Circular No. 5 /2016 -Customs
F. No. 465/12/2010-Cus V
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
******
New Delhi,
the 9th February 2016
To,
All Principal Chief Commissioners Customs
All Principal Chief Commissioner of Customs & Central Excise
All Chief Commissioners of Customs,
All Chief Commissioners of Customs & Central Excise,
All Directorate-Generals, Chief Departmental Representative,
All Principal Commissioners of Customs,
All Principal Commissioners of Customs & Central Excise
All Commissioners of Customs
All Commissioners of Customs & Central & Excise
Sub: Procedure for investigation of related party import cases and
other cases by the Special Valuation Branches - reg.
The ‘Special Valuation Branch’ (hereinafter referred to as “SVB”) was created as an
institution specializing in investigation of transactions involving special relationships between
buyer - seller or those involving other special circumstances surrounding the 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since been superseded by the Customs Valuation (Determination of Value of Imported Goods)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 investigations by SVBs.
3. 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 (DGOV), with effect from 1st
January, 2013. However, upon assessing the impact of the revised administrative arrangements
and taking into consideration the suggestion of the industry that jurisdictional Chief Commissioner
/ Commissioner offer a convenient avenue for redressing grievances, it has been decided to
withdraw the said circular with immediate effect. Henceforth, the Special Valuation Branches shall
function under the supervisory control of the jurisdictional Chief Commissioner/Principal
Commissioner/Commissioner. DGoV shall continue to support the SVBs by issuing advisories on
legal issues & guidance notes. DGoV shall also continue to qualitatively monitor investigation
orders issued by SVBs.
3.1 The SVBs are presently functioning at the Customs Houses at Bengaluru, Chennai,
Kolkata, Delhi and Mumbai. Para 1 (b) of circular no. 11/2001 dated 23rd Feb 2001 laid down the
jurisdiction of the SVBs, based upon the principle of location of the corporate office of the
importer. After reviewing this arrangement from the point of view of convenience of the trade, it
has been decided to continue with the same administrative arrangements. Accordingly, as &
when imports requiring investigation by SVBs are noticed at any customs formation, the
concerned Commissionerate shall after following the procedure laid down in this circular, transfer
all relevant records to the jurisdictional SVB for investigations. However, 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 the Customs House of import or the Customs House most
proximate to the corporate office, as convenient to him. The jurisdiction of the five SVBs is
attached as Annexure F.
3.2 The Board has reviewed the practice relating to levy of ‘Extra Duty Deposits’ (EDD) in
cases where SVB investigations are undertaken. It has been taken into consideration that ‘Extra
Duty Deposit’ @ 1% of declared assessable value is being obtained from the importer for a period
of 4 months during which time he is required to submit required documents and information to
the SVB. In the event of his failing to do so, the EDD can be increased to 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. 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 within this extended period, the Commissioner in charge of SVB may
consider the use of other provisions of the Customs Act for obtaining documents / information
from an importer for conducting investigations. In no case shall the imposition of Security Deposit
exceed the period of three months specified above. Furthermore, the Board has also decided
that the importer would be free to choose whether the Security Deposit to be provided for the
purposes of provisional assessment shall be by way of cash deposit or a Bank Guarantee. The
form of Bond to be initially furnished by the importer is attached as Annexure D. The form of Bond
to be used in a case where taking a Security Deposit becomes necessary is attached as
Annexure E.
3.3 It has also been decided that the existing system of adjudication, wherein the proper
officer of the SVB passed an appealable order followed by the assessing officer passing another
corresponding order finalizing provisional assessments should be replaced. It has now been
decided that the SVB shall not issue an appealable order. Instead, the SVB shall convey its
investigative findings by way of an Investigation Report to the referring customs formation for
finalizing the provisional assessments. This would obviate multiple streams of appeals for the
trade.
3.4 During consultations with field formations, it has been reported that while circular
11/2001- Cus dated 23.2.2001 cast the responsibility upon the Commissioner to carefully
examine whether a case merits SVB investigations, lack of adequate information at the stage of
assessment did not facilitate making a judicious decision on whether a case needs to be referred
to SVB or not. Accordingly, it has been decided to introduce a questionnaire to be filled by the
importer (attached as Annexure A to the circular), which would enable the jurisdictional
Commissioner to take a decision on whether a case needs to be referred to SVB for
investigations.
