UNIT 12 CUSTOMS AND EXCISE DUTY

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CHAPTER 18

CUSTOMS AND EXCISE DUTY

After studying this chapter you should be able to understand the following: Functions of the Customs & Excise Division Official and Commercial documents alue for duty !urposes aluation Clearance

18.1 - INTRODUCTION The customs and Excise Division of the ZRA administers the Customs and Excise Act CAP. 322 of the Laws of Zambia and is com osed of Two !ections name"# the Customs and Excise !ections. The Customs !ection is res onsib"e for the co""ection of Customs Dut# and the enforcement of the $m orts and Ex orts Contro"s. The Excise !ection is Res onsib"e for the co""ection of Excise Dut# and enforcement of Contro"s re"ated to Excisab"e roducts. The !ection a"so co""ects fue" Lev# on beha"f of the %ationa" Roads &oard. The Customs and Excise Division is a"so invo"ved in im "ementin' bi"atera"( re'iona" and internationa" trade arran'ements( and su ortin' '"oba" enforcement efforts a'ainst smu''"in'( the i""e'a" im ortation and ex ortation of arms( dru's of abuse( etc as mandated throu'h various internationa" "e'a" instruments. )or exam "e( Zambia is a member of both the !ADDC and the Common *ar+et for Eastern and !outhern Africa ,C-*E!A.. *embershi in these two re'iona" b"ocs entai"s extendin' referentia" tariffs to 'oods im orted from !ADDC and C-*E!A *ember !tates sub/ect to a'reed conditions ,the Ru"es of -ri'in.. 0oods ori'inatin' in Zambia a"so enter into the countries in 1uestion at referentia" rates. The Customs and Excise Division( as the a'enc# of 'overnment entrusted with the res onsibi"it# to monitor and contro" im orts and ex orts( is res onsib"e for the im "ementation of the 2trade and customs3 c"auses of the re'iona" trade a'reements. This a"so a "ies to trade references that ma# not be mutua""# a "#in' 4 such as the references extended to Zambia under the African 0rowth and - ortunit# Act of the 5!A. At the internationa" "eve"( the Zambia Revenue Authorit# Customs and Excise Division is a member of the 6or"d Customs -r'ani7ation ,6C-.. *embershi in the 6C- confers certain benefits to the countr#8 e.'. artici ation in ne'otiations towards accession to customs a'reements with internationa" a "ication

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,such as the 9armoni7ed !#stem Convention that forms the basis for tariff c"assification of 'oods traded in the internationa" mar+et.. The "in+s assist in deve"o in' best internationa" ractices throu'h benchmar+in'( trainin' of customs officers throu'h the 6C- or *ember !tates( networ+in' with other or'ani7ations with a sta+e in internationa" trade e.'. the 6or"d Trade -r'ani7ation( the $nternationa" Chamber of Commerce( the 5nited %ations Conference for Trade and Deve"o ment ,5%CTAD.( etc... !ince Zambia is a member of the 6or"d Trade -r'ani7ation ,6T-.( the Division a"so im "ements and enforces those 6T- a'reements to which Zambia has acceded. These inc"ude the A'reement on Customs :a"uation ,AC:. ado ted b# Zambia and the A'reement on Trade;Re"ated As ects of $nte""ectua" Pro ert# Ri'hts ,TR$P!.. The Division has a"so artici ated in ne'otiations and consu"tations toward the 6TA'reement on Ru"es of -ri'in. The African Gr !"h an# O$$ r"%ni"& Ac" 'AGOA( The African 0rowth and - ortunit# Act ,A0-A. is contained in the 5nited !tates of America Trade and Deve"o ment Act of 2<<<( si'ned into "aw b# then President 6i""iam =. C"inton on >?th *a# 2<<<. The Act rovides for entr# of Zambian ,amon' other !ub;!aharan Countries. ex orts to the 5!A at referentia" rates. Current"#( on"# a few com anies are e"i'ib"e for this treatment. A manufacturer who wants to ta+e advanta'e of the benefits of A0-A has to obtain a Certificate of Re'istration for manufacture. The Certificate is issued annua""# to re'istered manufacturers in Zambia wishin' to ex ort merchandise to 5!A under A0-A. The manufacturer sha"" ma+e an underta+in' to reserve a"" records re"atin' to the roduction of the 'oods to be ex orted such as records of the number of wor+ers( actua" 1uantities roduced( wor+ that is subcontracted ,done outside the manufacturer3s remises. and the machiner# used. The records shou"d be +e t for a eriod of at "east seven ,@. #ears. O)*ec"i+e f "he C%," -, Ac" The Act was first enacted on >A<@ABB to rovide for the im ortation( co""ection and mana'ement of customs( excise and other duties( the "icensin' and contro" of warehouses and remises for the manufacture of certain 'oods( the re'u"atin'( contro""in' and rohibitin' of im orts and ex orts( the conc"usion of customs and trade a'reements with other Countries( forfeitures and for other matters connected therewith or incidenta" thereto.

