means imported goods that -

(a) are the same in all aspects, including physical characteristics, quality and reputation, as the goods being valued, except for minor differences in appearance that do not affect the value of the goods; 

(b) were produced in the country in which the goods being valued were produced; and

(c) were produced by or on behalf of the person who produced the goods being valued,

but does not include imported goods where engineering, development work, artwork, design work, plans or sketches undertaken in Malaysia were supplied, directly or indirectly, by the buyer of those imported goods free of charge or at a reduced cost for use in connection with the production and sale for export of those imported goods;

"minimum value" means a value which is predetermined under regulation 11 as the lowest acceptable value;

"price paid or payable" in relation to any goods, means the aggregate of all amounts paid or payable by the buyer to or for the benefit of the seller in respect of the goods;

"produce" includes grow, manufacture or mine;

"similar goods" means imported goods that -

(a) closely resemble the goods being valued in respect of materials, components and parts and characteristics and are functionally and commercially interchangeable with the goods being valued having regard to the quality and reputation of the goods and the goods being valued;

(b) were produced in the country in which the goods being valued were produced; and

(c) were produced by or on behalf of the person who produced the goods being valued,

but does not include imported goods where engineering, development work, artwork, design work, plans or sketches undertaken in Malaysia were supplied, directly or indirectly, by the buyer of those imported goods free of charge or at a reduced cost for use in connection with the production and sale for export of those imported goods;

"sufficient information" in respect of the determination of any amount, difference or adjustment, means objective and quantifiable information that clearly establishes the accuracy of the amount, difference or adjustment;

"transaction value" means the value determined under regulations 4 and 5.

(2) For the purposes of regulation 4, where the degree of relationship is relevant, the proximity of blood of collateral descendants in the relationship shall be determined by taking a step, upward or downward, or both upward to a common ancestor and downward from such ancestor.

(3) For the purposes of regulations 4, 6 and 7, the sale of goods for export to Malaysia shall be the last contracted sale prior to importation of the goods into Malaysia and the buyer of the said goods is in Malaysia.

(4) For the purposes of these Regulations, persons shall be deemed to be related only if -

(a) they are officers or directors of one another's business;

(b) they are legally recognised partners in business;

(c) they are employer and employee;

(d) any person directly or indirectly owns, controls, or holds five per cent or more of the outstanding voting stock or shares of both of them;

(e) one of them directly or indirectly controls the other;

(f) both of them are directly or indirectly controlled by a third person;

(g) together they directly or indirectly control a third person; or

(h) they are members of the same family.

(5) For the purposes of these Regulations, persons shall be deemed to be members of the same family if

(a) they are connected by blood relationship within the fourth degree of relationship;

(b) they are married to one another or if one is married to a person who is connected within the fourth degree of relationship to the other; or

(c) one has been adopted as the child of the other or as a child of a person who is within the third degree of relationship to the other.

(6) For the purposes of these Regulations, where there are no goods that were produced by or on behalf of the person who produced the goods being valued and are identical goods or similar goods, goods that were produced by or on behalf of a different person and that are otherwise identical goods or similar goods shall be deemed to be identical goods or similar goods, as the case may be.

(7) For the purposes of these Regulations, charges for interest under a financing arrangement entered into by the buyer and relating to the purchase of imported goods shall not be regarded as part of the customs value in any case where -

(a) the charges are distinguished from the price actually paid or payable for the goods;

(b) such goods are actually sold at the price declared as the price actually paid or payable; and

(c) the buyer, if required, can demonstrate that-

(i) the financing arrangement was made in writing; and

(ii) the claimed rate of interest does not exceed the level for such transactions prevailing in the country where, and at the time when, the finance was provided.


Order Of Application Of Rules Of Valuation  

3. (1) Subject to sub regulation (2), the customs value of imported goods shall be valued on the basis of the transaction value of the goods as the primary basis of valuation as set out under regulation 4.