3.5 The Board has also decided that in order to ensure that only cases with significant
revenue implications are taken up for SVB investigations, the following cases shall not be taken
up for inquiries by SVBs :
(i) Import of samples and prototypes 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 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
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 examined to determine whether SVB
investigations are necessary. Accordingly, transactions where any payments are sought to be
made which are in the nature of instances given below, shall be examined with respect to the
need for SVB investigations:
(a) ‘royalty and licence fee’ under Rule 10 (1)(c) of CVR, 2007
or
(b) where the value of any part of proceeds of any subsequent resale,
disposal or use of imported goods accrues to the seller [i.e. Rule (10)(1)(d)]
of CVR, 2007
or
(c) where any other payments are made or are contemplated to be made in
future by buyer to seller as a condition of sale of imported goods etc., [i.e.
Rule 10(1)(e)] of CVR, 2007
4.2 However, no reference to SVB would be necessary where any additions are sought to be
made under Clauses (a) and (b) of Rule 10(1), as it is expected that such matters would be
decided routinely by Appraising Groups.
Procedure for considering reference to SVB
5. Scrutiny of a transaction between related persons or involving additions to value on
account of royalty, licence fee etc. can pose complex issues and may lead to delay in clearance.
Therefore, importers are advised that if their transaction falls in such a category they should, in
so far as possible, file a prior bill of entry as provided under the second proviso to subsection (3)
of section 46 of the Customs Act, 1962, preferably 15 days prior to the import. The importers are
also advised to provide information as prescribed in Annexure A to this circular as well as
information enjoined under Rule 3 (3) (b) of CVR 2007 at the time of filing of the Bill of Entry itself.
Such advance filing of the Bill of Entry is expected to provide sufficient time for taking a decision
on whether the transaction needs to be referred to SVB or not and therefore ensuring timely
clearance of the goods. This would be necessary only in the first instance of import and once a
decision has been taken regarding referring the matter to SVB or not, there would be no need for
such advance filing of the Bill of Entry for each subsequent import.
5.1 Upon filing of the Bill of Entry, and receipt of information in Annexure A, the proper officer
shall proceed to determine whether, prima facie, there is a need for investigation by the SVB. He
shall complete such examination within 3 days of the filing of Bill of Entry and the matter submitted
before the Commissioner. 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, directly or indirectly, to the seller?
viii. What is the nature of other payments, if any, made or to be made by the buyer as a
condition of sale of the imported goods?
ix. Has the importer entered into an Advance Pricing Agreement with the Income Tax
Authorities or obtained an Advance Ruling?
x. Will the prices paid or payable by the importer be settled with the seller at the end of a
defined period by means of a debit note / credit note?
5.2 While examining the information provided by the importer in terms of Rule 3(3) (b), if any,
the proper officer shall bear in mind that the interpretative note to CVR 2007 states:
“A number of factors must be taken into consideration in determining
whether one value "closely approximates" to another value. These
factors include the nature of the imported goods, the nature of the
industry itself, the season in which the goods are imported, and
whether the difference in values is commercially significant. Since
these factors may vary from case to case, it would be impossible to
apply a uniform standard such as a fixed percentage, in each case.
For example, a small difference in value in a case involving one type
of goods could be unacceptable while a large difference in a case
involving another type of goods might be acceptable in determining
whether the transaction value closely approximates to the "test"
values set forth in rule 3(3)(b).”
5.3 After examining the transaction on the above lines, the proper officer at the customs
station of import shall submit the findings to the Commissioner for a decision on whether the case
is fit for being referred to the SVB for investigations.
5.4 The Commissioner shall after due consideration of the preliminary findings, take a
considered view whether:
(a) the matter be referred to the SVB for further investigations and the goods be
provisionally assessed to duty in terms of section 18 of the Customs Act, or
(b) the transaction does not merit investigations by SVB and that assessment be finalised
on the basis of enquiries to be conducted by the proper officer in terms of Rules 4 to
9 of the CVR 2007 or
(c) the transaction be assessed in terms of Rule 3 of CVR 2007
Procedure for reference to SVB:
6. 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 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 examination of the transaction, it is decided by the Commissioner that
a reference to SVB is not necessary, 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.
Procedure in Special Valuation Branch
8. 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 to
ensure provisional assessments during the currency of SVB inquiries.
8.1 Upon receipt of information from the importer as per Annexure B, SVB shall commence
inquiries, during the course of which the Deputy Commissioner / Asst. Commissioner (SVB) may
call for further documents or information as required. The importer shall also be given suitable
opportunity to submit evidence in support of the declared value.
8.2. The SVBs shall, as far as possible, complete the investigations and issue its findings
within 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 fit.