18.2 - THE .UNCTIONS O. THE CUSTOMS / EXCISE DI0ISION The Customs and Excise Division of the Zambia Revenue Authorit# is tas+ed with the fo""owin' duties8

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RE0ENUE CO11ECTION The Division co""ects Revenue on beha"f of the Centra" 0overnment throu'h the fo""owin' rescribed Duties8 C%," -, D%"& 4 a tax on 'oods im orted into the Countr#. I-$ r" 0AT 4 :AT aid on $m orts at entr# into the Countr# exce t where the :AT is deferred. E2ci,e D%"& 4 a tax on 'oods manufactured in Zambia and main"# of Luxur# nature. &ut it is a"so "evied on some im orted 'oods. .%e3 1e+& 4 a tax co""ected on Petro" and Diese". D%-$in4 D%"& 4 a tax on 'oods where dum in' has been estab"ished. This is intended to rotect the "oca" com anies from unfair forei'n com etition. PROTECTION O. 1OCA1 INDUSTRY The Division is char'ed with the Res onsibi"it# to rotect "oca" industr# a'ainst forei'n com etition. The rotection is achieved b# means of8 Protective Duties 4 hi'h rates of customs dut# aimed at discoura'in' the excessive im ortation of Tar'et 0oodsC es ecia""# those that are a"so "oca""# roduced. Enforcin' of a"ternative Dut# Rates such as 2BD or E2 mi""ion( whichever is hi'her( on *otor :ehic"es. $m ort Licences Rebate of Dut# on Raw materia"s for use in the manufacture of s ecified 'oods. This rotection does not on"# a""ow the 'rowth of industries in Zambia and rovision of em "o#ment to "oca" eo "e( but it a"so ma+es the Countr# !e"f 4 sufficient in 0oods. PROTECTION O. THE PU51IC The Division is em owered to sei7e dan'erous or harmfu" 'oods so that such 'oods do not reach the Zambian *ar+et. A"" narcotic and s#chotro ic substances are rohibited( to'ether with orno'ra hic materia"s in whatever form. PROTECTION O. P1ANT 1I.E A"" "ants im orted into Zambia must com "# with the P"ant( Pest and Diseases Act.

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PROTECTION O. ANIMA1 1I.E A"" anima" roducts comin' from outside Zambia must be free of disease or e"se the# ris+ destruction or Fuarantine. Fuarantine means a eriod of time when someone or somethin' that ma# be carr#in' disease is +e t se arate from others so that the disease cannot s read. )or instance( anima"s enterin' &ritain from abroad are ut in 1uarantine for G months to revent the s read of diseases such as Rabies. PRE0ENTION O. SMUG11ING !mu''"in' means causin' 'oods to "eave Zambia or causin' 'oods to be brou'ht into Zambia without the notice of the ZRA. PROTECTING 6AM5IA7S 8EA1TH Ex ortation of artic"es that are considered natura" wea"th for Zambia need ex ort ermits( e.'. *inera"s( 'overnment tro hies etc. PRO0ISION O. DATA .OR TRADE STATISTICS Periodica""#( the ZRA has a mandator# ob"i'ation to rovide information to the &an+ of Zambia and Centra" !tatistics -ffice obtained from various Customs documents such as the &i""s of Entr#( which assist in the formu"ation of Trade Po"ic#. 18.9 - PO8ERS O. THE 6RA O..ICERS Genera3 P !er, -fficers of the Customs and Excise Division have under !ection H of the Customs and Excise Act the Power to do an# of the fo""owin'8 S. :'1( An officer ma# sto and search an# erson( inc"udin' an# erson within or u on an# shi ( aircraft( or vehic"e( whom he has 'ood reason to sus ect of havin' secreted about him or in his ossession an# dutiab"e 'oods or an# 'oods in res ect of which there has been a contravention of the "aw. A person shall only be searched by a person of the same "ex#

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S. : '2( )or the rotection of the revenue and the ro er administration of the customs and Excise Act an officer ma#8 6ithout rior notice( enter an# sho ( office( store( structure or enc"osed area for ma+in' such examination and in1uir#( as he considers necessar#. Demand for an# boo+( document( or thin'( which is re1uired under the rovisions of Customs and Excise Act. Examine and ma+e extracts from and co ies of such boo+s and documents. Ta+e with him onto such remises an Assistant who ma# be a Po"ice officer or other erson. S. :'9( An# erson who is in occu ation( ownershi ( or contro" of an# remises referred to in !ubsection ,2. above and ever# erson em "o#ed b# him sha"" at a"" times furnish such faci"ities as are re1uired b# an officer for enterin' such remises in the course of his duties and for the exercise of the owers conferred b# subsection ,2.. S. :';( $f an# officer( after havin' dec"ared his officia" ca acit# and his ur ose and havin' demanded admission into an# remises( is not immediate"# admitted thereto( he and an# erson assistin' him ma# at an# time( but durin' the hours of dar+ness on"# in the resence of a Po"ice officer( brea+ o en an# door or window or brea+ throu'h an# wa"" on such remises for the ur ose of entr# and search. S.: '<( )or the ur ose of search( if an# safe( chest( box( or ac+a'e is "oc+ed or otherwise secured and the +e#s thereof or other means of o enin' it are not roduced u on demand( the officer ma# o en such safe( chest( box( or ac+a'e b# an# means at his dis osa". S. :'=( $f a search revea"s no breach of the customs and Excise Act( an# dama'e done b# an officer or erson assistin' him sha"" be made 'ood at the ex ense of the 0overnment( un"ess such officer or other erson has been obstructed in the exercise of his owers under the Customs and Excise Act.

