Understanding the Special Valuation Branch (SVB) in India: A Guide for Importers

If you’re importing goods into India and working with related suppliers, it’s crucial to understand the role of the Special Valuation Branch (SVB). This specialized branch of Indian Customs ensures that transactions between related parties are fairly valued, preventing underpricing or overpricing that can affect customs duties. Here’s everything you need to know about the SVB and how to navigate its procedures.

What is the Special Valuation Branch (SVB)?

The SVB is a division of Indian Customs that investigates the valuation of imported goods when the importer and supplier are related. Its primary goal is to ensure that the declared transaction value is accurate and not influenced by the relationship, which could lead to lower or higher customs duties.

Where Are SVB Offices Located?

SVBs operate out of five major Custom Houses in India:

• Chennai
• Kolkata
• Delhi
• Bangalore
• Mumbai

Decisions made by any SVB office apply uniformly across all Indian ports, ensuring consistency.

When is an SVB Investigation Triggered?

An SVB investigation is initiated if:

• The importer declares a relationship with the supplier.
• Additional payments like royalties or fees could impact the value of goods.

The aim is to verify that the declared value of goods is fair and unaffected by the relationship.

Procedure for an SVB Investigation

The process is outlined in Board Circular No. 05/2016 and involves the following steps:

1. Filing Initial Documents: Importers must declare their relationship with the supplier during the first import and provide supporting documents.
2. Provisional Assessment: Goods are temporarily cleared while the SVB conducts its investigation.
3. Response Submission: Importers submit additional details through forms like Annexure B within 60 days.
4. Detailed Submission: Importers provide evidence showing that their relationship does not impact the declared value.
5. Investigation Report: The SVB submits a final report for customs to make a definitive assessment.

Common Cases Handled by the SVB

• Related Party Transactions: When
  
  
  the importer and supplier are related, potentially influencing the value of goods.
• Complex Adjustments: Cases requiring valuation adjustments under Rule 10 of the Customs Valuation Rules.

Exceptions to SVB Investigations

Not all related-party imports are investigated. Exceptions include:

• Samples or prototypes.
• Duty-free imports.
• Transactions below INR 100,000 or total imports under INR 2.5 million in a financial year.

How to Justify Transaction Values

Importers can validate their declared values by:

• Comparing prices with similar goods sold to unrelated parties.
• Using deductive or computed valuation methods as per the Customs Valuation Rules.

What Happens if the Declared Value is Rejected?

If the SVB rejects the declared value:

• A show-cause notice is issued.
• Importers can submit a response to justify their valuation.
• If the response is not accepted, the importer can appeal the decision.

Compliance Tips for Importers

• Maintain Accurate Documentation: Keep all pricing and contract details organized and accessible.
• Prepare for Audits: Clearly document and explain your pricing methods.
• Engage Local Experts: Work with customs professionals who understand SVB rules to streamline compliance.
• Stay Informed: Monitor updates in DGFT notifications and SVB guidelines.

Key Points About the SVB

• Report Validity: The SVB report applies to all ports in India until significant changes occur.
• Documentation for Changes: Use Annexure C to notify Customs of any changes in the importer-supplier relationship or valuation.
• Transfer Pricing vs. SVB: While transfer pricing documents can help, they alone are not sufficient for customs valuation.

Conclusion

For importers dealing with related parties, understanding the SVB process is essential for smooth operations in India. By maintaining transparency, accurate documentation, and a proactive approach to compliance, importers can avoid delays and penalties. If you need further assistance, consulting with Indian customs experts can ensure a seamless experience.