8.3 Upon completing investigations, the SVB shall submit the findings before the Principal
Commissioner/Commissioner, quantifying the extent of influence on the transaction value due to
the relationship or payments towards royalty or licence fee or other payments actually made or
to be made as a condition of sale of the imported goods. Upon approval by the Principal
Commissioner / Commissioner, an Investigation Report (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
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 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 provisional assessments.
9.3 The adjudicating authority shall, after following the principles of natural justice, pass an
order quantifying the extent of influence on the declared transaction value. The Order shall be
endorsed to the Risk Management Division and the DGoV, for updating the Central Registry
Database.
9.4 The appellate provisions under Section XV of the Customs Act would apply for filing
appeals against the order passed by the adjudicating authority.
Change in circumstances surrounding the sale
10. 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 jurisdictional Commissioner shall refer the matter to the jurisdictional SVB, where
required.
10.1 In view of the above, it may be noted that the system of renewal of SVB orders has been
discontinued with immediate effect.
10.2 Instructions regarding disposal of pending cases are contained in circular 4 / 2016 dated
9
th February 2016.
Monitoring of SVB investigations:
11. DGoV shall facilitate co-ordination amongst the SVBs. Once a case is registered by the
SVB, detailed information regarding the same along with the IEC code of the importer should be
entered in the Central Registry Database (CRD) maintained by the Directorate General of
Valuation. DGoV shall monitor the progress of the investigations and report to the Board cases
involving any inordinate delays.
12. This circular is issued in supersession of Circular No. 1/98 – Cus dated 1.1.98 and
11/2001-Cus dated 23rd February 2001 and comes into immediate effect.
13. Difficulties, if any, faced in the implementation of this Circular may be brought to the notice
of the Board.
14. Hindi version follows.
Yours faithfully,
(S.Kumar)
Commissioner (Customs)
Circular No.5 / 2016-Customs
F. No. 465/12/2010-Cus V
BE No:
Customs Station:
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 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 imported
4.1 Whether the seller is the manufacturer of the imported goods or a trader?
4.2 Please specify the clause of Rule 2(2), CVR 2007 in terms of which the Buyer (importer)
and seller are related, if applicable. Please provide details of the relationship.
4.3 Please provide a gist and title of all agreements between the buyer (importer) and the
seller and/or with their associates
Goods
5 Have goods identical to the goods imported under the present BE, been imported
earlier? If yes, please provide details.
5.1 Whether the importer has imported any capital goods, plant, machinery, equipment, etc.,
from the seller of the imported goods or its related or associated concerns?
5.2 Does the seller of the imported goods supply the same directly to any other unrelated
person in India? If so, please furnish details of other importers in India, if available.
5.3 Has the price of the goods been settled in manner consistent with the way the price is
settled by the seller with unrelated buyers?
5.4 Please provide the information under Rule 3 (3) (b) of CVR, 2007, if any.
5.5 Is the price of the imported goods determined on the basis of a price list? If yes, please
provide copy of the price list and the basis of arriving at the invoice value.
5.6 If the price is not based upon a price list, then is the price declared a ‘Transfer Price’?
5.7 What is the basis on which the price has been settled between the buyer and seller?
Other Payments (Costs & Services under Rule 10 of CVR, 2007)
6. Whether the goods imported by the importer are sold under a trade mark, design,
licencing/royalty agreement or patent owned or controlled by the seller of the goods or
any other person?
6.1 Whether the product manufactured by the importer using the imported goods is sold
under a trade mark, design, licencing/royalty agreement or patent owned or controlled
by the seller of the goods or any other 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)?
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 Import or the Customs House most proximate to
the Corporate Office, as convenient to him.
Company Seal
(Signature of Authorised Representative)/ Director (Finance)/CFO
Name:
Designation:
Tel no. / email:
Circular No. 5 / 2016-Customs
F. No. 465/12/2010-Cus V
Annex-B
Questionnaire and documents to be filed by the importer to SVB within 60 days
Details of Importer
1. Name of the importer with full address of the Corporate office, registered office,
administrative office/factory
1.1 Please attach a copy of the Annex A filed at the customs station.
1.2 Please provide the copy of the bill of entry, invoice, bill of lading, packing list and LC in
respect of which Annex A was filed.
1.3 Please provide copies of all provisionally assessed bills of entry and accompanying,
invoice, bill of lading, packing list and LC since filing of Annex A at all ports.