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S. :'>( 6here the Commissioner 0enera" has reasonab"e 'rounds to sus ect that an# erson has contravened the rovisions of the Customs and Excise Act( he ma# a "# to the 9i'h Court 2 E2$ar"e3 for an order re1uirin' an# &an+ or financia" $nstitution to furnish him a statement in writin' containin' articu"ars of8 ; A"" &an+ accounts 4 business or rivate( of such erson. De osits or sources of de osits made b# such erson. A"" a#ments made b# or to an# such erson. S. :'8( An officer sha"" have the ri'ht to ut such 1uestions to an# erson as ma# be re1uired for obtainin' a"" necessar# information. OTHER SPECI.IC PO8ERS S.< The commissioner 0enera" ma# station an officer on an# shi or train whi"e such shi or train is within Zambia and the master of an# such shi or train sha"" rovide free of char'e such accommodation and board as ma# be reasonab"e. S.= An# officer( when trave"in' on dut# connected with the administration of the Customs and Excise Act in an# !hi or Train( is entit"ed to free trave". S.> '1( An officer ma# board an# shi arrivin' at or bein' about to de art from an# ort in Zambia( or bein' within Zambian waters. S.> '2( An officer ma# enter an# aircraft or vehic"e arrivin' in or bein' about to de art from Zambia and exercise the owers rovided for in the Customs and Excise Act. S.8 The officer has the ower to sea" u a"" sea"ab"e 'oods on the shi ( aircraft or vehic"e. S.1? An officer ma# at an# time ta+e( without a#ment( sam "es of an# 'oods for examination or for ascertainin' the duties a#ab"e thereon or for such other ur oses as the Commissioner 0enera" ma# consider necessar#. S.11 An officer ma# re1uire the owner of an# ac+a'e im orted into Zambia to o en such ac+a'e and ma# examine( wei'h( mar+( or sea" such 'oods as are contained therein.

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18.; - O..ICIA1 AND COMMERCIA1 DOCUMENTS A"" officia" transactions carried out b# an# business enter rise must be su orted b# written documentation to ensure accountabi"it#( "o'ica" f"ow of information( rocedures and a"so maintain records for future reference. $t is im ortant that students of Taxation and accountants fami"iari7e themse"ves with both officia" and commercia" documents used in internationa" tradin' transactions. Official Documents These are documents desi'ned and rescribed in "e'is"ation for use b# ersons transactin' with the Customs and Excise Division of the ZRA or for use b# the Division in accom "ishin' its ob/ectives. The ei'hth !chedu"e to the Re'u"ations out"ines a"" the rescribed )orms( which are the main -fficia" Documents8 C --ercia3 D c%-en", Do traders when transactin' amon'st themse"ves issue Documents. 5n"i+e the officia" documents( which are standard( this varies from trader to trader and inc"udes the fo""owin'8 Commercia" invoice Contracts &i""s of "adin' Airwa# &i""s Rai" advise %otes *anifest or consi'nments %otes Corres ondence )ina" Accounts( !tatements etc. Letters of Credit or documentar# Credit These documents show officers the va"ue of the 'oods( descri tion( wei'ht( Countr# of -ri'in etc. 1icence, an# Per-i", These are documents issued b# concerned authorities for certain restricted or rohibited 'oods to intendin' im orters or ex orters. O"her 5 @, f reference )& "he 6RA Ru"es issued b# the Commissioner 0enera" under the Customs and Excise Act The C%," -, an# E2ci,e Tariff 5 @ 4 this is the ma/or too" used b# the Customs and Excise Division in c"assif#in' 'oods. $t contains rates of dut# to be a "ied when ma+in' assessments of outstandin' amounts. The C -- #i"& In#e2 4 which assists officers in c"assif#in' 'oods 1uic+"#. $tems are resented in a" habetica" order for ease of reference with a ro riate tariff numbers indicated a"on'side each item.

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 The H.S E2$3ana" r& N "e, 4 which constitutes the officia" inter retation of the harmoni7ed s#stem as a roved b# the wor"d customs or'ani7ation. The C -$en#i%- f C3a,,ifica"i n O$ini n, 4 this boo+ "ists a"" the c"assification o inion ado ted b# the 6or"d Customs -r'ani7ation resu"tin' from the stud# of c"assification 1uestions( which are referred to them b# contractin' Countries. The C -$en#i%- f P 3icie, an# Pr ce#%re, 4 this Com endium is issued ursuant to !ection >HI of the Customs and Excise Act for ur oses of issuin' rocedures and instructions that are bindin' on a"" officers. 5n"i+e other boo+s of reference( this boo+ is confidentia" and intended for use b# officers of the Customs Division on"#. P r", f En"r& an# R %"e, Or#er 4 6hich out"ines the routes throu'h which 'oods ma# enter or "eave the Countr# and a"so s ecifies the hours of o erations at the various Customs Ports throu'h out the Countr#. $t fo""ows( therefore( that it is an offence for an#one to im ort or ex ort 'oods usin' routes other than those s ecified in the -rder.

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De"ai3e# G%i#e n h ! " c -$3e"e . r- CE 2?

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18.< A DETERMINATION O. 0A1UE .OR DUTY PURPOSES 6hen 'oods are im orted into the Countr#( a ro riate duties need to be com uted and conse1uent"# remitted to the ZRA. $n the rocess most duties are com uted as a ercenta'e of the va"ue of the 'oods for the ur oses of estab"ishin' the amount of customs dut# or surtax a#ab"e on the 'oods im orted into Zambia or manufactured in Zambia. Therefore it is im ortant to assess and estab"ish the correct va"ue for the 'oods. This va"ue for dut# ur oses is "ar'e"# based on the CI. $Cost %nsurance and Freight. rice. 6e have a"read# "oo+ed at what 'oes into the cost 4 commissions( bro+era'e etc. To cost #ou add the cost of $nsurance and a"" frei'ht char'es to come u with the a ro riate va"ue for dut# ur oses. 0DP .OR CUSTOMS DUTY The va"ue for the ur oses of assessin' Customs Dut# is the !um of Cost( $nsurance and )rei'ht. 6here :a"ues have been ex ressed in a forei'n currenc#( the commissioner 0enera" sha"" determine the Exchan'e Rate. 0DP .OR EXCISE DUTY The va"ue for the ur oses of assessin' Excise Dut# on im orted Excisab"e 'oods sha"" be the :DP for Customs ur oses P"us the Customs Dut# a#ab"e on those 0oods.

