SVB is a unit of Indian Customs Department which determines the valuation of Import transactions between the related parties. In cases where the Indian entity imports goods from its related companies located outside India, the Indian importer has to undergo an additional procedure commonly called as the SVB process. The said examination by the Customs authorities is required to verify whether the goods supplied by the supplier from outside India to its related importer have
As your customs consultant we demystify related party transactions with precise valuation services through the Special Valuation Branch (SVB). CCC is here to make your customs and trade ventures seamless and compliant. Our seasoned team will provide end to end support in valuation of goods imported from the related overseas entity by the SVB assistance in investigation of related party transactions.
Special Valuation Branch (SVB)
The Special Valuation Branch (SVB) is a dedicated unit within the Indian Customs Department that focuses on examining the valuation of transactions between related parties, as defined under Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR).
The primary role of the SVB is to assess whether the pricing of goods in inter-company transactions is influenced by the relationship between the importer and the foreign supplier, potentially leading to an undervaluation aimed at reducing Customs Duty liability.
What is the Special Valuation Branch (SVB) in Customs, and what role does it play?
The term “related” has been defined in Rule 2(2) of the CVR to provide that buyer and seller shall be deemed to be "related" if:
-
They are officers or directors of one another's businesses;
-
They are legally recognized partners in business;
-
They are employer and employee;
-
Any person directly or indirectly owns, controls, or holds five percent or more of the outstanding voting stock or shares of both of them;
-
One of them directly or indirectly controls the other;
-
Both of them are directly or indirectly controlled by a third person;
-
Together they directly or indirectly control a third person; or
-
They are members of the same family.
How is a “related party” defined for the purpose of Customs valuation?
Yes, transactions involving the import of goods by an Indian company from its holding company, or from any associated or affiliated group company located outside India, are typically treated as related party transactions and are subject to scrutiny by the Customs authorities.
Are transactions involving imports by an Indian company from its holding or affiliated group companies abroad treated as related party transactions by Customs authorities?
As per the prescribed procedures, the following cases are exempted from SVB inquiries:
-
Import of samples and prototypes from related sellers;
-
Imports from related sellers where duty chargeable is unconditionally fully exempted or nil;
-
Any transaction where the value of imported goods is less than INR 100 thousand (approximately 1,250 Euro), but cumulatively these transactions do not exceed INR 2.5 million (approximately 30,000 Euro) in any financial year.
Is it mandatory to refer every related party import to the Special Valuation Branch? If not, what are the exemptions?
The importer is free to select any Customs House for undergoing the SVB investigation based on its convenience. However, it is suggested to select the SVB department which is situated closest to the registered office of the related importer in India.
Which location should the importer select for their SVB investigation?
Presently, the Customs Department has SVBs functioning at five Customs port cities, namely: Bengaluru, Chennai, Delhi, Kolkata, and Mumbai.
What are the locations of the Customs SVB offices in India?
As per the prescribed procedures, the following cases are exempted from SVB inquiries:
-
Import of samples and prototypes from related sellers;
-
Imports from related sellers where duty chargeable is unconditionally fully exempted or nil;
-
Any transaction where the value of imported goods is less than INR 100 thousand (approximately 1,250 Euro), but cumulatively these transactions do not exceed INR 2.5 million (approximately 30,000 Euro) in any financial year.
Is it mandatory to refer every related party import to the Special Valuation Branch? If not, what are the exemptions?
An SVB investigation is generally initiated at the time of the first import of goods by an importer from a related party, when the importer declares in the Bill of Entry—filed for customs clearance—that the foreign supplier is a ‘related party’.
Under what circumstances is an SVB investigation initiated?
What is the process flow of an SVB investigation under Customs regulations?
STEP 1
When an importer in India brings in goods for the first time from a related foreign supplier, they must submit certain documents, including Annexure-A, which provides details about the relationship between the parties and the transfer pricing method. Based on this declaration, the Customs appraising cell assesses whether the declared value aligns with the Customs Valuation Rules. If the value is acceptable, a final assessment is done, and a reference number is issued for future imports. However, if further scrutiny is needed, the case is referred to the Special Valuation Branch (SVB), and goods are cleared on a provisional basis.
STEP 2
Once a case is referred to the SVB, the department registers it and issues a second questionnaire—Annexure B—to the importer under a separate file reference number. The importer is required to submit a response within 60 days of issuance.
STEP 3
After submitting Annexure B, the importer must provide detailed written justifications to prove that the declared transaction value is not influenced by the relationship with the supplier, as per the Customs Valuation Rules.
STEP 4
Based on the submissions and supporting documents, the SVB issues an Investigation Report (IR) with approval from the Principal Commissioner/Commissioner to the port Customs authorities, with a copy to the importer. The report outlines key facts, findings, and the rationale for accepting or rejecting the declared transaction value under the Customs Valuation Rules (CVR).
In what cases is the importer required to execute a bond?
An importer is required to execute a bond when the Customs authorities determine that further scrutiny of the declared transaction value is necessary and refer the case to the Special Valuation Branch (SVB). In such cases, the goods are cleared on a provisional basis, and all future imports remain provisionally assessed until the SVB issues its final report.
What happens if the importer fails to respond to Annexure B within the prescribed timeframe?