1.4 Please provide Annual reports, if any, for a period of upto three preceding years.
1.5 Please provide Balance Sheets, if any, for a period of upto three preceding years.
1.6 Please provide, copy of Transfer Pricing report filed before Income Tax Dept, if any, or
a Transfer Pricing Report prepared for Customs Purposes / Tax Purposes, if any
1.7 Please provide copy of Advance Pricing Agreement, if any
1.8 Whether the importer has imported any capital goods, plant, machinery, equipment, etc.,
from the seller of the imported goods or its related or associated persons? Please furnish
copies of Bills of Entry, invoice, packing list, bill of lading & LC (or remittance details), as
applicable.
Details of goods imported
2. Whether the imported goods are component parts of CKD/SKD sets for local assembly
into finished goods? If yes, furnish a complete list of the items imported in CKD/SKD
condition.
Pricing Pattern
3. Are the imported goods or identical or similar goods (meaning assigned in terms of CVR,
2007) internationally 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?
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, quality control, marketing, sub-licensing of patent,
franchise, etc?
5.1 Whether any legal liabilities created by contracts or agreements entered into by the seller
devolve on the importer? If so, details thereof.
5.2 Whether the seller is in a position, directly or indirectly, to exercise restraint over the
importer, legally or operationally, in any manner? If so, details thereof.
5.3 Whether the converse position for serial no. 5.2. or 5.3 applies? If so, details thereof.
5.4 Whether any third party is in a position, directly or indirectly, to exercise restraint over
both the importer and the seller of imported goods, legally or operationally, in any
manner? If so, details thereof
5.5 Whether the importer and the seller of the imported goods, together, are in a position,
directly or indirectly, to exercise restraint over a third person, legally or operationally, in
any manner? If so, details thereof.
Please note:
After scrutiny of the information & documents provided by the importer under
Annexure A and B, the Special Valuation Branch of the Customs House may
require additional information / documents, which shall be communicated to the
Importer in writing.
Company Seal
Signature of Authorised Representative/Director (Finance)/CFO
Name:
Designation:
Tel no. / email:
ANNEXURE – C
(Para 10 of Circular 5 / 2016 dated 9
th February 2016 refers)
(on the letterhead of the importer)
To,
Commissioner of Customs
Customs House____________
I ( Name of the person) , (Designation) , of M/s (Name of Company) do hereby declare &
confirm that, –
This declaration is in relation to the Bill of Entry No._________
dated__________
(a) there is a change in the circumstances surrounding the sale of 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:
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 9
th 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,
administrators and legal representatives firmly by these presents.
Sealed with our seal(s) this___ day of______20
WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of
Customs at the ________________ (fill in name of customs station of import) (hereinafter called
the "Proper Officer") has agreed to make provisional assessment of the goods imported
from time to time by the importer pending submission of further documents and furnishing
information and/or completion of further enquiries and the Proper Officer has agreed to
allow provisional clearance of the goods mentioned in the schedule hereto annexed upon
the importer agreeing to furnish such bond as is herein contained.
NOW THE CONDITION of the above written bond is such that -
(1) If the importer shall within ninety days from the date of importation of this
consignment or within such extended period as the Proper Officer may allow, produce
such documents and furnish such information as may be called for by the Proper
Officer/Special valuation branch, and
(2) If the importer pays to the President, the difference between the duty finally
assessed and the duty provisionally assessed in respect of the goods imported from time
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 is 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 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 written.
SIGNED AND DELIVERED by and on behalf of the importer 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 9
th 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 9
th 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, administrators and legal representatives firmly by these presents.
Sealed with our seal(s) this___ day of______20
WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of
Customs at the ________________ (fill in name of customs station of import) (hereinafter
called the "Proper Officer") has agreed to make provisional assessment of the goods
imported from time to time by the importer pending submission of further documents and
furnishing information and/or completion of further enquiries and the Proper Officer has
agreed to allow provisional clearance of the goods mentioned in the schedule hereto
annexed upon the importer agreeing to furnish such bond as is herein contained; and
WHEREAS the importer has deposited with the Principal Commissioner of Customs or
Commissioner of Customs, as the case may be, at ----------- (location),
* a bank guarantee;
OR
* a security deposit
mentioned in the schedule hereunder for the due observance of and performance of
the terms and undertakings on the part of the importer and for being applied in part or full
towards the indemnity hereby given or otherwise according to law.
* strike out whatever is not applicable
NOW THE CONDITION of the above written bond is such that –
(1) If the importer shall within ninety days from the date of importation of this
consignment or within such extended period as the Proper Officer may allow, produce such
documents and furnish such information as may be called for by the Proper Officer/Special
valuation branch, and
(2) If the importer pays to the President, the difference between the duty finally
assessed and the duty provisionally assessed in respect of the goods imported from time 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 written.