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0DP .OR EXCISE DUTY AND SURTAX ON GOODS MANU.ACTURED IN 6AM5IA The va"ue for the ur oses of assessin' Excise Dut# and !urtax on "oca""# manufactured excisab"e 'oods sha"" be8 The )actor# Cost P"us 2BD of !uch CostC The !e""in' PriceC or The - en *ar+et :a"ue 6hich ever is hi'her. Factory Cost & 'he "um of all the costs( direct and indirect( incurred by the manufacturer in the manufacture( finishing and pac)ing of *oods# 0A1UE .OR EXPORTED GOODS The va"ue for customs ur oses of an# 'oods ex orted from Zambia is8 The !e""in' rice )ree on &oard at the "ace of dis atch or ort of shi ment in Zambia( inc"udin' the cost of ac+in' and ac+a'es. $n the Case of 0oods for which there is no "oca" se""in' rice( the rice rea"i7ed Less the Cost of frei'ht( rai"a'e( insurance and char'es other than ac+in'( incidenta" to "acin' the 'oods on board a shi ( aircraft or vehic"eC or $n the Case of 'oods for which there is no se""in' rice( the va"ue assessed b# the Commissioner 0enera". INCOTERMS USED IN THIS SECTION CI. 'C ,"B In,%rance / .rei4h"( The se""er has the same ob"i'ation as under C)R ,Cost and )rei'ht.( but with the addition that he has to rocure marine insurance a'ainst the bu#er3s ris+ of "oss of or dama'e to the 'oods durin' the carria'e. The se""er contracts for insurance and a#s the insurance remium. .O5 '.ree n 5 ar#( The se""er fu"fi"s the ob"i'ation to de"iver when the 'oods have assed over the shi 3s rai" at the named ort of shi ment. The bu#er has to bear a"" costs and ris+s of "oss of or dama'e to the 'oods from that oint

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18.= - 0A1UATION 0a3%a"i n R%3e, This is one of( if not the most im ortant to ic in as far as Customs and Excise Duties are concerned. 6e wi"" "oo+ at how to ca"cu"ate the :a"ue for Dut# Pur oses and other rovisions of the Customs and Excise Act in the "i'ht of the 6or"d Trade -r'ani7ation ,6T-. :a"uation A'reement. Zambia has 'enera""# ado ted what is famous"# ca""ed the &russe"s Definition of :a"ue ,&D:. but as an active artici ant in 0"oba"i7ation issues( it is steadi"# ado tin' the rovisions of the 6or"d Trade -r'ani7ation which more intent on harmoni7in' internationa" Customs Practices and Procedures. The 8 r3# Tra#e Or4aniCa"i n 0a3%a"i n A4ree-en" This was former"# +nown as the 0enera" A'reement on Tariff and Trade :a"uation ,0:A. and was based on the rinci "es of the mu"ti"atera" Trade %e'otiations A'reement on Customs :a"uations of Artic"e :$$ of the 6T- conc"uded in >H@H. 8h& Chan4e fr - 5D0 " 8TO 0a3%a"i nD There are man# erceived advanta'es of shiftin' to the 6T- :a"uation a'reement8 To im rove the effectiveness and efficienc# of the Customs :a"uation !#stem To rovide a fair and e1uitab"e method of va"uin' im orted 'oods in order to co""ect the correct amount of Customs Dut# and other char'es. To +ee in touch with the rest of the 6or"d To meet internationa" ob"i'ations brou'ht about b# Zambia bein' a si'nator# to the 6or"d Trade -r'ani7ation A+ai3a)3e 0a3%a"i n Me"h #, There are six methods avai"ab"e for com utin' the :a"ue of $m orted 0oods name"#8 Transaction :a"ue *ethod Transaction :a"ue of $dentica" 0oods *ethod Transaction :a"ue of !imi"ar 0oods *ethod Deductive :a"ue *ethod Com uted :a"ue *ethod Residua" &asis ,)a"" &ac+. *ethod

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TRANSACTION 0A1UE METHOD This is the rimar# or main :a"uation *ethod as sti u"ated in the )ifth !chedu"e !ubsection ,2. of the Customs and Excise Act which states that8 2The customs va"ue of im orted 'oods sha"" be their Transaction.3 Transaction :a"ue ma# be defined as the rice actua""# aid or a#ab"e for 'oods when so"d for ex ort to Zambia( ad/usted in accordance with the rovisions of C"ause 3 of the fifth schedu"e. $n this c"ause the Commissioner 0enera" ad/ust the va"ue of the 'oods where he is of the o inion that the rice has been affected b# a s ecia" re"ationshi between the )orei'n !u "ier and the Zambian $m orter. . %r S"e$, " De"er-inin4 Tran,ac"i n 0a3%eE I#en"if& "he I-$ r" Sa3e, Tran,ac"i n 4 a contract of sa"e for the im orted 'oods that is entered into before the 'oods come under the Contro" of Customs. A va"id Contract is evidence b# the resence of an offer( acce tance and fina""# consideration. $n other words( a va"id contract must be "e'a""# enforceab"e a'ainst a defau"tin' art#. De"er-ine "he Price 4 rice in re"ation to im orted 'oods( is the a''re'ate of a"" amounts actua""# aid or a#ab"e b# the &u#er to or for the benefit of the !e""er in res ect of the 'oods 4 !.>,>. of the B th !chedu"e of !ection ?B of the Customs and Excise Act. $t must be noted that rice is not the customs va"ue but the "e'a" startin' oint for determinin' a Customs :a"ue for im orted 'oods. Ma@e 1e4a3 De#%c"i n, f A#*%,"e# $rice 4 as we saw ear"ier( if a re"ationshi has affected the rice( the Commissioner 0enera" sha"" write( if so re1uested( to the im orter informin' him of the 'rounds wh# the rice is sus ected to have been affected b# a re"ationshi . The im orter has however( an o ortunit# to satisf# the C0 that the re"ationshi did not affect the rice. $n that re'ard( Customs wou"d then consider8 The circumstances of !a"e to determine whether the rice was inf"uenced b# the re"ationshi ;C or 6hether the rice c"ose"# a roximates one of the Test :a"ues 4 Test va"ues su "ement the 'enera" examination of circumstances surroundin' the !a"e when the bu#er and !e""er are re"ated. Price A+era4in4B Pac@a4e Dea3, e"cE Pac+a'e dea"s( rice avera'in' and simi"ar arran'ements usua""# invo"ve urchases of different 'oods or services in the same or se arate transaction at artificia""# "ower rices constructed b# the arties for some 'oods and !ervices.

