Purpose & Applicability of Special Valuation Branch (SVB) in Customs

Purpose & Applicability of Special Valuation Branch (SVB) in Customs

Customs duties are levied on the value of goods imported to India. However, these values can be impacted if the overseas supplier and the importer are related persons. These can affect the transaction value and consequently the import duty levied by the customs authorities. Therefore, Indian customs authorities have a special division known as the Special Valuation Branch (SVB) that investigates and analyses the valuation of goods when they are imported by the related parties.  Let’s get deeper insights about what is SVB in Customs.

Constitution and Purpose of Special Valuation Branch

As discussed earlier, SVBs are created to monitor the valuation of goods imported when the related parties are involved. Currently, there are 5 Special Valuation Branches in India i.e., Delhi, Mumbai, Kolkata, Chennai and Bengaluru. The importer is free to select any of the SVB for valuation of imported goods. SVB investigation gets triggered immediately at the time of import when the bill of entry is presented for customs clearance and it is disclosed that the seller is the related party of the importer.

Further, in certain cases of import transactions between unrelated parties, SVB investigations can still take place where the importer makes additional payments over and above the value of imported goods to the seller as per Rule 10 of the Customs Valuation Rules. In such cases, the SVB shall determine whether these additional payments have any bearing or nexus with the value of the imported goods. Such payments can include royalties, commission, design fees, IT or HR support etc.

Applicability of Special Valuation Branch Investigation

SVB investigations are taken up in case of import from related parties. However, in certain cases, SVB inquiries are not necessary. This includes:

• Import of prototypes and samples from related sellers
• Imports undertaken from related sellers where the customs duty on the product is nil or unconditionally fully exempt.
• Imports where the imported goods value less than Rs. 1 lakh and the value of imports cumulatively do not exceed Rs. 25 lakhs in a financial year.

How Can Importers Justify that the Transaction Value is Not Influenced Due to Buyer-Seller Relationship?

As per the customs valuation rules, the transaction value shall be considered as the import value. The importers can justify that the value of the imported goods is not influenced by the relationship between the buyer and seller by comparing it with the value derived using the methods indicated in the customs valuation rules. This includes the value of similar or identical goods, deductive value, computed value etc.

Multiple submissions have to be made considering the requirements of the Special Valuation Branch and at times, information from the overseas supplier needs to be furnished as required by the SVB. In case the importer does not furnish the information and documents as required by the SVB, then the SVB is authorised to conduct the best judgement assessment as per the SVB customs rules.

If you are an importer undertaking imports from a related supplier, then feel free to contact the ASC Group to liaison with the SVB.