Procedure For registration under Special Valuation Branch

What is Special Valuation Branch?
Special Valuation Branch is a Branch of the Custom House, specialising in investigating the transactions involving relationship between the supplier and the importer and certain other special features like Technical Collaboration between the parties, etc under Customs Valuation (Determination of Value of Imported Goods ) Rules 2007. ? .

Special Valuation Branch examines the influence of relationship on the invoice value of the imported goods in respect of transactions between related parties.?

In respect of Technical Collaboration Agreements and Joint Venture Agreements, the terms and conditions of these agreements are examined to arrive at the conclusion, whether the existence of such agreement has influenced the invoice value of the imports.


Who should register with SVB? For the purpose of Customs Valuation (Determination of Value of Imported Goods) Rules 2007 the following Persons shall be deemed to be ?related? / should register with SVB only if:

• They are officers or directors of one another's businesses
• They are legally recognised partners in business;
• They are employer and employee;
• Any person directly or indirectly owns, controls or holds 5 per cent 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;
• They are members of the same family.

Explanation I - The term "person" also includes legal persons
Explanation II- Persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, however described, of the other shall be deemed to be related for the purpose of these rules, if they fall within the criteria of this sub-rule.
Apart from the above, those who are having Collaboration Agreement, Technical Assistance Agreement or any other agreement / contract with the foreign supplier are also required to register with SVB.

Procedure for Registration with SVB?

• All those importers who are having relationship with the suppliers as mentioned above or those who are having Technical Collaboration, etc., shall furnish a declaration about the relationship in the GATT declaration form at the time of filing of Bill of Entry in the Appraising Group.

• On examination of the circumstances of sale and keeping in view the invoice value of identical or similar goods, the group will make a reference to Special Valuation Branch for further investigation of influence of relationship on assessable value.

• If the importer is able to furnish evidence of the transaction value of identical or similar goods in respect of sales to unrelated buyers in India at the same price, then there is no need for any reference to Special Valuation Branch and the Bill of Entry will be assessed finally based on those contemporaneous import values.

• If there are no contemporaneous imports, and there is no way to compare the values at the time of assessment of the Bill of Entry, then a reference is made to Special Valuation Branch.

• This reference is to be done with the prior approval of the Commissioner of Customs. If the importer can substantiate with documentary evidence that his invoice price is not influenced because of the relationship, there is no need for any reference to Special Valuation Branch.

• The Special Valuation Branch of that major Custom House, (out of the four - Chennai, Calcutta, Delhi and Bombay) which is located proximate to the Head or Corporate Office of the importer (having special relationships etc. with the suppliers), would handle the investigation into valuation of such importer.?

• No application or representation to the Special Valuation Branch directly by the importers will be considered.

• All references shall be made through the Appraising Groups at the time of filing of the Bill of Entry. On receipt of the reference from Appraising Groups, the case is registered in Special Valuation Branch and a PD Circular for provisional assessment is issued.

• Copies of the same are issued to the importer and to the Appraising Groups as well. The importer shall indicate the PD Circular No. at the time of provisional assessment of all their imports in the Appraising Group and execute PD Bond with 1% Extra Duty Deposit on the assessable value of the goods.

• Along with the PD Circular a questionnaire (Given Below) is also issued to be filled up by the importer along with the list of all documents required to be submitted.

Documents required to be submitted.?

The amount of extra duty deposit presently kept at 1% will be continued. Board has however decided that if the importer does not furnish complete reply to the questionnaire within 30 days of receipt of the 'Questionnaire' by the importer, the extra duty deposit will be increased to 5% till the date of receipt of reply by the Department.
The importers falling under the related category may keep ready all the documents along with the replies to the questionnaire, etc., at the time of first import itself, so that the case can be finalised as early as possible in the Special Valuation Branch.
NOTE: 1) Normally the SVB order is valid for a period of 3 years.
2) In all cases of loading, it is mandatory for the importer to quote Order in Original No. of SVB and indicate the percentage of loading at the time of filing of each Bill of Entry by them.If they do not quote the Order No. and the loading factor, it will be construed as misdeclaration on the part of importer and dealt with in accordance with the provisions of Customs Act.


