Procedure and Eligibility for Special Valuation Branch Registration

The Special Valuation Branch (“SVB”) was created to look at the valuation of products imported from a related overseas source by an Indian party.

When an Indian importer buys items from a foreign supplier and both the Indian importer and the foreign supplier are related to each other, it’s likely that the transactions aren’t done on an “arm’s length” basis. In such circumstances, the Indian importer must go through a separate process known as the Special Valuation Branch (“SVB”).

The Special Valuation Branch Registration focuses on connected parties influencing the transaction value of imported products. The customs duty due by the importer is directly related to the transaction value.

Who is obligated to register?

• Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007
• Rule 2(1) of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007
• Section 14(1) of the Customs Act, 1962

Procedure of Special Value Branch Registration:

• Before the goods are cleared from the Customs Port, the importer must file a declaration in Annexure-A together with the bill of entry and supporting documentation with the Customs Authorities.
• Following that, the Proper officer investigates the facts surrounding the transaction, as well as the invoice value of the commodities, before referring the case to the Special Valuation Branch for further inquiry if incase needed.
• The Proper Officer may request additional information in Annexure-B if the case is referred to the Special Valuation Branch. The importer must respond to the jurisdictional Special Valuation Branch within 60 days and provide all information and documents requested by the Proper officer as per Annexure-B.

If the importer fails to respond to Annexure B within the specified sixty-day period, an Extra Duty Deposit (up to 5% of the stated assessable value of goods) is collected on subsequent imports of goods cleared on a provisional basis for three months.

• The Special Valuation Branch conducts an investigation based on papers provided by the importer and then reports to the Principal Commissioner.

Few of the documents required for Special Valuation Branch Registration:

• Photocopies of necessary Bills of Entry
• Sample import invoices from the previous three years
• Annual reports for the preceding three years
• Price list of products purchased from a foreign source at the moment
• Collaboration agreements, joint venture agreements, and other agreements with overseas suppliers.
• CIF value statements for the last three years, duly confirmed by a Chartered Accountant
• Sample invoices and bill of entry of imports of identical or similar items by any other person Statement of shareholding in Indian firm with particulars of common Directors
• Payment information, as well as remittances with delayed payments
• Any other payments made to, on behalf of, or in accordance with the supplier’s instructions.

In the following cases, Special Valuation Branch registration is not mandated:

• Import of goods from linked suppliers as samples and prototypes.
• Imports of items from connected suppliers that are duty-free or duty-free with no conditions.
• Any transaction with a value of less than INR 100 thousand (about 1.250 Euro) is prohibited. Nonetheless, these transactions must not total more than INR 2.5 million, or about 30,000 Euros, in any given financial year.

Conclusion:

ASC provides assistance in all aspects of the Special Valuation Branch, including the production of registration applications, liaison for the issuance of SVB, Intimation Reports for acceptance, and percentage loading on invoice value for the purpose of a bill of entry assessment.

All bills of entry are assessed provisionally until the resolution of the Special Valuation Branch issue. All tentatively assessed bills of entry must be finally appraised after finalisation. We offer final assessment and revenue deposit return services if any were collected during the preliminary assessment of bills of entry.