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Special Valuation Branch

Special Valuation Branch

Special Valuation Branch (SVB) is a unit of the Custom House the function of which is to investigate the transactions involving the association between the suppliers including any technical collaboration between the parties etc.  All those importers importing goods from related parties or having any technical collaboration with their related parties are required to file a declaration about the relationship at the time of filing a bill of entry before the jurisdictional customs authorities i.e. Appraising Group.

The Group based on the circumstances of sale and the invoice value of the identical or similar goods will make a reference to the SVB order (Special Valuation Branch ) for further investigation of the influence of connection on assessable value. If the importer is able to demonstrate with the help of the invoice value of sales to unrelated buyers that the import values are not influenced by the relationship. In that case, there is no requirement for any recommendation to SVB in customs.

Also, the bill will be evaluated based on those coexisting import values. Although, if there will be no coexisting imports, and the contrast of values cannot be calculated at the time of SVB in customs evaluation of bill of entry, then a recommendation to Special Valuation Branch needs to be made by the Appraising Group with the prior approval of the Commissioner of Customs. 

The case is registered with the Special Valuation Branch order based on the reference from the Appraising Group and a PD circular for provisional assessment is issued to the importer as well as the Appraising Group. The importer is required to indicate the PD circular no. at the time of provisional assessment of all its imports and execute PD bond with extra duty deposit at the prescribed rate on the assessable value of goods along with other details as required by the questionnaire issued by the Appraising Group.

Based on the details submitted by the importer an order in original is passed by the D.C. (Special Valuation Branch) which is intimated to the importer and also to the Appraising Group. The SVB order in original is valid for a period of three years and requires renewal. 

How ASC Help?

ASC has in-house professionals with years of experience in consulting importers on SVB in Customs to have their bill of entry finalized by the Customs Authorities and also the renewal of order in original. Therefore ASC provides the out-and-out services for the Special Valuation Branch of customs & helps thoroughly:

  • Analyzing the influence on the import price due to the relationship between the importer and its suppliers and also any other collaboration agreements;
  • Assisting companies in organizing the information and documents required to be submitted to the Appraising Group
  • Preparation, filing, and representation before the Appraising Group and providing timely support in order to faster disposal of the case
  • Keeping a Follow up with the Appraising Group to decrease the process timeline till the order in original is received.
  • Assisting companies in the renewal of SVB orders in original after their expiration for uninterrupted flow 

Frequently Asked Questions

How many Special Valuation Branches are there in India?

Currently, there are 5 special valuation branches in India i.e., Mumbai, Chennai, Kolkata, Delhi, and Bengaluru.

When Special Valuation Branche (SVB) investigation is exempted?

SVB investigations are usually applicable for all the imports undertaken from the related supplier. However, in the following cases, the SVB investigation is exempted:

  • 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.
Whether the documents submitted for income tax transfer pricing purposes regarding the valuation of goods are relevant for SVB in customs purposes?

They can act as supporting documents but cannot be the sole basis for the purpose of SVB investigations. Further, the purpose of SVB in customs authorities is to identify the undervaluation of imported goods whereas, the purpose of income tax authorities is to identify the overvaluation of imported goods. Also, different methodologies are adopted by customs and income tax for the valuation of goods. However, customs authorities may ask for the documents prepared for transfer pricing purposes under the income tax but they won’t be the sole basis for their investigation.

How can changes in circumstances of sale be reported to the Special Valuation Branch Order?

In case there is any change in the circumstances of sale or there is any change in the terms and conditions between the importer and the supplier, then the importer shall file a declaration in Annexure-C. In case the jurisdiction commissioner recommends the SVB orders process, then it will be initiated. 

Whether Special Valuation Branch investigation is possible in case of imports from unrelated persons?

Yes. If the importer makes additional payments to the supplier over and above the value of imported goods, then it can attract SVB investigations to know the actual reason behind such payments. 

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