DECREE OF MINISTER OF FINANCE
NO. 690/KMK.05/1996

ON
CUSTOMS VALUE FOR IMPORT DUTY CALCULATION

THE MINISTER OF FINANCE,

Considering:

That with the enforcement of Law No. 10/1995 on customs affairs, it is deemed necessary to issue a decree of the Minister of Finance on customs value for import duty calculation;

In view of:

• 1. Law No.7/1994 on the ratification of the agreement establishing the World Trade Organization (Statute Book No.57/1994, Supplement to Statute Book No.3564);
• 2. Law No.10/1995 on customs affairs (Statute Book No.75/1995, Supplement to Statute Book No.3612);

DECIDES

To stipulate:

THE DECREE OF THE MINISTER OF FINANCE ON CUSTOMS VALUE FOR IMPORT DUTY CALCULATION

Article 1

Referred to in this stipulation as:

• a. "Inter-related" or "related" people shall be:
• i. employees or the management of one company who are at the same time the employees or the management of another company;
• ii. those known/legally admitted as partners in trade;
• iii. workers and those providers of work;
• iv. those one of whom directly or indirectly controls 5% or more of the shares they own in a company;
• v. those one of whom directly or indirectly supervises the other parties;
• vi. those directly or indirectly supervised by a third party;
• vii. those simultaneously supervising a third party directly or indirectly; or
• viii. those constituting members of a family, namely husband, wife, parents, children, younger brothers/sisters and elder brothers/sisters (of the same parents or of a step parent), grandfathers, grandmothers, grandchildren, uncles, aunts, nephews/nieces, parents-in-law, sons/daughters-in-law and brothers/sisters-in-law.
• b. Included in the definition of "(being) produced" shall be (being) planted, made and mined;
• c. Identical goods shall be goods which are the same in all respects, encompassing physical character, quality and reputation, and:
• i. produced by the same producer in the same country; or
• ii. produced by another producer in the same country, in the event of identical goods produced by the same producer in the same country not being available.
• d. Similar goods shall be goods, which are not in all respects the same but have the same characteristics and the same material components so that they may be exchanged and have the same function, the goods being:
• i. produced by the same producer in the same country; or
• ii. produced by another producer in the same country, in the event of similar goods produced by the same producer in the same country not being available.

Article 2

(1) The customs value for import duty calculation shall be the transaction value of the imported goods concerned.

(2) The transaction value as meant in sub-article (1) shall be the price which is actually paid or which should be paid, the price being that of the goods which are sold for export to a Customs Area, plus certain charges as meant in Article 3.

(3) The transaction value as meant in sub-article (2) must fulfill the requirements as meant in Article 4.

Article 3

(1) Certain charges added to the price which is actually paid or which should be paid as meant in Article 2 shall be:

• a. The charges paid by an importer and not yet included in the price which is actually paid or which should be paid shall be in the form of:
• 1) a commission and a middleman's fee, with the exception of a purchase commission;
• 2) packing charges, the said packing, in the interest of the customs, being an inseparable part of the goods concerned; and/or
• 3) packaging charges, encompassing workers' fees or the cost of the packaging material.
• b. The value of supporting materials in the form of objects and services, namely:
• 1) materials, components, parts and similar objects contained in imported goods;
• 2)equipment, moulds and similar objects used to manufacture imported goods;
• 3) materials used to manufacture imported goods; and/or
• 4) the technique, development, artwork, design, planning and sketches made anywhere outside a Customs Area and needed to manufacture imported goods supplied directly or indirectly by an importer to an exporter on condition that the said goods and services:
• i. are supplied free of charge or at reduced prices;
• ii. shall be used for the production and export sale of the imported goods purchased; and
• iii. the prices are not included in the price which is actually paid or which should be paid with respect to the said imported goods.
• c. The royalties and the license fees which must be paid by an importer directly or indirectly, as the requirement for the transaction of the imported goods the customs value of which is being determined, as far as the said royalties and license fees have not been included in the price which is actually paid or which should be paid with respect to the imported goods concerned.
• d. Portions of the proceeds/earnings received by an importer from the sales, utilization or use of imported goods which shall later be directly or indirectly be handed over to the exporter.
• e. The transportation charges for the imported goods sold for export to a harbor or an import site in a Customs Area.
• f. The charges for loading, unloading and handling connected with the transportation of imported goods to a harbor or to an import site in a Customs Area.
• g. Insurance charges.

