TaxTMI 
TaxTMI 
Procedure for investigation of related party import cases and other cases by the Special Valuation Branches
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....sale of imported goods, both of which have a bearing on the assessable value. Detailed instructions were issued vide Circular Nos. 1/98 - Customs dated 1.1.98 and 11/2001-Customs dated 23.2.2001, prescribing the procedure to be observed by the Custom Houses for referring cases to Special Valuation Branches and time lines to be followed for finalising such cases. 2. However, trade and industry has been repeatedly representing regarding delays in finalisation of SVB investigations, continued uncertainty due to provisional assessments, increase in transaction costs due to extra duty deposits and burdensome procedure of renewal of SVB orders. Board has also taken cognizance of the WCO's Guide to Customs Valuation and Transfer Pricing (June 2015) and the fact that the circulars 1/98 and 11/2001 were based upon the Customs Valuation (Determination of Price of imported goods), Rules, 1988, which have since been superseded by the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Accordingly, after considering the above and the large number of SVB investigations pending in various Customs Houses, a need has been felt to streamline the procedures relating to inve....
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.... 5% till such time the importer complies. Upon the importer complying with the requisition for documents and information, Circular 11/2001 - Cus dated 23.2.2001 provides that EDD shall be discontinued, while imports will continue to be assessed provisionally till the completion of investigations. In other words, the imports were continued to be assessed provisionally on the basis of a PD Bond but without any EDD. It has also been noted that many importers have represented on delays in dispensing of EDD, even though they have provided the required information and a period of 4 months has passed without the case having been decided. Therefore, the Board has decided that while reference to SVB requires the assessments to be provisional, for the sake of reducing transaction cost and bringing uniformity across Customs Houses, no security in the form of EDD shall be obtained from the importers. However, if the importer fails to provide documents and information required for SVB inquiries, within 60 days of such requisition, security deposit at a rate of 5% of the declared assessable value shall be imposed by the Commissioner for a period not exceeding the next three months. Simultaneousl....
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....mports 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 Cases, which may be considered for SVB Investigations 4.0 While filing a bill of entry, every importer makes a declaration about whether the seller of imported goods is a related party or not, as defined under Rule 2(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 (CVR, 2007). In other words, where any importer makes a declaration that the transaction is between 'related persons', as defined under Rule 2 (2) of CVR 2007, it would be necessary to examine whether or not the circumstances surrounding the sale of the imported goods indicate that the relationship has influenced the price. Accordingly, such transactions will require to be examined as to whether SVB inquiries are necessary. 4.1 Apart from investigation of transactions involving related parties, cases involving possible additions to declared transaction value also need to be....
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....ioner. While examining the information submitted by the importer, the proper officer shall carefully examine the "circumstances surrounding the sale" and evaluate the case on the following parameters:- i. Has the importer declared the price of the goods imported is a "transfer price"? ii. What is the basis on which the price has been settled between the buyer & seller? iii. Has the price been settled in a manner consistent with the way the seller settles prices for sales to buyer who are not related to the seller? iv. Does the nature of relationship between the buyer and seller appear to influence the price? v. Is the information provided by the importer in terms of rule 3 (3) (b) able to demonstrate that the transaction is at arms length? vi. Are there any payments, such as royalty, licence fee etc., actually made or to be made, as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation cast by the seller? Are such payments included in the price actually paid or payable? vii. Whether any part of the proceeds of subsequent re-sale, disposal or use of the imported goods accrues....
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....rms of section 18 of the Customs Act, 1962 and ensure that no delays occur in the release of the goods. 6.1 In order to facilitate expeditious inquiries by the SVB, the proper officer shall alongside of provisionally assessing the bill of entry, requisition further information from the importer as per Annexure B to this circular. The importer should be advised to furnish the documents and a duly indexed reply to the questionnaire to the jurisdictional SVB (as per para 3.1) within 60 days. 6.2 Upon completion of the procedure for provisional assessment and issue of the questionnaire (Annexure B), all related records shall be transferred to the jurisdictional SVB, and in no case later than 3 working days of the release of the goods. 6.3 The documents received from the importer with respect to the checklist shall be duly acknowledged by the SVB. An intimation shall be forwarded to RMD and the referring appraising group regarding submission of the documents within time so that provisional assessments, without security deposit or bank guarantee, continue till the finalisation of the investigation. Procedure for cases where reference to SVB is not required: 7. In case where after ex....
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....saction 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 9. Upon receipt of the IR from the SVB, where investigative findings are that the declared value is found conforming to Rule 3 of the CVR, 2007, the customs stations where provisional assessments have been undertaken shall immediately proceed to finalize the same. There would be no need to issue a speaking order for finalising the provisional assessments in such cases. 9.1 However, when investigative findings are that the declared value has been influenced by the circumstances surrounding the sale, the proper officer shall issue a show cause notice to the importer within 15 days of the receipt of the IR, under intimation to the concerned SVB. 9.2 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 lo....
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.... the time of filing bill of entry Importer 1 Name & Address of the importer 1.1 IEC Code 1.2 Central Excise Registration number, if any 1.3 Service Tax Registration number, if any 1.4 PAN number 2. Whether the importer is a proprietorship/partnership/private limited company/public limited company/branch office of company incorporated outside India/wholly owned subsidiary etc.? 3 Whether the importer is manufacturer or manufacturer cum trader or only a trader? 3.1 If the importer is a manufacturer, please provide address of unit (s); and jurisdictional central excise / service tax commissionerate, division & range. 3.2 If the importer is a manufacturer, please briefly describe the manufacturing activity undertaken (principal inputs and description of goods manufactured) 3.3 If the importer is a manufacturer cum trader, please list the goods which are imported and traded. 3.4 If the importer is only a distribution & marketing company or maintenance & services co. etc., please briefly describe the business activity and commodities traded/serviced etc. Seller 4. Name, address, website of the foreign seller from whom the goods are impo....
