The Special Valuation Branch (SVB) investigates the transactions between the importer and the related foreign supplier. When the parties are related as per Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (Valuation Rules), then the valuation of goods as imported from such related foreign suppliers is investigated and/or examined by the SVB.
Rule 2(2) of the said Customs Valuation Rules enumerates the following persons who shall be deemed to be ‘related’ for the purpose of customs valuation:
Circulars Pertaining to SVB
CBEC has comprehensively revised the instructions for the examination of related party transactions. In this regard, the following circulars have been issued by CBEC:
(ii) Circular No. 05/2016-Customs dated 09.02.2016 providing procedure for investigation of related party import cases and other cases by SVBs B.2
The step by step SVB procedure to be followed is laid down as under:
Step 1 – Filing of Annexure-A with the Customs Authority
Every importer while filing bill of entry makes a declaration about whether seller of imported goods is related in terms of Rule 2(2) of the Valuation Rules. Accordingly, importer, shall file Annexure-A along with the supporting documents with the Customs Authorities before getting the goods cleared from the Customs Port.
Step-2- Reference to SVB
√ Upon filing the Bill of Entry and receipt of information under Annexure-A, the proper officer will examine “circumstances surrounding the sale” within 3 days based on parameters specified in the said Annexure – A.
√ Further, the following cases shall not be taken up for inquiries by SVBs:
√ Thereafter, findings would be forwarded to Commissioner for a decision on whether the case is fit for being referred to the SVB for investigations.
√ The Commissioner based on preliminary findings will take a considered view on whether-
Step-3- Procedure for reference to SVB
√ If the Commissioner -refers case to SVB, the proper officer would assess and release goods on provisional basis and seek further information as in Annexure B.
√ Further, Importer as directed by proper officer is required to furnish documents as per Annexure B & reply to Jurisdictional SVB within 60 days.
√ The proper officer needs to transfer the related documents to the jurisdictional SVB, within 3 working days of release of goods on provisional basis
Step-4 – SVB Investigation
√ Upon receipt of documents from referring customs formation, SVB shall inform details of importer to Risk Management Division (RMD).
√ The SVB Department will go through the documents and information received and complete investigations and issue its finding in 2 months from date of receipt of initial information and documents. Extension can be sought for another 2 months.
√ The SVB will quantify the extent of influence on the transaction value due to the following and submit its findings to the Principal Commissioner / Commissioner.
√ Upon approval by the concerned Principal Commissioner / Commissioner, an Investigation Report (“IR”) containing following and with recommendations will be submitted to the referring customs station.
√ Further, IR will also be submitted to any other customs station where the goods were cleared on provisional basis as well as to the Directorate General of Valuation.
Step-5- Finalization of Assessments
√ Upon receipt of the Investigation Report from the SVB, all the provisional assessments will be immediately finalized.
√ In case the investigation report finds that the declared value has been influenced by the circumstances surrounding the sale, then the Customs Officer will issue a Show Cause Notice to the importer within 15 days
√ In case IR report accepts declared value then there shall not be any further investigation and such report would be valid without any expiry (i.e renewal is not required) for said sellers.
√ For every new related seller SVB complete process needs to be followed.
Changes in Circumstances surrounding the sale
In case the circumstances of sale or terms and condition of agreement between existing buyer and seller changes, then importer shall declare same at place of import in Annexure C and SVB process if recommended by jurisdictional commissioner would be initiated. (process explained above)