   (2) Where the proper officer of customs is of the opinion that the customs value of the goods cannot be valued under sub regulation (1) due to the fact that - 

(a) the proper officer of customs has reason to doubt the truth or accuracy of the declared customs value and after having sought further explanation or other evidence  that the declared customs value represents the total amount actually paid or payable for the imported goods, the proper officer of customs is still not satisfied that the customs value can be determined under regulation 4; or

(b) where any adjustment under regulation 5 cannot be made because of the lack of sufficient information the proper officer of customs may then value the goods on the basis of the first of the following values as provided in sub regulation (3).

   (3) The order of valuation are as follows:

(a) the transaction value of identical goods under regulation 6;

(b) the transaction value of similar goods under regulation 7;

(c) the deductive value of the imported goods under regulation 8; and

(d) the computed value of the imported goods under regulation 9.

   (4) Notwithstanding sub regulations (2) and (3), on the written request of a buyer of any goods being valued made prior to the commencement of the valuation of those goods, the order of consideration of the values referred to in paragraphs (3)(c) and (d) shall be reversed.

   (5) Where the proper officer of customs IS of the opinion that any one of the methods mentioned in paragraphs (3)(a) to (d) cannot determine any amount, difference or adjustment in relation to the customs value for the goods being valued due to lack of sufficient information, that particular method of valuation cannot be the basis of such valuation.

   (6) If none of the values as set out in paragraphs 3(a) to (d), can be a basis of valuation for such goods, the proper officer of customs may then value such goods under regulation 10.

Transaction Value As Primary Basis Of Valuation

4. (1) The customs value of imported goods shall be their transaction value, that is, the price paid or payable for the goods when sold for export to Malaysia, adjusted in accordance with regulation 5, provided that -:

(a) there are no restrictions in respect of the disposition or use of the goods by the buyer other than restrictions that-

(i) are imposed by law;

(ii) limit the geographical area in which the goods may be resold; or

(iii) do not substantially affect the value of the goods;

(b) the sale of the goods or the price paid or payable for the goods is not subject to some condition or consideration where its value cannot be determined;

(c) no part of the proceeds of any subsequent resale, disposal or use of the goods by  the buyer is to accrue, directly or indirectly, to the seller; or

(d) the buyer and seller of the goods are not related at the time the goods are sold for export or where the buyer and seller are related at that time but the proper officer of customs is satisfied that their relationship did not influence the price paid or payable for the goods.

   (2) In a sale between related persons, for the purpose of showing that the relationship did not influence the transaction value, the buyer shall produce evidence that the transaction value of the goods being valued, taking into consideration any relevant factors including such factors and differences as enumerated in sub regulation (4). closely approximates to one of the following values of other goods exported at the same time or substantially at the same time as the goods being valued, being -

(a) the transaction value of identical goods or similar goods in respect of a sale of those goods for export to Malaysia between a seller and buyer who are not related at the time of the sale;

(b) the deductive value of identical goods or similar goods; or

(c) the computed value of identical goods or similar goods.

   (3) In any case where the proper officer of customs is of the opinion that the relationship between the buyer and seller of any goods influenced the price paid or payable for the goods, the proper officer of customs shall inform the buyer, in writing if so requested, of the grounds on which the proper officer of customs formed that opinion, and shall give the buyer a reasonable opportunity to satisfy the proper officer of customs that the relationship did not influence the price.

   (4) Where sub regulation (2) applies, the buyer shall, without limiting the generality of sub regulation (2), provide the following information:

(a) the nature of the goods being valued;

(b) the nature of the industry that produces the goods being valued;

(c) the season in which the goods being valued are imported;

(d) whether a differences in values is commercially significant;

(e) the trade levels at which the sales take place;

(f) the quantity levels of the sales;

(g) any of the amounts referred to in regulation 5; and

(h) the costs, charges or expenses incurred by a seller when the seller sells to a buyer to whom the seller is not related that are not incurred when the seller sells to a buyer to whom the seller is related.