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....ctly or indirectly, to or on behalf of the seller of the imported goods in connection with the production of the imported goods? (for example, materials, parts, components, tools, dies, moulds, engineering, development, art work, design work, plans or sketches undertaken elsewhere than in India) 6.5 Are any services rendered by or on behalf of the importer relatable to the goods imported or undertaken on behalf of the seller of foreign goods? 6.6 Will the price paid or payable by the importer be settled with the seller at the end of defined period by means of debit note / credit note (post - import price adjustment)? Other information 7. Has the importer or any of its associates entered into an Advance Pricing Agreement with the Income Tax Authorities or obtained Advance Ruling? (please enclose copy). Note: 1. The replies to this questionnaire shall be signed by the Authorised Signatory of the Importer accompanied by a self-certified copy of the statutory document as proof of such authorization. 2. In cases where the import takes place through CHs of Mumbai / Delhi / Chennai / Kolkata / Bangalore, the importer will be free to select the SVB of Customs House of Impo....
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....plied by the sellers to the importer in India? 4.1 Whether the product imported is sold under a trade mark, design or patent owned or controlled by the seller of the goods or any other person? If yes, please provide details and copies of the agreements. 4.2 Whether the importer is incurring any expenses on behalf of the seller or their associates? If yes, please provide copies of the agreement and details of the expenses incurred. 4.3 Whether any amounts are paid by the importer in the form of agency commission, overriding commission or any other remuneration, including that for services rendered by or on behalf of the seller, to other importers in India or to the seller of the imported goods, or their related or associated concerns or persons. If yes, please provide copies of the agreements and details of such expenses 4.4 Is the price paid or payable by the importer to be settled with the seller at a future date by means of debit note / credit note (Post - Import price adjustment)? If yes, please provide details. Relationship particulars 5. Specify the role, if any, of the seller or any of its associate business entities, in your corporate policy, design specification,....
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....ct to the best of my knowledge. Company Seal (Signature of Authorised Representative/Director (Finance)/CFO Name: Designation: Tel no. / email: Annexure D Continuity Bond (Under Section 18 of the Customs Act, 1962) (To be executed by the Importer of goods subject to Inquiries by Special Valuation Branch under Customs Valuation (Determination of Value of Imported Goods) Rules, 2007) (Circular No5 / 2016 dated 9th February 2016 issued from CBEC F.No: 465/12/2010 - Cus V) KNOW ALL MEN BY THESE PRESENTS THAT We M/s_______________________________ having our corporate office located at______________________________ and holding Import-Export Code No.__________ hereinafter called the "Importer" (which expression shall include its successors/heirs, executors, administrators and legal representatives) are held and firmly bound unto the President of India hereinafter called the "President" (which expression shall include his successors and assigns) in the sum of Rs___________ Rupees__________________(please fill amount in words) to be paid to the President for which payment well and truly to be made, we bind ourselves, our successors, heirs, executors, administr....
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....rter at___________ (place) in the presence of:- (Signature of Authorised Signatory and Corporate Seal) Witnesses: 1. 2. Accepted for and on behalf of the President of India (Signature of the Proper Officer) Schedule to Continuity Bond (under section 18 of the Customs Act, 1962) (To be executed by the Importer of goods subject to Inquiries by Special Valuation Branch under Customs Valuation (Determination of Value of Imported Goods) Rules, 2007) (Circular No5 / 2016 dated 9th February 2016 issued from CBEC F.No: 465/12/2010 - Cus V) Bill of Entry Number Date Provisional Assessable Value Balance of bond value Remarks Signature / date / name / designation of officer (1) (2) (3) (4) (5) (6) Annexure E Continuity Bond (With Bank Guarantee or Security Deposit) (under section 18 of the Customs Act, 1962) (To be executed by the Importer of goods with provision for security deposit/bank guarantee subject to Inquiries by Special Valuation Branch under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007) (Circular No. 05 / 2016 dated 9th February 2016 issued from CBEC F.No: 465/12/2010 - Cus V) KNOW ALL MEN BY ....
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.... to time. Then the above written bond shall be void and of no effect; otherwise the same shall remain in full force and virtue. AND IT IS HEREBY AGREED AND DECLARED by the importer as follows:- 1. This bond and security deposit/bank guarantee are given under the orders of the Central Government for the performance of an act which is in public interest. 2. The President through the [Deputy Commissioner / Assistant Commissioner of Customs] or other officer may recover the said sum of Rs ____________ in the manner laid down in Section 142 of the Customs Act, 1962 without prejudice to any other mode of recovery. 3. This bond and security deposit / bank guarantee shall remain in force from the date hereof and the obligation and liability of the importer shall be a continuing one in respect of all goods imported from time to time by the importer between the period of ______________ (present date) and the payment by the importer of the difference between the duty finally assessed and the duty provisionally assessed in respect of the goods imported from time to time. IN WITNESS WHEREOF the importer has herein set and subscribed its hands and seals the day, month and year first above ....