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Special Valuation Branch Amendment and Its Impact in the Current Scenario

Customs - Import - Export - SEZ - By: - ajay singh - Dated:- 3-5-2016 - To curb the loss of revenue and to deal with the transaction between the related parties kind of scenarios i.e. having special relationships etc. with the suppliers, the authorities developed a Specialized Branch of Customs. This branch of customs is called SPECIAL VALUATION BRANCH (SVB) Of Customs. SVB is a Branch of the Custom House specializing in investigating the transactions involving relationship between the supplier .....

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ment has influenced the invoice value of the imports. SVBs are located only at five Custom Houses, i.e., Chennai, Kolkata, Delhi, Bangalore and Mumbai and any decision taken in respect of a particular case in any of these Custom Houses is followed by all other Custom Houses/formations. The Special Valuation Branch of that Custom House, which is located proximate to the Head or Corporate Office of the importer (having special relationships etc. with the suppliers), handles the investigation into .....

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, where a separate case file is opened and a registration number is assigned to the case. Similar reference to SVB to look into valuation on account of special relationship can be ordered by Commissioner concerned where such relationship comes to light on any intelligence or while enquiring into transactions of any importer with a particular supplier. As per Rule 2 (2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (Customs Valuation Rules), persons shall be deemed t .....

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ly control a third person; (viii) they are members of the same family. According to Explanation I to Rule 2 (2) of the Customs Valuation Rules, the term person also includes legal persons. Further according to Explanation II to Rule 2 (2) of the Customs Valuation Rules, 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 .....

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types from related sellers (ii) Imports from related sellers where duty chargeable (including additional duty of Customs etc.) is unconditionally fully exempted or nil. (iii) Any transaction where the value of imported goods is less than ₹ 1 lac but cumulatively these transactions do not exceed ₹ 25 lacs in any financial year. In case where after examination of the transaction, it is decided by the Commissioner that a reference to SVB is not necessary, the Customs House shall issue a .....

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essary, the Customs House shall issue a reference number to the importer and the Risk Management Division to indicate that the transaction has been examined from the point of view of need for SVB inquiries and it has been decided not to refer the same for SVB investigations. In the event of the Commissioner directing investigations by SVB, the proper officer shall promptly carry out provisional assessment in terms of section 18 of the Customs Act, 1962 and ensure that no delays occur in the rele .....

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hat provisional assessments, without security deposit or bank guarantee, continue till the finalisation of the investigation. Upon receipt of all related records from the referring customs formation, the SVB shall forthwith assign a case number and update the Central Registry Database (CRD) maintained by DGoV. The SVB shall also inform the RMD of the details of the importer, his IEC code, and details of seller for inserting suitable instructions for assessing officers at all Customs Houses so as .....

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ithin two months from the date of receipt of information in Annexure B. In cases where investigations are not completed within 2 months, the SVB shall seek the approval of the jurisdictional Commissioner for such extended time period as is deemed necessary to complete investigations. 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 .....

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ons made by the importer, investigative findings, grounds for acceptance or rejection of transaction value, and the extent of influence on declared transaction value, if any. The IR shall include all relied upon documents and shall be communicated to the referring customs station/appraising group and such other stations where imports have been provisionally assessed. A copy of the IR shall also be sent to the DGoV. Finalisation of assessments Upon receipt of the IR from the SVB, where investigat .....

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cause notice to the importer within 15 days of the receipt of the IR, under intimation to the concerned SVB. In cases where imports have been cleared through multiple customs locations, the jurisdictional commissioner of the SVB shall, after issue of notices by the proper officers in the said locations, make a proposal addressed to the Commissioner (Customs), CBEC recommending appointment of a common adjudicating authority by the Board for the purpose of passing order for finalization of the pro .....

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le In any case where, the circumstances of sale or terms and conditions of the agreement between the buyer and related seller change, or any other payments of the kind referred under Rule 10 (1) (c), (d) & (e) of the CVR, 2007 become payable, the importers shall be required to declare the same at the place of import in the prescribed format at Annexure C. In all such cases, the proper officer shall examine the transactions as per procedures laid out above in this circular and the jurisdictio .....

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EDD shall be discontinued forthwith. This exercise shall be completed by 31st May 2016. In cases, where EDD has been enhanced to 5%, due to the importer not having provided information or documents necessary for SVB inquiries, the Commissioner shall immediately take recourse to appropriate provisions under the Customs Act for obtaining the necessary documents for investigations and subsequently dispense with the EDD. Conclusion: On the whole, the reforms introduced by CBEC are laudable efforts t .....

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