Special Valuation Branch Cases

The 'Special Valuation Branch (SVB)' was created for investigation of transactions involving special relationships between buyer - seller or those involving other special circumstances surrounding the sale of imported goods, both of which have a bearing on the assessable value.

Challenges with SVB Cases:

• Delays in finalization of SVB investigations,
• Uncertainty due to provisional assessments,
• Transaction costs increases due to Extra Duty Deposits (EDD)

Impact of SVB

'Extra Duty Deposit' @ 1 % of declared assessable value is being obtained from the importer for a period of 4 months during which time he is required to submit required documents and information to the SVB. In the event of his failing to do so, the EDD can be increased to 5% till such time the importer complies. Upon the importer complying with the requisition for documents and information, EDD shall be discontinued, while imports will continue to be assessed provisionally till the completion of investigations.

In other words, the imports were continued to be assessed provisionally on the basis of a PD Bond but without any EDD.

Cases not to be taken up for inquiries by SVBs are

• Import of samples and prototypes from related sellers
• Imports from related sellers where duty chargeable (including additional duty of Customs etc.) is unconditionally fully exempted or nil.
• Any transaction where the value of imported goods is less than Rs 1 lac but cumulatively these transactions do not exceed Rs 25 lacs in any financial year

Cases, which may be considered for SVB Investigations

While filing a Bill of entry, Importer makes a declaration about the seller of imported goods as a related party, as defined under Rule 2(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 (CVR, 2007).

Apart from related parties transactions, cases involving following additions to declared transaction value also need to be examined to determine whether SVB investigations are necessary:

• 'royalty and licence fee' under Rule 10 (1)(c) of CVR, 2007 or
• where the value of any part of proceeds of any subsequent resale, disposal or use of imported goods accrues to the seller [i.e. Rule (10)(1)(d)] of CVR, 2007; or
• where any other payments are made or are contemplated to be made in future by buyer to seller as a condition of sale of imported goods etc., [i.e. Rule 10(1 )(e)] of CVR, 2007

Reference:

WCO's Guideto Customs Valuation and Transfer Pricing (June 2015)

CustomsValuation (Determination of Value of Imported Goods) Rules, 2007