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0a3%e Unre3a"e# Ma""er,E Price is determined without re'ard to va"ue unre"ated matters8 Rebates that have not been received b# the &u#er when the rice is bein' determined ,retros ective discounts. e.'. 'oods found to be dama'ed in transit. Activities underta+en b# the bu#er on his own account( other that those for which an ad/ustment is demanded. Ma@e "he 1e4a3 a##i"i n, f Price Re3a"e# C ,", This is the "ast sta'e in determinin' transaction va"ue. Price re"ated costs are on"# added to rice in the fo""owin' circumstances8 The costin' e"ements the# refer to are not a"read# in the se""er3s Price The costin' e"ements have been actua""# incurred b# the bu#er in connection with the $m orted 'oods. The# are based on ob/ective and 1uantifiab"e data. E2a-$3e, f Price Re3a"e# C ,",E Commissions and bro+era'es in res ect of the 'oods incurred b# the bu#er( exce t bu#in' commission. Pac+in' costs :a"ue of 'oods and services su "ied direct"# b# the bu#er free of char'e or at reduced cost Ro#a"ties and "icence fees and a#ments for atents( trade; mar+s( etc :a"ue of an# art of the roceeds of an# subse1uent resa"e( dis osa" etc. :a"ue of materia"s( com onent arts( and other 'oods incor orated in the im orted 'oods. Costs of trans ortation and insurance( "oadin'( un"oadin' and hand"in' char'es etc. IDENTICA1 GOODS METHOD !ection ?B C"ause I ,>. dictates that where the Customs va"ue of im orted 'oods cannot( in the o inion of the Commissioner 0enera"( be determined under c"ause 2 ,The transaction :a"ue *ethod above. the customs va"ue of the 'oods sha"" be the transaction va"ue of $dentica" 'oods in res ect of a sa"e of those 'oods for ex ort to Zambia if that transaction va"ue is the customs va"ue of the identica" 'oods and the identica" 'oods were ex orted at the same or substantia""# the same time as the 'oods bein' va"ued and were so"d under the fo""owin' conditions8 a. To a bu#er at the same or substantia""# the same trade "eve" as the bu#er of the 'oods bein' va"uedC and b. $n the same or substantia""# the same 1uantities as the 'oods bein' va"ued

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C3a%,e ; '2(E 6here the customs va"ue of im orted 'oods cannot be determined under !ub;c"ause ,>. above on the 'rounds that the two conditions set out in a and b above were not met( then the identica" 'oods shou"d have been8 a. Ex orted to a bu#er at the same or substantia""# the same trade "eve" as the bu#er of the 'oods bein' va"ued but in 1uantities different from the 1uantities in which those 'oods were so"d. b. Ex orted to a bu#er at the trade "eve" different from that of the bu#er of the 'oods bein' va"ued but in the same 1uantities in which those 'oods were so"dC or c. Ex orted to a bu#er at the trade "eve" different from that of the bu#er of the 'oods bein' va"ued and 1uantities different from the 1uantities in which those 'oods were so"d. A##i"i n, an# De#%c"i n, A C3a%,e ; '9( $n determinin' the customs va"ue of im orted 'oods( transaction va"ue of identica" 'oods sha"" be ad/usted b# addin' or deductin' amounts for8 Ad/usted rice and rice re"ated costs in res ect of identica" 'oods Costs( char'es( and ex enses in res ect of the 'oods bein' va"ued that are attributab"e to differences in distances and modes of trans ort 6here the transaction va"ue is in res ect of identica" 'oods so"d under the conditions sti u"ated in !ub;c"ause ,2. a( b( and c above( differences in the trade "eve"s and 1uantities to the bu#ers of identica" 'oods and the 'oods bein' va"ued were so"d or both( as the case ma# be. $f each amount can( in the o inion of the Commissioner 0enera"( be determined on the basis of sufficient informationC where an# such amount cannot be so determined( the customs va"ue of the 'oods bein' va"ued sha"" not be determined on the basis of the transaction va"ue of those identica" 'oods under this c"ause. T! r - re "ran,ac"i n +a3%e, f i#en"ica3 4 A C3a%,e ; ';( 6here there are two or more transaction va"ues re1uirements under sub c"auses >J 2 of c"ause bein' va"ued sha"" be determined on the basis of those bein' considered. #, of identica" 'oods that meet a"" the I( the customs va"ue of the 'oods the "owest transaction va"ue amon'