(2) The charges added to the price which is actually paid or which should be paid as meant in sub-article (1) must be based on objective and measured data.

Article 4

A transaction value cannot be used as a customs value in the event of:

• a. the transaction of the price of imported goods being subjected to certain requirements or consideration which shall influence the price of the goods concerned;
• b. portions of the proceeds/earnings received by an importer from the sale, utilization or use of imported goods and later handed over directly or indirectly to the exporter not being added to the price which is actually paid or which should be paid;
• c. the relationship between an importer and an exporter influencing the price; and/or
• d. there being limitations to the utilization or use of imported goods other than the limitations which:
• i. are imposed or made compulsory by the law or by authorized parties in a Customs Area;
• ii. shall limit the geographical areas for the re-sale of the goods concerned; and/or
• iii. not substantially influence the value of goods.

Article 5

(1) In the event of the customs value of imported goods not being able to be stipulated on the basis of the trans action value of the goods concerned, the customs value shall be stipulated on the basis of the transaction value of identical goods exported for import to a Customs Area with the date of export being the same as or around the date of export of the goods the customs value of which is being determined.

(2) The transaction value of identical goods as meant in sub-article (1) shall be the value set forth in the import notice (PIB) and already determined as a customs value by the Directorate General of Customs and Excise pursuant to Article 16 of Law No.10/1995 on customs affairs.

(3) In implementing sub-article (1), it is compulsory that the transaction value of identical goods originating at the same trade level and of the same o-ntity as the goods of which the customs value is being determined should be used to determine the customs value.

(4) In the event of there being no transaction value in a condition as meant in sub-article (3), the transaction value of identical goods at a different trade level and or of a different quantity may be used to determine the customs value, as long as adjustment has been made on the basis of the actual evidence of the difference in trade level and or quantity of the goods.

(5) The adjustment as meant in sub-article (4) may also be made to transportation charges in the event of the loading port of the goods the customs value of which is being determined being different from the loading port of identical goods.

(6) If in the implementation of this article the identical goods have more than one transaction values, the value used to determine the customs value of the imported goods shall be the lowest transaction value of the identical goods.

Article 6

(1) In the event of the customs value of imported goods being unable to be determined on the basis of the transaction value of the goods concerned or the transaction value of similar goods which are exported for import to a Customs Area with the export date being the same as or around the export date of the goods the customs value of which is being determined.

(2) The transaction value of similar goods as meant in sub-article (1) shall be the value set forth in the PIB and already determined as a customs value by the Directorate General of Customs and Excise pursuant to Article 16 of Law No.10/1995 on Customs affairs.

(3) In implementing the provision of sub-article (1), it is compulsory that the transaction value of similar goods originating in the same trade level and of the same quantity as the goods the customs value of which is being determined should be used to determine the customs value.

(4) In the event of there being no transaction value in a condition as referred to in sub-article (3), the transaction value of similar goods at a different trade level or of a different quantity may be used to determine a customs value, as long as an adjustment has been made on the basis of the actual evidence of the difference in the trade level and or quantity of the goods.

(5) The adjustment as meant in sub-article (4) may be made to transportation charges in the event of the loading port of the goods the customs value of which is being determined being different from the loading port of similar goods.

(6) If in the implementation of this article similar goods have more than one transaction values, the value used to determine the customs value of imported goods shall be the lowest transaction value of similar goods.

Article 7

(1) In the event of it being unable to determine the customs value of imported goods on the basis of the transaction value of the goods concerned, the transaction value of identical goods or the transaction value of similar goods, the customs value shall be determined on the basis of a method of deduction.

(2) The method of deduction as meant in sub-article (1) shall be the determination of a customs value of imported goods on the basis of the unit price obtained from selling the imported goods concerned or identical goods or similar goods in the market within a Customs Area in the same condition as when they were imported.

(3) The sales as meant in sub-article (2) shall be the sales conducted by sellers and buyers that are not inter-related.

