Imports from a foreign parent, subsidiary, group company or other related supplier require careful customs valuation. The relationship itself does not make the invoice value unacceptable. The real question is whether the relationship, or any connected payment, has influenced the price of the imported goods.
Osgan Consultants assists Indian importers with the complete Special Valuation Branch process: reviewing agreements and pricing arrangements, preparing Annexure A and Annexure B submissions, coordinating provisional assessment, responding to SVB queries, presenting the valuation position and supporting finalisation of assessments.
Planning your first related-party import? A pre-filing review can identify valuation gaps before the first Bill of Entry is assessed.
What is the Special Valuation Branch?
The Special Valuation Branch is a specialised wing of Indian Customs that investigates imports involving related buyers and sellers, and certain other arrangements that may affect the assessable value. Its role is to examine the circumstances surrounding the sale and determine whether the declared transaction value can be accepted under the Customs Valuation Rules.
SVB proceedings are therefore not a routine price-loading exercise. A properly supported related-party price may be accepted where the importer demonstrates that the relationship did not influence the price and that all additions required under the valuation rules have been correctly considered.
Legal framework for SVB valuation
SVB examination is principally governed by:
- Section 14 of the Customs Act, 1962, which provides the statutory basis for valuation of imported goods.
- The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, particularly Rule 2(2), Rule 3(3) and Rule 10.
- CBIC Circular No. 5/2016-Customs dated 9 February 2016, which sets out the current procedure for SVB investigations.
- CBIC Circular No. 4/2016-Customs dated 9 February 2016, dealing with legacy renewals and pending SVB matters.
When can an SVB examination arise?
An SVB review may arise when an Indian importer purchases goods from a related foreign seller. Parties may be treated as related where, among other situations, one directly or indirectly controls the other; both are controlled by a third person; they are officers or directors of one another's businesses; they are legally recognised business partners; an employer-employee relationship exists; a person owns, controls or holds at least five per cent of the voting stock or shares of both; together they control a third person; or they are members of the same family.
Customs may also examine transactions involving:
- Royalty or licence fee connected with the imported goods
- Technical assistance, know-how, trademark or collaboration agreements
- Proceeds of subsequent resale, disposal or use accruing to the seller
- Payments made to the seller or a third party as a condition of sale
- Post-import debit notes, credit notes or transfer-pricing adjustments
SVB process: how the matter generally proceeds
1. Initial disclosure
The importer declares the related-party transaction in the Bill of Entry and submits the prescribed Annexure A information. For a first transaction, advance filing of the Bill of Entry and a prepared valuation note can reduce avoidable clearance delays.
2. Preliminary Customs review
The proper officer examines the relationship, pricing method, comparable values, royalty or other payments and the circumstances surrounding the sale. The officer places findings before the Commissioner to decide whether an SVB investigation is required.
3. Reference or closure
The Commissioner may refer the matter to SVB with provisional assessment under Section 18, decide that SVB investigation is unnecessary, or direct assessment under the applicable valuation rules.
4. Detailed submission
Where referred, the importer is ordinarily required to file a complete, indexed reply to Annexure B with supporting records within 60 days. A continuity bond may be required for provisional assessments.
5. SVB investigation
SVB reviews the agreements, pricing policy, financial and commercial records, comparable transactions and connected payments. Further queries or a personal hearing may follow. The importer should present one consistent customs valuation position across every port of import.
6. Investigation report and finalisation
SVB issues an Investigation Report to the referring Customs formation. If the declared value is accepted, provisional assessments are finalised. If influence on value is alleged, the proper officer proceeds through show cause notice and adjudication in accordance with law.
How Osgan Consultants can assist
Osgan provides practical, end-to-end support for SVB matters across India, including:
- Pre-import review of the relationship, agreements and valuation exposure
- Preparation and review of Annexure A and Annexure B replies
- Customs valuation note addressing arm's-length pricing and Rule 10 additions
- Document collation, indexing and reconciliation across business, tax and Customs records
- Representation before the Appraising Group, Commissioner and Special Valuation Branch
- Responses to questionnaires, deficiency letters and follow-up queries
- Support for provisional assessment, continuity bond and multi-port imports
- Assistance in finalisation of provisional Bills of Entry
- Advisory on changes in agreements, royalty, pricing policy or post-import adjustments
Our approach is not limited to filing forms. We first understand how the goods are priced, how the parties operate and what payments move between group entities. The submission is then built around the commercial facts and the legal test Customs must apply.
Frequently asked questions
Is SVB registration mandatory for every related-party import?
The expression 'SVB registration' is widely used, but SVB is not a licence or registration. A related-party transaction must be disclosed and examined. Whether a detailed SVB investigation is necessary is decided by Customs after preliminary review.
Will Customs automatically reject the invoice value because the parties are related?
No. Related-party status does not by itself require rejection or loading of value. The transaction value may be accepted if the relationship has not influenced the price and the importer supports its position under Rule 3 of the Customs Valuation Rules.
Are any related-party imports normally kept outside SVB investigation?
CBIC Circular No. 5/2016 identifies certain exclusions, including samples and prototypes, imports where the duty is unconditionally nil or fully exempt, and low-value transactions below the stated individual and annual thresholds. The facts should still be checked before relying on an exclusion.
Is an Extra Duty Deposit required during investigation?
Ordinarily, provisional assessment should continue without a security deposit or bank guarantee when the importer provides the required information within time. If the information is not furnished within 60 days, the Commissioner may impose security at five per cent of the declared assessable value for a limited period, in accordance with the circular.
Does an SVB order require periodic renewal?
No. The system of periodic renewal of SVB orders was discontinued in 2016. However, the importer must disclose material changes in the circumstances of sale, agreements, royalty or licence fee, other connected payments or post-import price adjustments.
Can one SVB matter cover imports through more than one Customs port?
Yes. The SVB investigation is centrally recorded, while provisional assessments may exist at multiple Customs stations. The submission should identify all ports and Bills of Entry so that the Investigation Report and finalisation are implemented consistently.
Speak with an SVB consultant
If your company imports from a foreign group entity, pays royalty or technical fees, or is facing provisional assessment or an SVB questionnaire, Osgan Consultants can review the transaction and prepare a clear action plan.
Contact Osgan Consultants: 011-29832120 | osganconsultants@hotmail.com
