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Customs Valuation - Significant amendments in SVB procedures

Customs - Import - Export - SEZ - By: - Yash Goyal - Dated:- 18-2-2016 Last Replied Date:- 30-9-2016 - Dear Readers, Recently, there has been significant change in the import procedure to be followed in case of imports from related parties. i have discussed the said changes in this article. Trust the same is useful for reference. (Vide Customs circulars 4/2016 & 5/2016 dated 9 February 2016) Import of goods are liable to Customs duty and are subject to scrutiny by the by Customs authorities. .....

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stigation of transactions involving special relationships between the parties ie importer and exporter. Presently, SVBs are located at five Custom Houses locations namely Chennai, Kolkata, Delhi, Bangalore and Mumbai. The procedure for investigation by SVB Cell was initially laid down vide Central Board of Excise & Customs ( CBEC or Board ) Circular Nos. 1/98 - Cus. dated 1 January 1998 and 11/2001-Cus., dated 23 February 2001. However, there were several issues and challenges at the operati .....

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rties, the importer is required to declare the fact of related party relationship at the time of import. Usually all related party imports are made subject to SVB valuation. Once the case is referred to the SVB authorities, related party imports are provisionally assessed by Customs authorities (at the port of import). Importer is also required to pay an Extra Duty Deposit ('EDD') at 1% of the assessable value of goods and also execute a bond. SVB examines the influence of relationship ( .....

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ill the date of receipt of the reply to the questionnaire. The goods are allowed to be cleared on a provisional basis from the customs port on payment of the EDD. On completion of the SVB proceedings, an order is issued based on which the assessment is finalized. The SVB order is valid for a period of 3 years. After the expiry of period of 3 years, the importer is required to apply for renewal of the same. The Need for change: The erstwhile provisions were based upon the Customs valuation rules .....

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entire process has been revamped. Brief about the new procedure is given under. Key features of the Circular 4/2016 - Provisions for pending case as on 9 February 2016 The pending cases can be broadly classified into the following two categories: Case which are pending renewal Other cases: These would typically be cases which are pending SVB investigation Cases pending renewal Importers shall submit a declaration in prescribed formats (Annexure 1 & 2) to the jurisdictional SVB by 31 May 2016 .....

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e of application in Annexure 2, the SVB enquiries will be initiated as per the procedure laid out in Circular 5 /2016. Cases pending SVB Investigation If the importer has submitted all the required information and documents then EDD will be discontinued. In cases where the EDD has been enhanced to 5%, the commissioner will take necessary recourse for obtaining the necessary documents and then dispense with the EDD. Key features of the Circular 5/2016 - New procedure for SVB process The procedure .....

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facie basis. A time limit of three days has been prescribed wherein customs officer has to determine whether: To clear the goods based on provisional assessment and refer the matter to SVB for investigation Whether the assessment is to be finalized by conducting enquiries by customs officer Whether the assessment is to be finalized under Rule 3 Few parameters have been specified, based on which the customs officer has to evaluate a particular case and determine the need of reference to SVB. The .....

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ion for BCD, CVD as well as SAD) Imports from related sellers which have low value ie each individual transaction has value less than ₹ 1 Lacs, and cumulatively all transactions in a financial year are for value less than 25 lacs. There is a provision for subjecting cases, other than imports from related party, to SVB valuation. Few instances have been specified in the circular which consist of transactions wherein the valuation is subject to adjustment under Rules 10(1)(c) - 10(1)(e) of t .....

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h. However, if the importer does not furnish the required information within 60 days, then EDD at 5% of the declared assessable value will be imposed. Further, the EDD will be for a maximum period of 3 months, without any exceptions. Option has been provided to discharge the EDD by way of cash deposit or a bank guarantee. The importer will be required to furnish additional information as per the questionnaire provided in Annexure B. A time limit of three days has been prescribed for transfer of .....

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the erstwhile procedure, the importer was required to obtain separate orders from SVB and from the customs officer. Upon approval, an Investigation Report ( IR ) will be submitted to the referring customs station and to any other customs station where the goods were cleared on provisional basis. The report will broadly consist of the following: Relevant facts, submissions made by the importer The findings The grounds for acceptance or rejection of declared value Extent of influence on the declar .....

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