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SIMI1AR GOODS METHOD 6here in the o inion of the Commissioner 0enera" the customs va"ue of im orted 'oods cannot be determined under c"ause I( the customs va"ue of the 'oods sha"" be the transaction va"ue of simi"ar 'oods in res ect of a sa"e of those 'oods for ex ort to Zambia if that transaction va"ue is the customs va"ue of the simi"ar 'oods and the simi"ar 'oods were ex orted to Zambia at the same time or substantia""# the same time as the 'oods bein' va"ued and were so"d under the fo""owin' conditions8 a. To a bu#er at the same or substantia""# the same trade "eve" as the bu#er of the 'oods bein' va"uedC and b. $n the same or substantia""# the same 1uantities as the 'oods bein' va"ued. EXAM A1ERT

&oth c"auses I and B re1uire a revious"# acce ted and estab"ished transaction va"ue under c"ause 2. Hierarchica3 Or#er f C3a%,e, ; an# < $dentica" 4 same roducer; same "eve" $dentica" 4 same roducer 4 different "eve" $dentica" 4 different roducer 4 same "eve" $dentica" 4 different roducer 4 different "eve" !imi"ar 4 same roducer 4 same "eve" !imi"ar 4 same roducer 4 different "eve" !imi"ar 4 different roducer 4 same "eve" !imi"ar 4 different roducer 4 different "eve" The time e"ement wou"d never ta+e recedence over the -rders of C"ause I and B. That is( a simi"ar roduct ex orted c"ose to the date of ex ort of the 'oods bein' va"ued wou"d not be referred over an identica" roduct ex orted at a time further removed from that date.

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DEDUCTI0E 0A1UE METHOD The deductive :a"ue *ethod is a method used to determine the Customs :a"ue b# reference to the 5nit !a"e Price of the $m orted 'oods or simi"ar 'oods in Zambia( ad/usted to the "ace of im ortation. C n#i"i n,E The fo""owin' conditions are re1uired8 The 'oods shou"d be so"d in Zambia in the same condition as im orted The im orted 'oods or identica" 'oods or simi"ar 'oods shou"d be so"d in Zambia at the same or substantia""# same time as the time of im ortation of the 'oods bein' va"ued The rice is the first sa"e in Zambia of the $m orted 'oods or identica" 'oods or simi"ar 'oods The estab"ished unit rice shou"d be the one at which the im orted 'oods or identica" or simi"ar 'oods are so"d in 'reatest a''re'ate 1uantit# There shou"d be no re"ationshi between im orter and the domestic bu#er in Zambia. The bu#er at the first trade "eve" in Zambia shou"d not have su "ied free of char'e or at reduced cost of roduction. $f there are no sa"es in Zambia of the im orted 'oods or identica" or simi"ar 'oods so"d in the condition as im orted at or about the date of im ort of the 'oods bein' va"ued( then the rice at which the im orted 'oods or identica" or simi"ar 'oods are so"d in Zambia shou"d be considered. De#%c"i n, The rice er 5nit in res ect of an# 'oods bein' va"ued or identica" or simi"ar 'oods sha"" be ad/usted b# deductin'8 The amount of commission 'enera""# earned on a unit basis for im orted 'oods of the same c"ass. Additions usua""# made for rofit and 'enera" ex enses in Zambia for $m orted 'oods of the same c"ass. Post im ortation char'es :a"ue added that is attributab"e to the assemb"#( ac+in' or further rocessin' of the 'oods in Zambia.

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COMPUTED 0A1UE METHOD Com uted va"ue is determined b# ca"cu"atin' the sum of a"" the costs which have 'one into their roduction( rofit( trans ortation and insurance costs to their "ace of im ortation. Defined in more detai"( com uted va"ue is the sum of the fo""owin'8 The cost or va"ue of materia"s and fabrication or other rocessin' em "o#ed in roducin' the im orted 'oods. An amount for rofit and 'enera" ex enses e1ua" to that usua""# ref"ected in sa"es of 'oods of the same c"ass as the 'oods bein' va"ued which are made b# roducers in the Countr# of Ex ortation for ex ort to Zambia. The cost or va"ue of a"" other ex enses necessar# to ref"ect the ad/ustments. C ," r 0a3%e f Ma"eria3, an# .a)rica"i n 9ere we need to distin'uish between Cost and :a"ue of materia"s and fabrication. C ," f Ma"eria3, A C3a%,e > '2( Cost of *ateria"s wi"" inc"ude Costs to 'et the materia"s from their source to the "ace of manufacture. 9owever( not to be inc"uded in the cost of materia"s are8 An# recoverab"e amounts for either scra or waste The amount of an# interna" tax im osed b# the Countr# of roduction that is direct"# a "icab"e to the materia"s or their dis osition if the Tax is remitted or refunded u on ex ortation of the finished 'oods. .a)rica"i n A C3a%,e > '2( )abrication inc"udes8 A"" Costs for direct "abour A"" assemb"# costs *achiner# costs which are invo"ved in roduction $ndirect Costs such as P"ant su ervision costs. The Customs and Excise Division wi"" on"# use the :a"ue of *ateria"s and fabrication where the Costs are not avai"ab"e. Pr fi" an# Genera3 E2$en,e, A C3a%,e > '2( ')( The amounts for rofit and ex enses shou"d be ta+en as a who"e. Thus it is a ro riate to consider the !um of both and com are that to the sum of what is usua". The Customs Division usua""# use the amount added b# the roducer of the 'oods bein' va"ued 4 rovided that amount e1ua"s the amount usua""# rea"i7ed in sa"es of 'oods of the same trade. 5nder this method( in order for the 'oods to be of the same trade( the# must be from the same Countr#.