Documents required for Registration with SVB & Annexure A (Questionnaire) :

ANNEX � A (SVB)

Questionnaire to be filled by importers who are related to the foreign suppliers.

1. Name of the importer with full address of the Head or Corporate office, registered office administrative office / factory and PAN No.
2. Whether the importer is a proprietorship/partnership/private limited company/public limited company/branch office of company incorporated outside India.
3. (a) Name of the foreign supplier from who the goods are imported (b) nature of the business relationship of the importer with the supplier (eg., subsidiary company/branch office/distributor/agent/indentor or any other) (c) nature of the transaction - eg., sale to the importer, consignment sales, branch transfer or any other.
4. Whether any officer or director in the company/firm of the importer holds any office in any company incorporated outside India; if so, whether such a company is related to / associated in any way with the supplier of the imported goods. Also give details of converse situation, if applicable?
5. Whether the importer and the supplier of the goods are partners in business?
6. Whether there is an employer-employee relationship between the importer and the supplier of the imported goods and vice versa?
7. Whether the foreign supplier or any of their associated companies jointly or severally, directly or indirectly own, control or hold equity shares worth % or more of the total paid up capital of your company or any of your associated companies?
8. Whether any other third person, jointly or severally, directly or indirectly owns controls or holds equity shares worth 5% or more of the foreign supplier and of your company including the associated companies?
9. a) Whether the supplier of the goods is in a position, directly or indirectly, to exercise restraint over you, legally or operationally, in any manner? (b) Specify the role if any, of the supplier or any of its associate business entities, in your corporate policy, design specification, quality control, marketing, sub-licensing of patent, franchise, etc? (c) Whether any legal liabilities created by contracts or agreements entered into by the supplier devolve on the importer?
10. Whether the importer is in a position, directly or indirectly, to exercise restraint over the supplier, legally or operationally, in any manner? Details as per (b) and (c) above for this converse position?
11. Whether a third party is in a position, directly or indirectly, to exercise restraint over both the importer and the supplier of imported goods, legally or operationally, in any manner? Details as per (b) and (c) of (9) above for this converse position?
12. Whether the importer and the supplier of the imported goods, together, are in a position, directly or indirectly, to exercise restraint over you, legally or operationally, in any manner? Details as per (b) and (c) of (9) above for this converse position?
13. Whether the importer and the supplier of the imported goods are members of the same family?
14. (a) Whether the importer is a sole agent, distributor or indentor appointed by the foreign suppliers. (b)Give the full particulars of all the suppliers of goods from outside India for whom the importer acts as agents/distributors/indentors?
15. Whether the importer is a branch or subsidiary of the supplier of the importer goods? (The word subsidiary has the same meaning as in section 4 of the Companies Act)
16. (a) Whether the importer is engaged in the local manufacture of any products of the suppliers of the imported goods? (b) If yes, whether the imported items are used in such manufacture? (c) If yes, whether the imported items are manufactured or exclusively supplied by the suppliers? (d) Whether the product manufactured by the importer using the imported goods is sold under a trade mark, design or patent owned or controlled by the supplier of the goods or any person related to them?
17. (a) Whether the imported goods are component parts in the SKD/CKD condition for local assembly into finished goods? If yes, furnish a complete list of items imported in CKD/SKD condition.
18. In the case of (16 and (17) above, are the same components imported by any person to India as spares for stock and sale? If so, please furnish the prices at which such imports are made.
19. Whether the importer has imported any capital goods, plants, machinery, equipment etc., from the foreign supplier of the imported goods or its related or associated concerns or persons? Please furnish details.
20. Is any amount paid or payable, directly or indirectly, to or on behalf of the supplier of the imported goods for engineering, development, art work, design work and plans and sketches undertaken elsewhere than in India and connected with the production of imported goods? Are any services rendered by or on behalf of the importer relatable to this?
21. Is the import of the goods covered under an agreement? Are there other agreements between the importer and the supplier? If yes, list them.
22. What is the basis of arriving at the price in the invoice? Is it (a) Price list with discount (b) net discounted price (c) quotation (d) Transfer price or (e) other (please specify)?
23. What is the form of payment by the importer for the imported goods? Furnish the heads of accounts under which other payments, if any, made to the supplier of the imported goods, and details of the payments/transfer of funds in any form
24. Furnish the total quantity and FOB value of imports made by the importer from the same supplier during the last three years.
25. Amount of royalty/technical knowhow fee/licence fee any other fee paid or payable by the importer to the supplier of the imported goods.
26. Furnish the full details of amounts, if any, received by the importer in the form of agency commission, overriding commission or any other remuneration received either from other importers in India or from the supplier of the imported goods.
27. Express incurred by the importer on behalf of, by understanding or agreement with, or under instructions from the supplier of the imported goods, eg., advertising, propaganda expenses or any other expenses for the promotion of the imported goods.
28. Whether the supplier of the goods supplies identical, similar or conncected items to buyers/branches/collaborators in other countries? If yes, prices at which such transaction have taken place, for the last one year.