Adjustment Of Price Paid Or Payable

5. (1) In determining the transaction value of imported goods under regulation 4, the price paid or payable for the goods shall be adjusted -

(a) by adding thereto amounts, where such amount is not already included in the price paid or payable for the goods, determined on the basis of sufficient information, equal to -

(i) commissions and brokerage in respect of the goods incurred by the buyer, other than fees paid or payable by the buyer to the buyer's agent for the service of representing the buyer overseas in respect of the purchase of the goods;

(ii) the packing costs and charges incurred by the buyer in respect of the goods, including the cost of cartons, cases, and other containers and coverings that are treated for customs purposes as being part of the goods and all expenses of packing incidental to placing the goods in the condition in which they are transported to Malaysia; 

(iii) the value of any of the following goods and services:

(A) materials, component, parts and other items incorporated in the goods;

(B) tools, dies, moulds and other items utilized in the production of the goods;

(C) materials consumed in the production of the goods; and

(D) engineering, development work, artwork, design work, plans and sketches undertaken elsewhere than in Malaysia and necessary for the production of the goods-

determined under sub regulation (2) that are supplied, directly or indirectly, by the buyer free of charge or at a reduced cost for use in connection with the production and sale for export of the goods, apportioned to the goods in a reasonable manner, and in accordance with generally accepted accounting principles;

(iv) royalties and licenses fees, including payments for patents, trademarks and copyrights in respect of the goods that the buyer must pay, directly or indirectly, as a condition of the sale of the goods for export to Malaysia, exclusive of charges for the rights to reproduce the goods in Malaysia;

(v) the value of any part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer that accrues or is to accrue, directly or indirectly, to the seller;

(vi) the value of any materials, component, parts and other items incorporated in the goods for the purpose of repair to, or refurbishment of, those goods prior to important of the goods to Malaysia, and the price paid for the service or repair or refurbishment, as the case maybe; or

(vii) the costs of transportation and insurance of, and the loading, unloading and handling charges and other charges and expenses associated with the transportation of, the goods have arrived in the country of importation;

(b) by deducting there from amounts, where such amount is already included in the price paid or payable for the goods, equal to any of the following costs, charges or expenses -

(i) any reasonable cost, charge or expense that is incurred for the construction, erection, assembly or maintenance of, or technical assistance provided in respect of the goods after the goods are imported;

(ii) any reasonable cost, charge, or expense that is incurred in respect of the transportation or insurance of the goods within Malaysia and any reasonable cost, charge, or expense associated therewith; and

(iii) any customs duties or other taxes payable in Malaysia by reason of importation or sale of the goods.

If the cost, charge, expense, duties or other taxes is identified separately from the balance of the price paid or payable for the goods;

(c) in respect of carrier media bearing data or instructions, by deducting the value of the data or instructions from the price paid or payable for the goods if:

(i) the value of the data or instructions is distinguished from the cost or value of the carrier media; and

(ii) the data or instruction are not incorporated in data processing equipment.

   (2) The value of the goods and services described in subparagraph(1)(a)(iii) shall be determined-

(a) in the case of materials, component, parts and other items incorporated in the goods being valued or any materials consumed in the production of the goods being valued-

(i) by ascertaining -

(A) their cost of acquisition where they were acquired by the buyer from a person who was not related to the buyer at the time of their acquisition;

(B) their cost of acquisition incurred by the person related to the buyer, where the goods were acquired by the buyer from a person who was related to the buyer at the time of their acquisition but who did not produce them; or

(C) their cost of production where they were produced by the buyer or a person related to the buyer at the time of their production

(ii) by adding thereto -

(A) the cost of their transportation to the place of production of the goods being value; and

(B) the value added to them by any repairs or modifications made to them after they were so acquired or produced;

(b) in the case of tools, dies, moulds, and other items, utilized in the production of the goods being valued in accordance with subparagraphs (2)(a)(i) and (ii) and by deducting there from an amount to account for any previous use of the goods made after the goods were so acquired or produced; and

(c) in the case of engineering, development work, artwork, design work, plans and sketches undertaken elsewhere than in Malaysia and necessary for the production of the goods being valued by ascertaining -