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RESIDUA1 5ASIS O. 0A1UATION This method is rovided for under c"ause ?. 6here the customs va"ue of im orted 'oods cannot( in the o inion of the Commissioner 'enera"( be determined usin' an# of the methods above( it sha"" be determined usin' information avai"ab"e in Zambia on the basis of a va"ue derived from the methods of va"uation set out in C"auses 2 to @ but inter reted in a f"exib"e manner and reasonab"# ad/usted to the extent necessar# to arrive at a customs va"ue of the 'oods. A customs va"ue sha"" not be determined on the fo""owin' bases8 The se""in' rice in Zambia of 'oods roduced in Zambia A basis which rovides for the acce tance of the hi'her of two a"ternative va"ues The rice of 'oods on the domestic mar+et of the Countr# of Ex ortation The cost of roduction( other than com uted va"ues that have been determined for identica" or simi"ar 'oods in accordance with c"ause @ above. The rices of 'oods for ex ort to a Countr# other than Zambia( un"ess the 'oods were im orted into Zambia. *inimum customs va"ues Arbitrar# or fictitious va"ues. The Residua" basis as can be deduced from the fore'oin' is not rea""# a methodo"o'# at a"" but /ust a "e'a" means of "oosenin' the rovisions of the four :a"uations *ethods above. The fo""owin' are the situations that wou"d fre1uent"# "ead to the use of C"ause ? for :a"uin' $m orted 0oods8 0oods are $m orted under a Lease or 9ire Purchase arran'ement 0oods are re;im orted after re air or modification 0oods are im orted on a tem orar# basis The transaction is on a barter basis or counter trade.

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18.> - C1EARANCE MOTOR 0EHIC1E C1EARNCE *otor vehic"e im ortation has increasin'"# become rominent in Zambia. =ust "i+e an# other 'oods brou'ht into the Countr# a number of forma"ities need to be fina"i7ed before a motor vehic"e is brou'ht into the Countr#. These forma"ities are contained in the Customs and Excise Act( Ca 322 of the Laws of Zambia and the ZRA throu'h its boarder orts is the im "ementin' a'ent for the 'overnment of the Re ub"ic of Zambia. D c%-en"a"i n ReF%ire# At the time of im ortation( the Customs officers at each res ective boarder wi"" be "oo+in' for the fo""owin' documents to va"idate the motor vehic"e urchase transaction8 Genera3 Letter of !a"e $nvoice indicatin' the Price aid &i"" of "adin' )rei'ht !tatement ,$nc"udin' over"and costs from ort. $nsurance CertificateC and An# other documents re"evant to the urchase( ac1uisition( shi ment or im ortation of the vehic"e.

SPECI.IC SITUATIONS Ne! M " r 0ehic3e,E I-$ r"e# fr - O+er,ea,E 6here the affected *otor :ehic"e has been im orted from overseas( i.e.( outside Africa( the Customs and Excise Division wi"" re1uire the Tax Pa#er to submit a"" the Documents "isted above for ro er c"earance of the *otor :ehic"e. I-$ r"e# fr - !i"hin AfricaE 6here the motor vehic"e has been im orted from within Africa( e.'. Dubai or !outh Africa( a"" the documents "isted above are re1uired "us a Road Consi'nment %ote A *anifest which a must for a"" vehic"es im orted over"and.

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U,e# +ehic3e,E I-$ r"e# fr - +er,ea,E A"" the "isted documents above are re1uired. $n addition( the boo+ for first vehic"e re'istration or Certificate of Re'istration must be inc"uded. I-$ r"e# fr - !i"hin AfricaE A"" the "isted documents above are re1uired. A Letter of sa"e ro er"# si'ned b# the se""er of the vehic"e is acce tab"e in "ieu of a commercia" $nvoice. A"so re1uired is the Po"ice c"earance from the Countr# of su "#. M " r 0ehic3e 0a3%a"i n :a"uation is a"wa#s a contentious issue at &oarder Posts. This is because Tax Pa#er usua""# wants to under va"ue the 'oods so that the# eventua""# a# "ess Tax( whi"e the Customs officers3 intention and ob/ective is to co""ect the correct tax. The ta' of war is between what is erceived to be the correct tax b# Customs officers and what is considered to be the rea"istic amount of tax b# im orters. !econd hand vehic"es are in most cases the sub/ect of these va"uation tan'"es. And this usua""# arises when the Customs officers use their discretion to reva"ue a"" secondhand vehic"es to determine the e1uitab"e transaction va"ue in the Countr# of su "#. The circumstances under which this is ossib"e are8 6here the im orter or his a'ent has rovided insufficient or unsatisfactor# information re'ardin' the motor vehic"e. 6here the vehic"e concerned is a donation( or brou'ht into the Countr# at be"ow norma" rice an# reason. 6here the vehic"e is ac1uired in circumstances other than in norma" course of trade. 0a3%e f r D%"& P%r$ ,e, '0DP(E The va"ue for Dut# Pur oses ,:DP. is a"wa#s based on the Tota" Cost of the :ehic"e u to the Entr# Point. !ome of the Costs that are "oaded in the Tota" Cost inc"ude8 The rice aid for the vehic"e which is o u"ar"# referred to as ).-.& ,)ree on &oard. $nsurance char'es Trans ort CostsC and An# other incidenta" costs incurred in im ortin' the vehic"e into Zambia. The Customs :a"ue for $m orts is therefore ca"cu"ated basin' on Cost( $nsurance( )rei'ht as "on' as the sa"e in the Countr# of Ex ort was conducted in the - en *ar+et.

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D%"& an# 0AT ca3c%3a"i n,E E2a-$3eE A new To#ota *ar+ $$ is im orted from =a an. -ther detai"s re"atin' to this sa"e are as 'iven be"ow8 Exchan'e Rate 5! K >L EIB<< Cost K >2(<<< $nsurance M 2D of ).-.& L K2I<.<< )rei'ht Char'es L K >(<<< ReF%ire#E Com ute the :DP and va"ue for :AT ur oses.

