Special Valuation Branch Registrations

The government created the Special Valuation Branch (SVB), also known as SVB in Customs, to look into the value of commodities that an Indian party imports from a foreign provider. The need to look into these imports stems from the potential connection between the foreign provider and the Indian customer. It is possible that a transaction involving the purchase of products by an Indian importer from a foreign supplier who happens to be linked to the importer does not occur at the Arm's Length Price (ALP). Here's where the SVBs come into play.

Determining how the buyer-seller connection affects the transaction value of the items is the responsibility of SVB. The transaction value of the items has a direct bearing on the customs duty that importers must pay. Let's first clarify a few key terms before learning more about Special Valuation Branch Registration in India.

To register as an SVB (Special Valuation Branch) with Indian Customs, one needs to follow a specific process and submit a variety of documentation. When related parties import goods, the SVB is responsible for handling the commodity valuation and ensuring that the transaction value conforms with the Customs Valuation Rules.

The following are the general requirements and actions for SVB registration:

Arm’s Length Price

Cost of an Arm's Length is the price at which a transaction between parties occurs at a price comparable to a transaction between unrelated parties under uncontrolled circumstances is known as the arm's length price. Put simply, the relationship between the parties involved in the transaction should not affect the price.

Related Party

It is crucial to ascertain the relationship between the foreign seller and the Indian buyer in order to assess the suitability of the Special Valuation Branch inquiry in India. In this context, Rule 2(2) of the Customs Valuation Rules becomes significant.

The following individuals will be considered "related" for customs valuation purposes in accordance with Rule 2(2) of the aforementioned Customs Valuation Rules:

1. Directors, Officers, and Partners in each other's companies
2. Connection between the employer and the worker
3. Any individual holding shares of both or controlling, directly or indirectly, five percent of the voting stock.
4. A third party either controls both directly or indirectly, or they control one another.
5. They belong to the same family.
6. They have direct or indirect power over a third party.
7. Exclusive distributor or agent

Special Valuation Branch (SVB) Registration Procedure:

• Application Submission: Send the application form to the Customs SVB division together with the necessary paperwork.
• preliminary Inspection: To make sure the application is accurate and comprehensive, Customs will do a preliminary inspection.
• Case Number Issuance: After an application is approved, a case number is assigned, and it is formally reviewed in full.
• Personal Hearing: If necessary, the importer may be asked to a personal hearing to present their case and offer further explanations.
• Verification and Investigation: The SVB will check the documents and, if required, carry out additional inquiries.
• Final Order: The SVB will issue a final order addressing the valuation of imported items following careful examination and verification.

Who Needs to Obtain SVB in Customs Registration in India?

• In India, importers who are connected to suppliers in the following ways must register as SVBs:
• Customs Valuation (Determination of Value of Imported Goods) Rule 2(2) Regulations, 2007
• Customs Valuation (Determination of Value of Export Goods) Rule 2(1) Regulations, 2007

Special Value Branch Registration in India Process

The procedure for registering a special value branch in India is as follows:

1. When submitting the bill of entry, the importer is required to include a declaration in Annexure-A. Before the items are released from the customs port, the declaration must be backed up by the necessary paperwork and submitted to the customs authorities.
2. After looking into the terms and conditions of the transaction, any relevant circumstances, and the invoice value of the items, the appropriate officer will send the matter to the SVB for additional investigation. It is noteworthy that the importer's direct application to the SVB is not taken into account.
3. The appropriate officer may look up more information in Annexure-B if he submits the matter to SVB. The importer has sixty days to produce the necessary paperwork and information. If the necessary paperwork is not submitted within 60 days, an extra duty deposit will be charged when goods are subsequently imported and temporarily cleared for a period of three months.
4. Based on the data at hand and the importer's filings, the SVB will look into the transaction. It will then present all pertinent findings to the Principal Commissioner or Commissioner.

Documents Required for Special Valuation Branch Registration in India

The following paperwork is required for Special Valuation Branch registration in India:

1. Copies of the pertinent Bills of Entry
2. A list of the current costs for goods imported from the overseas source
3. The importer, if a company, should submit annual reports covering the preceding three fiscal years.
4. Sample import invoices from the preceding three years
5. contracts, such as joint venture and collaboration agreements, with overseas suppliers.
6. A declaration of shareholding in an Indian corporation, together with information about common directors
7. Examples of bills of entry and sample invoices for imports of the same or comparable products by anybody else
8. Statement of any equity capital owned for the preceding three years in a foreign company
9. Payment information, including any postponed payments, and remittances
10. Information on any additional payments made to the supplier, on their behalf, or in accordance with their instructions.
11. Statements of the CIF value, appropriately attested by the chartered accountant, covering the preceding three years:

• The imports' CIF value and landing cost from the associated overseas suppliers
• CIF value and the importer's landing cost from other vendors
• Value of the commodities as of the factory
• Gross, net, and royalty Receipt or obligation

When SVB in Customs Registration is Not Required?

In India, SVB registration is not necessary in the following circumstances:

1. Importation of products as samples or prototypes from overseas vendors.
2. Import of goods from connected suppliers with unconditional full duty exemption or no duty.
3. Importation of products with a maximum transaction value of Rs. 1,00,000. This exemption is valid as long as the total amount of transactions made in a single fiscal year doesn't surpass Rs. 25,00,000.

Points to Note:

1. Depending on the case's intricacy and the SVB's workload, the full process may take several months.
2. To make sure that the right paperwork is done and that the processes are followed, it is best to speak with a customs broker or legal counsel who specializes in customs law.
3. It may be required to follow up with the SVB office and provide regular updates in order to monitor the application's development.
4. Throughout their investigation, the Customs authorities might need further paperwork or information.

How SKMC Global can help?

1. Expert Consultation: Our team offers expert guidance and consultation to navigate the intricate process of SVB registrations. We ensure that your business understands the related party definitions and their implications, staying in compliance with customs regulations.
2. Notification Compliance: We keep businesses updated on the impact of Notifications 04/2016 and 05/2016, ensuring that your SVB process aligns with the latest regulations. Our experts help you adapt to the changes introduced by these notifications.
3. Provisional Duty Bond Submission: SKMC Global assists in the submission of Provisional Duty (PD) bonds, ensuring that the bond remains effective until the customs department issues the final order. This helps your business maintain compliance throughout the SVB procedure.
4. Financial Flexibility: We guide businesses in understanding the relief offered by not having to deposit Extra Duty at the customs port without a final SVB order. This financial flexibility is advantageous for companies engaged in international trade, reducing financial burdens.
5. Annexure Utilization: Our services encompass the use of specific annexures, such as Annexure A and B for fresh registrations and Annexure C for amendment applications. We help businesses complete these annexures accurately, ensuring that the SVB process remains efficient and compliant with customs laws.
6. Comprehensive Support: SKMC Global provides end-to-end support in SVB registrations, from initial consultation and documentation to compliance monitoring and submission. We aim to simplify the SVB process, helping your business thrive in international trade while staying within the boundaries of customs compliance.