TaxTMI 
TaxTMI 
Procedure for investigation of related party import cases and other cases by the Special Valuation Branches
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....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. 3. 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were based upon the Customs Valuation (Determination of Price of imported goods), Rules, 1988, which have since been superseded by the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.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 investigations by SVBs. 4. Vide Circular No. 29/2012 dated 7th of December, 2012, it had been decided to vest functional control over SVBs with the Director General of Valuation (D....
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....ides 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. Simultaneously, the importer shall be granted a further period of 60 days to comply with the requisition for information & documents. If the importer fails to submit documents wi....
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....ally fully exempted or nil. (iii) Any transaction where the value of imported goods is less than Rs. 1 lac but cumulatively these transactions do not exceed Rs. 25 lacs in any financial year Cases, which may be considered for SVB Investigations 5.0 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. 5.1 Apart from investigation of transactions involving related parties, cases involving possible additions to declared transaction value also need to be examined to determine whether SVB investigations are necessary. Accordingl....
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....ining 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 goo....
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....tigations 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 release of the goods. 7.1 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. 7.2 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. 7.3 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 finalisa....
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....(IR, for short) shall be prepared incorporating all relevant facts, submissions 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 10. 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. 10.1 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 concer....
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..... 1/98 - Cus dated 1.1.98 and 11/2001-Cus dated 23rd February 2001 and comes into immediate effect. 14. Difficulties, if any, faced in the implementation of this Circular may be brought to the notice of the undersigned. --Sd-- (D.K. SRINIVAS) COMMISSIONER OF CUSTOMS, NS-I & III ============= Document 1 Annex-A Questionnaire to be filled by the importer at 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 manufacture....
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....person? 6.2 Whether any amount or any part of the proceeds of any subsequent resale, disposal or use of the imported goods accrues, directly or indirectly, to the seller? 6.3 Whether there are any other payments 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 of the seller? 6.4 Is any amount paid or payable, directly 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)? 1. 2. Other information Has the importer or any of its associates entered into an Advance P....
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....ernationally quoted in any data bases, commodity exchanges, industry publications (e.g. PLATT, Public Ledger etc)? If yes, please provide details of price listings and copies of relevant printed material 3.1 If the imported goods are for stock & sale, please provide a pricelist for sale in India of the imported goods. 3.2 If the imported goods are for captive consumption by the importer please provide the pricelist of the goods manufactured and sold in India. Terms & Conditions of Sale 4. Whether the imported items are exclusively supplied by the sellers to the importer in India? Document 4 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 rend....
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.... the goods between us and our related seller (s) (b) there is a change to the terms & conditions contained in the agreement (s) between us and our related seller (s). (c) We have entered into a new agreement with our existing related seller / new related seller / or their associates (d) there is a change in the rate of royalty payment / licence fee / or other payment being made to the seller of the imported goods. (e) We have undertaken a post-import price adjustment with our seller (*Please strike out, which ever are not applicable; please provide supporting documents in respect of (a) to (e), as applicable) The above statements are true and correct to the best of my knowledge. Company Seal (Signature of Authorised Representative/Director (Finance)/CFO Name: Designation: Tel no. / email: Document 6 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)....