(4) The unit price used to determine the customs value on the basis of a method of deduction shall be the unit price of the imported goods concerned, the identical goods or the similar goods which are sold in the biggest quantity, such sale occurring on the date or around the date of the registration of PIB of the goods the customs value of which is being determined.

(5) In the event of there being no sale of the imported goods concerned or the identical goods or the similar goods in the market within a Customs Area on the date or around the date of the registration of the PIB of the goods the customs value of which is being determined as meant in sub-article (4), the determination of a customs value on the basis of a method of deduction shall use the unit price fetched from selling the imported goods concerned or identical goods or similar goods, such sate occurring at the latest 90 (ninety) days after the date of registration of the PIB of the goods the customs value of which is being determined.

(6) To calculate a customs value, the unit price as meant in sub-articles (4) and (5) shall be subtracted by the following cost elements:

• a. a commission or profit and general spending with respect to the sale of the imported goods concerned or that of identical goods or similar goods in the market in a Customs Area;
• b. The transportation, insurance and other charges which are borne by an importer after the imported goods concerned or identical goods or similar goods arrive at the port of destination or at an import site in a Customs Area; and
• c. import duties and taxes in the framework of import of the imported goods concerned or identical goods or similar goods.

(7) In the event of there being no sale of the imported goods concerned or that of identical goods or similar goods in the market in a Customs Area in the same condition as when they were imported, the determination of a customs value on the basis of a method of deduction may, at the request of the importer, use imported goods sold in the market in a Customs Area in a different condition as long as adjustment is made to the said discrepancy in condition.

Article 8

(1) In the event of the customs value of imported goods being unable to be determined on the basis of the transaction value of the goods concerned, the transaction value of identical goods, the transaction value of similar goods or a method of deduction, the customs value shall be determined on the basis of a method of computation.

(2) The method of computation as meant in sub-article (1) shall be the determination of a customs value by means of putting together a number of cost elements as follows:

• a. The cost or the price of the raw materials and the production process undertaken in producing imported goods;
• b. The profits and general spending the amounts of which are the same as or close to the amounts of the profits and the general spending of the sales of similar goods;
• c. The transportation charges from a loading port to a port of destination in a Customs Area, including the charges for loading, unloading and handling connected with the transportation of imported goods to the port of destination in the Customs Area; and Insurance charges.

(3) The cost or price as meant in sub-article (2) shall include the charges as set forth in Article 3 sub-article (1) letters a and b.

(4) The determination of a customs value on the basis of a method of computation shall make use of the information provided by the producer of the goods the customs value of which is being determined and the data given in the producer's book-keeping arranged on the basis of the general accounting principle prevailing in the country of the producer of the goods.

Article 9

(1) In the event of the customs value of imported goods being unable to be determined on the basis of the transaction value of the goods concerned, the transaction value of identical goods, the transaction value of sim:. ..goods, the method of deduction or the method of computation, the customs value shall be determined on the basis of the data available in a Customs Area which shall be used in accordance with the principle and provisions as meant in Articles 2, 5, 6, 7 and 8 in a flexible manner.

(2) The customs value as meant in sub-article (1) above shall not be permitted to be determined on the basis of:

• a. the selling price in a Customs Area for goods produced in the Customs Area;
• b. a system which decides on the higher value if there are two value alternatives;
• c. the domestic market price of the exporting country;
• d. the production cost, in addition to the value computed with the method of computation already stipulated for identical goods or similar goods as meant in Article 8;
• e. the price of the goods exported to a particular country in addition to being exported to a Customs Area;
• f. the minimum customs value; or
• g. the value arbitrarily or fictitiously determined.

Article 10

The Director General of Customs and Excise is instructed to implement this decree by taking into account Law No. 7/1994 on the ratification of the agreement establishing the World Trade Organization, in particular the Agreement on the Implementation of Article VII of the GATT 1994.

Article 11

This decree shall take effect as from April 1, 1997.

For public cognizance, this decree shall be announced by publishing it in the State Gazette of the Republic of Indonesia.

Stipulated in Jakarta
On December 18, 1996

THE MINISTER OF FINANCE
sgd.
MARI'E MUHAMMAD