(i) their cost of acquisition or of the lease thereof, where they were acquired or leased by the buyer from a person who was not related to the buyer at the time they were so acquired or leased and are not generally available to the public;

(ii) their cost of acquisition or of the lease thereof incurred by the person related to the buyer, where they were acquired or leased by the buyer from a person related to the buyer at the time they were so acquired or leased, but who did not produce them and are not generally available to the public;

(iii) the cost to the public of obtaining them where they are available generally to the public; and

(iv) the cost of production where they were produced by the buyer or a person related to the buyer at the time of their production.

   (3) For the purposes of paragraph (1)(c) -

"carrier media"  does not include integrated circuits, semi conductors and similar devices, or articles incorporating such circuits or device;

"data or instruction" does not include sound, cinematic or video recordings.


Transaction Value Of Identicals Goods As Customs Value

6. (1) Subject to sub regulations (2), (3) and (4), where the customs value of imported goods cannot be determined under regulation 4,the customs value of the goods shall be the transaction value of identical goods in respect of a sale of those goods for export to Malaysia if -

(a) that transaction value is the customs value of the identical goods; and

(b) the identical goods were exported at the same or substantially the same time as the goods being valued and were sold under the following conditions:

(i) to a buyer at the same or substantially the same trade level as the buyer of the goods being valued; and

(ii) in the same or substantially the same quantities as the goods being valued

   (2) Where the customs value of imported goods cannot be determined under sub regulation (1) because identical goods were not sold under the conditions described in paragraph (1)(a) and (b), there shall be substituted therefore, identical goods sold under any of the following conditions -

(a) to a buyer at the same or substantially the same trade level as the buyer of the goods being valued but in quantities different from the quantities in which those goods were sold;

(b) to a buyer at a trade level different from that of the buyer of the goods being valued but in the same or substantially the same quantiti​​es as the quantities in which those goods were sold; or

(c) to a buyer at a trade level different from that of the buyer of the goods being valued an in quantities different from the quantities in which those goods were sold.

(3) For the purposes of determining the customs value of imported goods under sub regulation (1) or (2), the transaction value of identical goods shall be adjusted by adding thereto or deducting there from, as the case may be, amounts to account for- 

(a) commercially significant differences between the costs, charges and expenses referred to in subparagraph 5(1)(a)(vii) in respect of the identical goods and those costs, charges and expenses in respect of the goods being valued that are attributable to differences in distances and modes of transport; or 

(b) differences in the trade levels of the buyers of the identical goods and the goods being valued or the quantities in which the identical goods and the goods being valued were sold or both, as the case may be, where the transaction value is in respect of identical goods sold under any one of the conditions described in paragraph (2)(a), (b) or (c),

if each amount can, in the opinion of the proper officer of customs, be determined o the basis of sufficient information.

   (4) Where in relation to imported goods being valued, there are two or more transaction values of identical values of identical goods that meet all the requirement as set out in sub regulations (1), (2) or (3), the customs value of the good being valued shall be determined on the basis of the lowest such transaction value.

Transaction Value Of Similar Goods As Customs Value

7. (1) Subject to sub regulation (2), where the customs value of imported goods cannot be determined under regulation 6, the customs value of the goods shall be the transaction value of similar goods in respect of a sale of those goods for export to Malaysia if -

(a) that transaction value is the customs value of the similar goods; and

(b) the similar goods were exported at the same or substantially the same time as the goods being valued and were sold under the following conditions-

(i) to a buyer at the same or substantially the same trade level as the buyer of the goods being valued; and

(ii) in the same or substantially the same quantities as the goods being valued.

   (2) Sub regulations 6(2), (3) and (4) shall apply to this regulation mutatis mutandis.

Deductive Value As Customs Value

8. (1) Subject to sub regulation 3(2) and (3), where the customs value cannot be determined under regulation 7, the customs value of the goods shall be the deductive value in respect of the goods.
 
