SVB Proceedings for Related Party Transactions-Indian Customs

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Dated: 11.10.2022

Customs Valuation Proceedings- Special Valuation Branch (SVB)

It has been lately observed that lot of Indian importers who are a “Related Party” as per Rule 2(2) of the CVR, 2007, are facing enormous challenges in getting their SVB proceedings completed, and Investigation Reports (IR) issued.

In reference to the above we hereby suggest few key points for a smooth sail through the SVB proceeding:

Who all are exempted from SVB:

As per CBIC Boards Circular 05/2016 dtd 09th February 2016 the Customs board has exempted the following types of importers from any sort of SVB proceedings-

  1. Import of samples and prototypes from related sellers
  2. Imports from related sellers where duty chargeable (inclu additional duty of customs etc) is unconditionally fully exempted or NIL
  3. Any transaction where the value of the imported goods is less than INR 1 Lakh (One Lakh/One Hundred Thousand) but cumulatively these transactions do not exceed INR 25 Lakhs (Twenty Five Lakhs/Twenty Five Hundred Thousand) in any financial year

 

Counter to delays in SVB Proceedings:

  1. Refer to clause 8.2 in Circular 05/2016 which clearly refers to the timeline the SVB division is supposed to adhere to. It is envisaged as only 2 months to complete the Investigation from the date of Receipt of Annexure-B, the SVB division shall seek the approval of the jurisdictional commissioner for such extended time period as is deemed necessary to complete investigations.
  2. However, where investigations are not completed within 4 months from the date of receipt of information in Annexure-B, the matter shall be submitted before the Chief Commissioner for extension of period as is deemed fit.
  3. For Provisional Assessment matters please refer to Circular No. 38 /2016-Customs dtd 22nd August 2016 & amended circular numbers Circular 42/2020, dated 29.09.2020 and Circular 19/2021, dated 16.08.2021 respectively

 

 

List of Documents required to be submitted by the Indian importer

  1. Duly filled Annexure-A
  2. Duly filled Annexure-B
  3. Certificate of Incorporation in case of Pvt. Ltd/Ltd Firms
  4. Board Resolution in the name of the Authorized Signatory

All below mentioned documents should be signed by the Authorized Signatory

  1. MoA/AoA of the Firm
  2. IEC Code
  3. GSTIN regn
  4. MSME regn/Udyam, if registered
  5. IL/IEM Regn if obtained
  6. AEO Regn if obtained
  7. Pan card of the Firm
  8. Pan & Aadhaar Card of the Authorized Signatory
  9. In Case of Foreign Directors copy of the Passport & PAN card is required
  10. In case of Patented Products, the copy of Patent regn/design approval is required
  11. Detailed TP Study Report for the last 2-3 FY issued by 3rd party Auditor
  12. ALP Methodology adopted details
  13. Audited Balance sheet for the last 3 FY (Min 2 FY)
  14. 3CEB copies for the last 3 FY (Min 2 FY)
  15. Statement with List of Imports done in the last 2 FY wise with supporting documents copies like Bill of entry, Commercial Invoice and Packing List only
  16. Bill of entry wise data of all the items/products imported with their respective FCC & INR values line item wise
  17. Comparative Statement of similar imports in India by any other non-related entity or other importers
  18. Products Catalogue & Price list issued by the related seller
  19. Sale/Purchase/Technical/Royalty agreement copies as applicable
  20. In Case of No Royalty Payments involved Importer has to furnish a NIL Royalty Declaration
  21. Comparative statement of similar items sold by the related sellers to other non-related buyers, either in India or elsewhere
  22. Continuity Bond with Schedule
  23. Insolvency Certificate issued by the Importers Bank for INR 20 Lakhs (Minimum) to start with

General Process Flow:

Step 1: In case of Related party file in the Bill of Entry relevant section as “Yes”

Step 2: Duly filled Annexure-A with supporting documents to be submitted to the Import group of the jurisdictional Customs House & obtain the submission receiving/acknowledgment

Step 3: Customs Import group shall forward the file internally to the SVB Division with a Covering/Transfer letter

Step 4: SVB Division shall send Annexure-B questionnaire to the Indian importer

Step 5: Importer has to duly complete Annexure-B and submit the same along with supporting documents to the jurisdictional Customs House & obtain the submission receiving/acknowledgment

Step 6: SVB division starts the evaluation & investigation & thus the process continues further

Source: CBIC, New Delhi, Deptt of Revenue, Min of Finance, Govt of India

Download Section Below:

  1. Annexure-A: SVB- Annexure A
  2. Annexure-B: SVB- Annexure-B
  3. Circular: Circular 05-2016 Customs
  4. Circular: Circular 38-2016 Customs

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  1. Winomechanic Pvt Ltd, Chennai
  2. LSML Pvt Ltd, Chennai
  3. Sun Pharmaceutical Limited, Mumbai
  4. Liberty Shoes Limited, Karnal
  5. Grant Instruments India Pvt Ltd, UK & India
  6. Guangzhou Xiongli Battery Co, Ltd, China
  7. Shanutec Shanghai Electronic Technology Co, Ltd, China
  8. Audiophile India Pvt Ltd, Delhi
  9. Viralcurry Digital Pvt Ltd, Delhi
  10. The Plume Cosmetics, Delhi
  11. Emami Limited, Kolkata
  12. Leitner Group Europe

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