If the importer fails to respond within this timeframe, an Extra Duty Deposit (EDD), calculated at 5% of the declared assessable value, is levied on subsequent imports cleared on a provisional basis for a period of three months.
Is the IR issued by SVB valid at all ports in India, and what is its validity?
Once the SVB proceedings are finalised, the Investigation Report (IR) issued by any SVB is valid across all ports in India. The IR has no expiry or validity limit. The accepted declared transaction value remains applicable until the importer notifies Customs of any change in the circumstances related to the sale of goods.
To know more about the SVB programme read our blogs on SVB or reach out to us.
The Special Valuation Branch (SVB) is a dedicated unit within the Indian Customs Department that focuses on examining the valuation of transactions between related parties, as defined under Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR).
The primary role of the SVB is to assess whether the pricing of goods in inter-company transactions is influenced by the relationship between the importer and the foreign supplier, potentially leading to an undervaluation aimed at reducing Customs Duty liability.
What is the Special Valuation Branch (SVB) in Customs, and what role does it play?
The term “related” has been defined in Rule 2(2) of the CVR to provide that buyer and seller shall be deemed to be "related" if:
-
They are officers or directors of one another's businesses;
-
They are legally recognized partners in business;
-
They are employer and employee;
-
Any person directly or indirectly owns, controls, or holds five percent or more of the outstanding voting stock or shares of both of them;
-
One of them directly or indirectly controls the other;
-
Both of them are directly or indirectly controlled by a third person;
-
Together they directly or indirectly control a third person; or
-
They are members of the same family.
How is a “related party” defined for the purpose of Customs valuation?
Yes, transactions involving the import of goods by an Indian company from its holding company, or from any associated or affiliated group company located outside India, are typically treated as related party transactions and are subject to scrutiny by the Customs authorities.
Are transactions involving imports by an Indian company from its holding or affiliated group companies abroad treated as related party transactions by Customs authorities?
Presently, the Customs Department has SVBs functioning at five Customs port cities, namely: Bengaluru, Chennai, Delhi, Kolkata, and Mumbai.
What are the locations of the Customs SVB offices in India?
The importer is free to select any Customs House for undergoing the SVB investigation based on its convenience. However, it is suggested to select the SVB department which is situated closest to the registered office of the related importer in India.
Which location should the importer select for their SVB investigation?
As per the prescribed procedures, the following cases are exempted from SVB inquiries:
-
Import of samples and prototypes from related sellers;
-
Imports from related sellers where duty chargeable is unconditionally fully exempted or nil;
-
Any transaction where the value of imported goods is less than INR 100 thousand (approximately 1,250 Euro), but cumulatively these transactions do not exceed INR 2.5 million (approximately 30,000 Euro) in any financial year.
Is it mandatory to refer every related party import to the Special Valuation Branch? If not, what are the exemptions?
What is the process flow of an SVB investigation under Customs regulations?
STEP 1
When an importer in India brings in goods for the first time from a related foreign supplier, they must submit certain documents, including Annexure-A, which provides details about the relationship between the parties and the transfer pricing method. Based on this declaration, the Customs appraising cell assesses whether the declared value aligns with the Customs Valuation Rules. If the value is acceptable, a final assessment is done, and a reference number is issued for future imports. However, if further scrutiny is needed, the case is referred to the Special Valuation Branch (SVB), and goods are cleared on a provisional basis.
STEP 2
Once a case is referred to the SVB, the department registers it and issues a second questionnaire—Annexure B—to the importer under a separate file reference number. The importer is required to submit a response within 60 days of issuance.
STEP 3
After submitting Annexure B, the importer must provide detailed written justifications to prove that the declared transaction value is not influenced by the relationship with the supplier, as per the Customs Valuation Rules.
STEP 4
Based on the submissions and supporting documents, the SVB issues an Investigation Report (IR) with approval from the Principal Commissioner/Commissioner to the port Customs authorities, with a copy to the importer. The report outlines key facts, findings, and the rationale for accepting or rejecting the declared transaction value under the Customs Valuation Rules (CVR).
An SVB investigation is generally initiated at the time of the first import of goods by an importer from a related party, when the importer declares in the Bill of Entry—filed for customs clearance—that the foreign supplier is a ‘related party’.
Under what circumstances is an SVB investigation initiated?
Once the SVB proceedings are finalised, the Investigation Report (IR) issued by any SVB is valid across all ports in India. The IR has no expiry or validity limit. The accepted declared transaction value remains applicable until the importer notifies Customs of any change in the circumstances related to the sale of goods.
Is the IR issued by SVB valid at all ports in India, and what is its validity?
An importer is required to execute a bond when the Customs authorities determine that further scrutiny of the declared transaction value is necessary and refer the case to the Special Valuation Branch (SVB). In such cases, the goods are cleared on a provisional basis, and all future imports remain provisionally assessed until the SVB issues its final report.
In what cases is the importer required to execute a bond?
If the importer fails to respond within this timeframe, an Extra Duty Deposit (EDD), calculated at 5% of the declared assessable value, is levied on subsequent imports cleared on a provisional basis for a period of three months.
What happens if the importer fails to respond to Annexure B within the prescribed timeframe?
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