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.
When the declared price cannot be accepted under rule 3, customs moves down a ladder of methods. Rules 4 and 5 are the first two rungs: the transaction value of identical goods and then of similar goods. Rule 6 says what follows: rule 7 (deductive value) or rule 8 (computed value), in an order the importer can ask to reverse. If customs has proposed a comparison value for your goods, our compliance advisory team can test it.
This article is written as amended up to Notification No. 91/2017-Customs (N.T.) dated 26 September 2017 (CBIC text; no later amending notification found). Later notifications should be checked; no official consolidated text exists beyond the CBIC text.
Rule 4 values goods at the transaction value of identical goods sold for export to India and imported at or about the same time; rule 5 does the same with similar goods. Adjustments are allowed for commercial level, quantity and transport only on demonstrated evidence, and if more than one value is found, the lowest is used. Under rule 6, if rules 3, 4 and 5 fail, the value is found under rule 7, or rule 8; the importer may ask for the order of 7 and 8 to be reversed.
Rule 4: identical goods
Rule 4(1)(a) says that, subject to rule 3, the value of imported goods shall be the transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued. "Identical goods" has the meaning in rule 2(1)(d); see our article on rules 1 and 2.
Proviso. The transaction value used "shall not be the value of the goods provisionally assessed under section 18 of the Customs Act, 1962". A provisional assessment cannot be the benchmark; read the guide to section 18 for provisional assessment itself.
Level and quantity (clauses (b) and (c))
- Clause (b): use the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued.
- Clause (c): where no such sale is found, use a sale at a different commercial level, or in different quantities, or both, adjusted for the difference. The adjustment must rest on "demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustments, whether such adjustment leads to an increase or decrease in the value."
For example, Bharat Valves Ltd imports 10 control valves from an overseas maker. The only comparable sale of identical valves was a bulk sale of 500 units to another Indian buyer. A price list issued by the maker with prices for different quantity bands can support an adjustment. Without objective evidence of that kind, clause (c) does not permit a guess.
Transport differences (sub-rule (2))
Where the costs and charges in rule 10(2) (transport, loading, unloading, handling and insurance to the place of importation) are included in the identical goods' transaction value, an adjustment is made if there are significant differences in those costs between the goods being valued and the identical goods, arising from differences in distances and means of transport. See our article on rule 10.
The lowest value (sub-rule (3))
If more than one transaction value of identical goods is found, "the lowest such value shall be used".
Rule 5: similar goods
Rule 5(1) mirrors rule 4(1)(a): subject to rule 3, the value is the transaction value of similar goods sold for export to India and imported at or about the same time, again with the same proviso excluding provisionally assessed values. Rule 5(2) applies clauses (b) and (c) of rule 4(1), rule 4(2) and rule 4(3) "mutatis mutandis". So the level and quantity logic, the transport adjustment and the lowest-value rule all carry over.
| Point | Rule 4 (identical goods) | Rule 5 (similar goods) |
|---|---|---|
| Starting point | Transaction value of identical goods | Transaction value of similar goods |
| Timing | Sold for export to India, imported at or about the same time | Same |
| Provisional values | Excluded by proviso | Excluded by proviso |
| Level and quantity | Clauses (b) and (c) | Carried over by rule 5(2) |
| Transport differences | Sub-rule (2) | Carried over by rule 5(2) |
| More than one value | Lowest used | Carried over by rule 5(2) |
The ladder is sequential. Under rule 3(4) and the Explanation to rule 12, a value is determined "by proceeding sequentially" through rules 4 to 9. Our article on rule 3 explains how valuation reaches this point, and the article on rules 11 and 12 covers rejection of the declared value.
Rule 6: what comes after rules 3, 4 and 5
Rule 6 says: "If the value of imported goods cannot be determined under the provisions of rules 3, 4 and 5, the value shall be determined under the provisions of rule 7 or, when the value cannot be determined under that rule, under rule 8."
Proviso: "at the request of the importer, and with the approval of the proper officer, the order of application of rules 7 and 8 shall be reversed." Two things are needed: the importer's request and the proper officer's approval. An importer who holds full cost data from a related producer may prefer computed value (rule 8) first; one who knows resale prices in India may prefer deductive value. Our article on rules 7 to 9 explains both.
Practical checklist
- Identify whether any identical goods (same producer or country, same reputation) were sold for export to India at about the same time.
- Confirm that candidate values were accepted under rule 3 and are not provisional.
- Gather price lists or other evidence for any quantity or commercial-level adjustment.
- If several values exist, expect the lowest to be used.
- If identical and similar goods fail, consider whether to request the reversal of rules 7 and 8.
For pricing disputes, see our general guide to customs valuation and the Customs Act section 14 article.
Need help with comparison values?
If customs has proposed a value based on other shipments of identical or similar goods, we can test whether the comparison meets rules 4 and 5 and whether an adjustment should apply. Talk to our compliance advisory team.
Key takeaways
- Rule 4 values by identical goods; rule 5 by similar goods, both at or about the same time.
- Provisionally assessed values cannot serve as the comparison.
- Adjustments for level, quantity or transport need demonstrated evidence.
- If more than one value is found, the lowest is used.
- Rule 6 moves to rule 7, then rule 8, and the importer can request reversal with the proper officer's approval.
Read next
- Rule 3: transaction value and related-party sales
- Rules 7 to 9: deductive value, computed value and the residual method
- Rule 13: the interpretative notes
- 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.