SVB explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The Special Valuation Branch is a customs cell that scrutinises imports between related parties or those involving royalties and licence fees, to confirm the declared transaction value under the Customs Valuation Rules 2007 is not influenced by the relationship. Since Circular 5/2016 the earlier extra-duty-deposit is no longer charged during the investigation.
Overview
Customs duty is normally levied on the "transaction value" — the price actually paid or payable for imported goods. But when buyer and seller are related, or the price carries conditions such as royalties, that price may be artificially depressed to reduce duty. The Special Valuation Branch (SVB) exists to test whether the relationship or the conditions have influenced the price, and to fix the correct assessable value.
Legal Basis
Valuation of imported goods is governed by Section 14 of the Customs Act, 1962 read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. "Related persons" are defined in Rule 2(2). Where parties are related, Rule 3(3) requires an examination of whether the relationship influenced the price. The SVB procedure itself is administrative, laid down chiefly in CBEC Circulars 4/2016 and 5/2016, which replaced the older 2001 circular.
When an SVB Reference Arises
An importer is directed to the SVB when the proper officer finds any of the following:
- The importer and the foreign supplier are related under Rule 2(2) — for example, members of the same group, subsidiaries, or parties with a controlling interest.
- The declared price is subject to royalty or licence-fee payments that are a condition of sale.
- There are other payments or conditions — such as proceeds accruing to the seller from subsequent resale — that may affect the value.
The importer files a prescribed questionnaire and supporting documents (Annexure to the circular) at the SVB having jurisdiction, and pending the enquiry the goods are cleared on provisional assessment under Section 18.
The Extra Duty Deposit — Then and Now
Historically, importers under SVB investigation had to furnish an extra duty deposit (EDD) of 1% of the assessable value, rising to 5% if documents were not submitted in time. This tied up working capital for months. Circular 5/2016 abolished the EDD. Provisional assessment now continues without any security deposit merely on account of the pending SVB enquiry, a significant relief for importers.
Investigation and Timelines
The SVB examines whether the relationship has influenced the price by comparing the declared value against test values — the transaction value of identical or similar goods to unrelated buyers, deductive value, or computed value. The 2016 circulars set an indicative target of about two months to complete the investigation, extendable with senior approval. On conclusion the SVB issues an investigation report / order recording its finding.
Outcomes
| Finding | Consequence |
|---|---|
| Relationship did not influence price | Declared transaction value accepted; provisional assessments finalised without loading. |
| Relationship / conditions influenced price | Value loaded (e.g. adding royalty or a percentage uplift); duty reassessed on the enhanced value. |
An adverse finding can be challenged through the normal appeal ladder — Commissioner (Appeals) and CESTAT — as it results in an appealable assessment.
Renewal and Review
The old requirement to renew SVB orders every three years has been dispensed with under the 2016 reforms; an SVB finding continues to hold unless there is a change in circumstances (such as a change in the terms of the agreement or the pattern of payments), which the importer must report. This reduces repetitive re-investigation.
Common Pitfalls
- Not disclosing royalty or licence-fee arrangements at the time of import.
- Delaying submission of the questionnaire, which stretches provisional assessment.
- Assuming relatedness automatically loads the value — it does not; influence on price must be shown.
- Ignoring the duty to report changes in the underlying agreement after an SVB order.