   (2) Where the goods being valued or identical goods or similar goods are sold in Malaysia in the condition in which they were imported at the same or substantially the same time as the time of importation of the goods being valued, the deductive value of the goods being valued shall be the price per unit in respect of sales described in sub regulation (5), determined in accordance with that sub regulation and adjusted in accordance with sub regulation (6), at which the greatest number of units of the goods being valued or identical goods or similar goods are sold. 

   (3) Where the goods being valued or identical goods or similar goods are sold in Malaysia in the condition in which they were imported before the expiration of 90 days after the importation of the goods being valued but are not so sold at the same or substantially the same time as the time of that importation, the deductive value of the goods being valued shall be the price per unit in respect of sales described and determined in sub regulation (5) and adjusted in accordance with sub regulation (6), at which the greatest number of units of the goods being valued or identical goods or similar goods are so sold at the earliest date after the importation of the goods being valued.

   (4) Where the goods being valued or identical goods or similar goods are sold in Malaysia after being assembled, packaged or further processed in Malaysia before the expiration of 90 days after the importation thereof and the importer of the goods being valued requests that this sub regulation be applied in the determination of the customs value of those goods, the deductive value of the goods being valued shall be the price per unit in respect of sales described and determined in sub regulation (5) and adjusted in accordance with sub regulation (6), at which the greatest number of units of the goods being valued or identical goods or similar goods are so sold at the earliest date after the importation of the goods being valued.

   (5) For the purposes of sub regulations (2), (3) and (4), the price per unit in respect of any goods being valued or identical goods or similar goods, shall be determined by ascertaining the unit price in respect f the first sales transaction of the goods after their importation to persons who -

(a) are not related to the persons from whom they buy the goods at the time the goods are sold to them; and

(b) have not supplied, directly or indirectly, free of charge or at a reduced cost for the use in connection with the production and sale for export of the goods, any of the goods or services referred to in subparagraph 5(1)(a)(iii), at which the greatest number of units of the goods is sold where, in the opinion of the proper officer of customs, a sufficient number of such sales have been made to permit a determination of the price per unit of the goods.

   (6) For the purposes of sub regulations (2), (3) and (4), the price per unit in respect of any goods being valued or identical goods or similar goods, shall be adjusted by deducting there from an amount equal to the aggregate of -

(a) an amount, determined in accordance with sub regulation (7), equal to-

(i) the amount of commission generally earned on a unit basis; or

(ii) the amount for profit and general expenses, including all costs of marketing the goods, considered together as a whole, that is generally reflected on a unit basis, in connection with sales in Malaysia of goods of the same class or kind as those goods;

(b) reasonable costs, charges and expenses that are incurred in respect of the transportation or insurance of the goods within Malaysia and reasonable costs, charges and expenses associated therewith whereby such an amount  for such costs, charges, and expenses is not deducted in respect of general expenses under paragraph (a);

(c) any customs duties or other taxes payable in Malaysia by reason of the importation or sale of the goods, whereby such an amount for such duties and taxes is not deducted in respect of general expenses under paragraph (a); and

(d) where sub regulation (4) applies, the amount of the value added to the goods that is attributable to the assembly, packaging or further processing in Malaysia of the goods, if that amount is determined, in the opinion of the proper officer of customs, on the basis of sufficient information.

   (7) The amount considered to be equal to the amount of commission or the amount for profit and general expenses referred to in paragraph (6)(a) shall be calculated on a percentage basis and determined on the basis of sufficient information supplied by or on behalf of the importer of the goods being valued prepared in a manner consistent with generally accepted accounting principles.

   (8) For the purposes of sub regulation (7), where information supplied by or on behalf of the importer of the goods being valued is not sufficient, the proper officer of customs may conduct an examination of sales in Malaysia of the narrowest group or range of goods of the same class or kind as the goods being valued from which sufficient information can, in the opinion of the proper officer of customs, be obtained.


Computer Value As Customs Value        
9. (1) Subject to sub regulation 3(2) and (3), where the customs value of imported goods cannot be determined under regulation 8, the customs value of the goods shall be the computed value in respect of those goods.

