The Special Valuation Branch (SVB) or SVB in Customs, was established by the government to investigate the valuation of goods imported from a foreign supplier by an Indian party. The requirement to investigate such imports arises due to the possible relationship between the Indian buyer and foreign supplier. When an Indian importer buys goods from a foreign supplier who is related to such an importer, then it is possible that the transaction is not carried out in the Arm’s Length Price (ALP). That is where the SVBs enter into the picture.
SVB’s role is to determine the impact of the relationship between the buyer and seller on the transaction value of the goods. The customs duty payable by the importers is directly related to the transaction value of the goods. Before discovering more about Special Valuation Branch Registration in Chennai, let’s understand certain important terminologies.
Arm’s Length Price
Arm’s length price is the price at which a transaction happens between the parties at a price similar to the transaction between unrelated parties in uncontrolled conditions. In simple terms, the price should not be influenced due to the relationship between the transacting parties.
To determine the applicability of Special Valuation Branch investigation in Chennai, it is important to determine whether the Indian buyer and foreign seller are related or not. Rule 2(2) of the Customs Valuation Rules becomes important in this regard.
As per Rule 2(2) of the said Customs Valuation Rules, the following persons shall be deemed to be ‘related’ for customs valuation:
- Officers / Partners / Directors in each other’s businesses
- Relationship between the employer and employee
- Any person who directly/indirectly controls, owns, or holds 5% of voting stock or shares of both.
- A third person directly/indirectly controls both or they control each other.
- They are members of the same family
- They control a third person directly/indirectly
- Sole agent or sole distributor
Who Needs to Obtain SVB in Customs Registration in Chennai?
The importers who are related to the suppliers as per the following rules need to obtain SVB registration in Chennai:
- 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
Special Value Branch Registration in Chennai Process
Here’s the process of special value branch registration in Chennai:
- The importer should file a declaration in Annexure-A while filing the bill of entry. The declaration should be supported by the required documents and filed with the customs authority before getting the goods cleared from the customs port.
- The proper officer will investigate the terms and conditions of sale, related circumstances and the invoice value of goods following which he will refer to the SVB for further investigation. It is important to note that direct application by the importer to the SVB is not considered.
- If the proper officer refers the case to SVB, he may seek further information in Annexure-B. The requisite information and documents should be submitted by the importer within 60 days. In case of failure to submit the required information and documents within 60 days, an additional Extra Duty Deposit shall be collected on subsequent import of goods that are cleared on a provisional basis for 3 months.
- The Special Valuation Branch will investigate the transaction based on the information available and submissions by the importer and submit all the relevant findings to the Principal Commissioner or Commissioner.
Documents Required for Special Valuation Branch Registration in Chennai
You need to submit the following documents for Special Valuation Branch registration in Chennai:
- Photocopies of the relevant Bills of Entry
- List of current prices of products imported from the foreign supplier
- Annual reports for the previous 3 financial years (if the importer is a Company)
- Sample invoices of imports during the previous 3 years
- Agreements with foreign suppliers like Collaboration agreements, Joint Venture agreements etc.
- Statements of the CIF value for the previous 3 years, duly certified by the Chartered Accountant:
- CIF value and landed cost of imports from the related foreign suppliers
- CIF value and landed cost of import from other suppliers
- Ex-factory value of the goods
- Royalty, net and gross Paid or payable
- Statement of shareholding in Indian company along with particulars of common Directors
- Sample invoices and bills of entries of imports of identical or similar goods by any other person
- Statement of equity capital held in a foreign company for the previous 3 years (if any)
- Payment details, also remittances with deferred payments (if any)
- Details regarding any other payment made to or on behalf of or under the instructions of the supplier.
When SVB in Customs Registration is Not Required?
SVB registration in Chennai is not required in the following cases:
- Import of goods from foreign sellers as prototypes or samples.
- Import of goods from the related sellers whereby the duty is unconditionally fully exempt or nil.
- Import of goods where the transaction value does not exceed Rs. 1,00,000. This exemption shall be available till the cumulative value of the transaction within a single financial year does not exceed Rs. 25,00,000.
If you need any assistance relating to Special Valuation Branch registration in Chennai, feel free to contact the ASC Group.