List of Documents required to be submitted in case of Sole Agents/Sole Distribution/Sole Concessionaire

1. Agency agreements of the importer with any person.
2. Specimen copies of the import invoices and Bills of Entry
3. Specimen copy of invoices for import of identical, similar or connected goods by this part through the present importer.
4. Specimen copy of invoices for import of identical, similar or connected goods by a company associated with the importer.
5. Commission note and credit notes in case of amounts received from outside India.
6. Annual report of the importer's business concern for last three years.
7. Pricelists for import and sale of the imported goods.
8. Statement regarding percentage of shareholding of/in any Indian company alongwith common directors.
9. Statement regarding equity participation of/in foreign company.
10. Indent/invoices wise statement of commission received in last three years.
11. Details of remittances alongwith method, mode and deferred payment details, if any.
12. Statement of expenses as required under question number 28 of the questionnaire.

List of Documents required to be submitted in case of subsidiaries, holding companies, and those who have collaboration agreement or similar agreements

1. Collaboration agreement, Joint Venture Agreement and other agreements with the supplier of the imported goods or with any other person acting for the supplier.
2. Approval of Government of India/RBI to the agreement, if any.
3. Statements for last three years duly certified by the Chartered Accountant, containing the following informations:-
   1. CIF value and landed cost of imports from suppliers of the imported goods, the collaborator or associated companies.
   2. CIF value and landed cost of import from other suppliers.
   3. Value of standard bought out components procured in India.
   4. Ex-factory value of the goods.
   5. Royalty, net and gross Paid or payable.
4. Representative sample invoices of own imports for the last 3 years and photocopies of the relevant Bills of Entry.
5. Annual reports of importing Company for the last 3 years.
6. Statement regarding equity participation in/of foreign company for the last 3 years.
7. Statement regarding shareholding of/in any Indian company alongwith particulars of common Directors.
8. Current price list of product imported from the supplier of the goods including spares and warranty parts imported by any other person..
9. Representative specimen invoices of procurement of goods procured from some other person by the supplier and supplied importer.
10. Representative specimen invoices of procurement of identical, similar or connected goods made by companies associated with importer.
11. Representative specimen invoices of imports of identical of similar goods by any other person.
12. Representative specimen of invoices and bills of entry of imports of identical, similar items as spares and warranty parts by the importer or any other person.
13. Details of remittances alongwith method and mode and deferred payments details, if any.
14. Details regarding any other payment made to or on behalf or under the instructions of the supplier.