   (2) The computed value of the goods being valued is the aggregate of amounts equal to -

(a) the costs, charges and expenses incurred in respect of, or the value of,-

(i) materials employed in producing the goods being valued; and

(ii) the production or other processing of the goods being valued,-determined on the basis of -

(A) the commercial accounts of the producer of the goods being valued; or

(B) any other sufficient information relating to the production of the goods being valued, that are supplied by or an behalf of the producer of the goods and prepared in a manner consistent with the generally accepted accounting principles of the country of production of the goods being valued, including, without limiting the generality of the foregoing -

(aa) the costs, charges and expenses referred to in subparagraph 5(1)(a)(ii);

(bb) the value of any of the goods and services referred to in subparagraphs 5(1)(a)(iii) and (vi), determined and apportioned to the goods being valued as referred to in that regulation, whether such goods and services have been supplied free of charge or at reduced cost;

(cc) the costs, charges and expenses incurred by the producer in respect of engineering, development work, artwork, design work, plans or sketches undertaken in Malaysia that were supplied, directly or indirectly, by the importer of the goods being valued for use in connection with the production and sale for export of those goods to the extent that such elements are charged to the producer of the goods, apportioned to the goods being valued as referred to in subparagraph 5(1)(a)(iii);

(b) the amount determined in accordance with sub regulation (4), for profit and general expenses, considered together as a whole, generally reflected in sales for export to Malaysia of goods of the same class or kind as the goods being valued, made or incurred by the producers of the goods to importers in Malaysia who are not related to the producers from whom the importers buy the goods at the time the goods are sold to them.

   (3) For the purposes of this regulation, "general expenses" means the direct and indirect costs, charges and expenses of producing and selling goods for export other than the costs, charges and expenses referred to in paragraph (2)(a).

   (4) The amount of profit and general expenses referred to in paragraph (2)(b) shall be calculated on a percentage basis and determined on the basis of sufficient information supplied by or on behalf of the importer of the goods being valued prepared in a manner consistent with generally accepted accounting principles of the country of production of the goods being valued.

   (5) For the purposes of sub regulation (4), where information supplied by or on behalf of the importer of the goods being valued is not sufficient, the proper officer of customs may conduct an examination of sales in Malaysia of the narrowest group or range of goods of the same class or kind as the goods being valued from which sufficient information can, in the opinion of the proper officer of custom, be obtained.

Flexible Valuation Allowed  

10. (1) Where the customs value of imported goods cannot be determined under regulations 4 to 9, the customs value shall be determined on information available in Malaysia on the basis of a value derived from the methods of valuation set out in regulations 4 to 9 interpreted in a flexible manner and reasonably adjusted to the extent necessary to arrive at a customs value of the goods

   (2) A customs value shall not be determined on the basis of -

(a) the selling price in Malaysia of goods produced in Malaysia;

(b) a system which provides for the acceptance of the higher of two alternative values;

(c) the price of goods on the domestic market of the country of exportation;

(d) the cost of production, other than computed values that have been determined for identical or similar goods in accordance with regulation 9;

(e) the price of goods for export to a country other than Malaysia, unless the goods were imported into Malaysia;

(f) minimum customs values; or

(g) arbitrary or fictitious values.

Minimum Value  

11. Notwithstanding any other provision under these regulations, the minister may fix a minimum value on imported goods Written explanation on valuation method upon written request by importer

12. The importer shall, upon written request, have the right to an explanation in writing from the proper officer of customs as to how the customs value of his imported goods was determined.


Exchange Rate

13. (1) The customs value of imported goods shall be calculated in Malaysian Ringgit and any currency conversion to determine the customs value shall be based on the rate of exchange issued by the Director General.

   (2) The rate of currency conversion shall be the rate in force at the time when duty is payable.

Made 21 December  1999
On behalf and in the name of the
Minister of Finance,

CHAN KONG CHOY
Deputy Minister of Finance