An,!erE This is a new !a"oon car im orted from overseasN Therefore it wi"" be sub/ect to Dut# at the rate of 2BD of the C.$.). US G Cost >2(<<< $nsurance cost 2I< )rei'ht Char'es >(<<< ;;;;;;;;;; C.I.. 19B2;? LLLLL 0a3%e f r D%"& P%r$ ,e,E The C.$.) do""ar cost must be converted into the Ewacha 4 the re ortin' currenc# in Zambia at s ort rate. :.D.P L C.$.) x ru"in' rate >3(2I< x I(B<< L EBH(B?<(<<<. 0a3%e f r 0AT P%r$ ,e,E Customs Dut# M 2BD of C$) C$) H >I(?HB(<<< BH(B?<(<<< ;;;;;;;;;;;;;; >;B;><B??? LLLLLLLL

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T "a3 Ta2 Pa&a)3eE Customs Dut# :AT M >@.BD ,<.>@B x @I(I@B(<<<. H >I(?HB(<<< >3(<33(>2B ;;;;;;;;;;;;;; 2>B:28B12< LLLLLLL

Com "ete Customs c"earance of a *otor :ehic"e is 'ranted on"# after a"" the re1uirements under the Customs and Excise Act and other re"ated "aws have been fu"fi""ed. These inc"ude doin' the fo""owin'8 Presentation of 'enuine $m ort Documents :a"uation has been done and a'reed Pa#ment of dut#( :AT and As#cuda )ee Processin' of &i""s of Entr# b# Customs.

PASSENGER C1EARANCE The detai"ed immi'ration ru"es ertainin' to entr# into Zambia is outside the sco e of this Text &oo+. 6e wi""( however( confine and restrict our discussion to a "imited number of issues re"atin' to Passen'er C"earance. Dec3ara"i n -n arriva" into Zambia( individua"s wi"" receive a form +nown as a CE )orm de endin' on their circumstances. Persona" be"on'in's as we"" as 'oods urchased or ac1uired abroad shou"d be "isted on the dec"aration )orm ,)orm CE G. es ecia""# if the# are8; $n excess of the a""owab"e concession current"# at 5! K>B< )or commercia"( business or trade ur oses Carried on beha"f of another erson )irearms or wea ons and other sensitive items. Pr hi)i"e# I-$ r", $m ortation of the fo""owin' 'oods is rohibited8 )a"se or counterfeit coins or ban+ notes An# 'oods which are indecent( obscene or ob/ectionab"e materia" Pirated or counterfeit 'oods Prison made and enitentiar# made 'oods ! irituous bevera'es which contain re aration( extracts( essences or chemica" roducts which are noxious or in/urious Fi"i+a

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9owever( the *inister of )inance and %ationa" P"annin' ma# authori7e the im ortation of these 'oods if the# are for the ur oses of !tud#( scientific investi'ation( or use as evidence in an# court roceedin's. Re,"ric"e# I-$ r", $m ortation of the fo""owin' 'oods is restricted un"ess accom anied b# the re"evant "icences( ermits( Certificates and other "e'a" documents8 A'ricu"tura" roduce 0rain( 6heat and !eed *edicines and Dru's *inera" -res and Precious !tones )irearms and ammunitionC and Pets.

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TUTORIA1 IUESTION 8ITH ANS8ER

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PASCA1 CHI5UYE

Pasca" Chibu#e im orted a To#ota :ista car from =a an durin' December 2<<B. The cost of the car( free on board ,)-&.( was K2(><<. The cost of frei'ht to the ort of Durban in !outh Africa was K>(2<< whi"e the cost of $nsurance to the same ort was K>?<. $n order to trans ort the car from Durban to the Zambian boarder( *r. Chibu#e s ent an extra KI<<. The exchan'e rate at the time of urchasin' the car was K> L EI(G?<. ReF%ire#E 'i( Ca"cu"ate the motor car3s va"ue for customs dut# ur oses in Zambian Ewacha. 'ii( Ca"cu"ate the amount of Customs Dut#( Excise Dut# and $m ort :a"ue Added Tax a#ab"e on the car. 'iii( Ca"cu"ate the minimum amount of Customs Dut# that *r. Chibu#e wou"d have aid on the car at its im ortation in December 2<<BO

ANS8ER PASCA1 CHI5UYE

'i(

The va"ue for dut# ur oses ,:DP. is8 Cost )rei'ht to Durban )rei'ht to Zambian &oarder $nsurance K 2(><< >(2<< I<< >?< ;;;;;;;; 9B88? ;;;;;;;;

:a"ue in Ewacha L K3(??< x EI(G?< L E>?(>B?(I<<

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'ii(

C%," -, D%"& $a&a)3e Dut# L 2BD x :DP L 2BD x E>?(>B?(I<< L EI(B3H(G<< E2ci,e D%"& Pa&a)3e :a"ue for Customs Dut# Pur oses Customs Dut# H >?(>B?(I<< I(B3H(G<< ;;;;;;;;;;;;;;;; 22(GH?(<<< ;;;;;;;;;;;;;;;; 1B19;B:?? ;;;;;;;;;;;;;;;; H 22(GH?(<<< >(>3I(H<< ;;;;;;;;;;;;;;;; 29B892B:?? ;;;;;;;;;;;;;;;;

Excise Dut# L BD x E22(GH?(<<< I-$ r" 0a3%e A##e# Ta2 Pa&a)3e :a"ue for Excise Dut# Pur oses Excise Dut# :a"ue for :AT ur oses

$m ort :AT Pa#ab"e8 >@.BD x E23(?32(H<< L I(>@<(@B? 'iii( The minimum amount of Customs Dut# that *r. Chibu#e wou"d have aid is E2(<<<(<<<.

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