Rules 4 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
If the transaction value of export goods cannot be accepted, rules 4, 5 and 6 give three fallback methods in order. Rule 7 requires the exporter's declaration, and rule 8 sets the procedure for rejecting a declared value, including the exporter's right to know the grounds and to be heard. If your declared export value is under question, our legal dispute resolution team can help.
This article is written as amended up to the CBIC text updated 10 October 2017 (no amending notification found). Later notifications should be checked; no official consolidated text exists beyond the CBIC text.
Rule 4 values by comparison with goods of like kind and quality exported at about the same time, with reasonable adjustments. Rule 5 uses computed value: production cost, design or brand charges and profit. Rule 6 is the residual method, where local market price cannot be the only basis. Rule 7 requires a declaration. Rule 8 lets the officer doubt the declared value, ask for evidence and reject it, after giving the exporter the grounds and a hearing if asked.
Rule 4: value by comparison
Rule 4(1): the value is based on the transaction value of goods of like kind and quality exported at or about the same time to other buyers in the same destination country, or in its absence another destination country, adjusted under sub-rule (2). The meaning of "goods of like kind and quality" is in our article on rules 1 to 3.
Rule 4(2): the proper officer makes such adjustments as appear to him reasonable, considering relevant factors including:
- difference in the dates of exportation;
- difference in commercial levels and quantity levels;
- difference in composition, quality and design between the goods assessed and those compared; and
- difference in domestic freight and insurance charges depending on the place of exportation.
The word "including" shows the list is not complete.
Rule 5: computed value
If the value cannot be determined under rule 4, it is based on a computed value that includes:
- (a) cost of production, manufacture or processing of export goods;
- (b) charges, if any, for the design or brand; and
- (c) an amount towards profit.
Rule 6: residual method
Rule 6(1): subject to rule 3, where the value cannot be determined under rules 4 and 5, it is determined "using reasonable means consistent with the principles and general provisions of these rules provided that local market price of the export goods may not be the only basis for determining the value of export goods".
For example, Anand Gems exports a one-off designer piece for which no comparable exports exist and whose maker's cost records are incomplete. After rules 4 and 5 fail, the officer may use reasonable means, but the local market price cannot be the only basis.
| Rule | Method | Key point |
|---|---|---|
| 3 | Transaction value | First method, accepted between related parties if price not influenced |
| 4 | Comparison | Like goods exported at about the same time to other buyers; reasonable adjustments |
| 5 | Computed value | Production cost, design or brand charges, profit |
| 6 | Residual | Reasonable means; local market price not the only basis |
Rule 7: declaration by the exporter
"The exporter shall furnish a declaration relating to the value of export goods in the manner specified in this behalf." The Rule itself prints no form; the manner is specified elsewhere. The declaration is made on the shipping bill; see our article on section 50 of the Customs Act.
Rule 8: rejection of declared value
Rule 8(1): doubt and request
When the proper officer has reason to doubt the truth or accuracy of the declared value, he may ask the exporter for further information, including documents or other evidence. If after receiving it, or in the absence of a response, he still has reasonable doubt, the transaction value "shall be deemed to have not been determined in accordance with sub-rule (1) of rule 3."
Rule 8(2): the exporter's request
At the request of an exporter, the officer shall intimate in writing the ground for doubting the declared value and give a reasonable opportunity of being heard before the final decision under sub-rule (1). The process mirrors rule 12 of the import rules; our article on rules 11 and 12 shows the import side.
The Explanation
| Point | Content |
|---|---|
| (i) | Rule 8 is a mechanism and procedure for rejection, not a method; where rejected, value is determined sequentially under rules 4 to 6 |
| (ii) | The declared value is accepted where the officer is satisfied about its truth or accuracy after the inquiry in consultation with the exporter |
| (iii) | Doubt may be raised on reasons that may include the grounds below |
The grounds printed in (iii) are: (a) significant variation from the value at which goods of like kind and quality exported at or about the same time in comparable quantities in a comparable commercial transaction were assessed; (b) significantly higher value compared with the market value of goods of like kind and quality at the time of export; and (c) the declaration of goods in parameters such as description, quality, quantity, year of manufacture or production.
What an exporter should do
- Answer any request for evidence promptly and in writing.
- Ask in writing for the ground of doubt and a hearing.
- Hold invoices to other buyers; they answer rule 4 and ground (a).
- Keep cost sheets in case rule 5 is applied.
- Remember the sequence if the value is rejected: rule 4, then 5, then 6.
Related provisions are in the Act: section 14 on valuation and section 51 on clearance for export.
Need help with a doubted export value?
If the proper officer has asked for evidence or proposes to reject your declared export value, we can prepare the reply and hearing submission. Reach our legal dispute resolution team early.
Key takeaways
- Rule 4 compares like goods exported at about the same time to other buyers, with adjustments.
- Rule 5 adds production cost, design or brand charges and profit.
- Rule 6 allows reasonable means, but not local market price alone.
- Rule 8 needs reasonable doubt, a request for evidence and, on request, grounds in writing and a hearing.
- Rejected values are determined sequentially under rules 4 to 6.
Read next
- Rules 1 to 3 of the export valuation rules
- Rules 11 and 12 of the import valuation rules: rejection of declared value
- Section 51 of the Customs Act, 1962: clearance for export
- Section 14 of the Customs Act, 1962: valuation of goods
Disclaimer: Based on the customs rules named above as published on the CBIC Tax Information Portal and, for sets amended since 2023, the amending notifications (read through a TaxClue consolidated reading text; no official consolidated text exists), as consulted on 3 October 2026. Later notifications, rates and the Customs Act, 1962 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.