SIGNED AND DELIVERED by and on behalf of the importer 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 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. 5 / 2016 dated 9
th February 2016 issued from CBEC F.No: 465/12/2010 - Cus V)
Bill of
Entry
Number
Date Provisional
Assessable
Value
Balance
of bond
value
Details of
security
deposit or
bank
guarantee
whichever is
applicable
Balance of
security
deposit or
bank
guarantee
value
(whichever is
applicable)
Remarks
(attach
bank
guarantee
in original
countersigned
by
officer
making
this entry)
Signature /
date / name
/
designation
of officer
(1) (2) (3) (4) (5) (6) (7) (8)
Annexure F
F.No: 465/12/2010-Cus V
Cir No. 5/2016
Jurisdictions of Special Valuation Branches
Sl.
No.
Special Valuation
Branch
Commissioner In
charge
Jurisdiction
1 Bengaluru Airport and Air Cargo
Complex, Bengaluru
Karnataka
Kerala
2 Chennai Customs –III, Chennai Andhra Pradesh
Puducherry
Tamil Nadu
Telangana
3 Delhi Commissionerate of
Customs (General)
Chandigarh
NCT of Delhi
Haryana
Himachal Pradesh
Jammu and Kashmir
Punjab
Rajasthan
Uttar Pradesh
Uttarakhand
4 Kolkata Customs (Port) Andaman and Nicobar Islands
Arunachal Pradesh
Assam
Bihar
Chhattisgarh
Jharkhand
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Sikkim
Tripura
West Bengal
5 Mumbai Customs (Import-II),
Mumbai Zone I
Dadra and Nagar Haveli
Daman and Diu
Goa
Gujarat
Madhya Pradesh
Maharashtra
F. No. 465/12/2010-Cus V
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
******
New Delhi,
the 9th February 2016
To,
All Principal Chief Commissioners Customs
All Principal Chief Commissioner of Customs & Central Excise
All Chief Commissioners of Customs,
All Chief Commissioners of Customs & Central Excise,
All Directorate-Generals, Chief Departmental Representative,
All Principal Commissioners of Customs,
All Principal Commissioners of Customs & Central Excise
All Commissioners of Customs
All Commissioners of Customs & Central & Excise
Sub: Procedure for investigation of related party import cases and
other cases by the Special Valuation Branches - reg.
The ‘Special Valuation Branch’ (hereinafter referred to as “SVB”) was created as an
institution specializing in investigation of transactions involving special relationships between
buyer - seller or those involving other special circumstances surrounding the 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 investigations by SVBs.
3. 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 (DGOV), with effect from 1st
January, 2013. However, upon assessing the impact of the revised administrative arrangements
and taking into consideration the suggestion of the industry that jurisdictional Chief Commissioner
/ Commissioner offer a convenient avenue for redressing grievances, it has been decided to
withdraw the said circular with immediate effect. Henceforth, the Special Valuation Branches shall
function under the supervisory control of the jurisdictional Chief Commissioner/Principal
Commissioner/Commissioner. DGoV shall continue to support the SVBs by issuing advisories on
legal issues & guidance notes. DGoV shall also continue to qualitatively monitor investigation
orders issued by SVBs.
3.1 The SVBs are presently functioning at the Customs Houses at Bengaluru, Chennai,
Kolkata, Delhi and Mumbai. Para 1 (b) of circular no. 11/2001 dated 23rd Feb 2001 laid down the
jurisdiction of the SVBs, based upon the principle of location of the corporate office of the
importer. After reviewing this arrangement from the point of view of convenience of the trade, it
has been decided to continue with the same administrative arrangements. Accordingly, as &
when imports requiring investigation by SVBs are noticed at any customs formation, the
concerned Commissionerate shall after following the procedure laid down in this circular, transfer
all relevant records to the jurisdictional SVB for investigations. However, 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 the Customs House of import or the Customs House most
proximate to the corporate office, as convenient to him. The jurisdiction of the five SVBs is
attached as Annexure F.
3.2 The Board has reviewed the practice relating to levy of ‘Extra Duty Deposits’ (EDD) in
cases where SVB investigations are undertaken. It has been taken into consideration that ‘Extra
Duty Deposit’ @ 1% of declared assessable value is being obtained from the importer for a period
of 4 months during which time he is required to submit required documents and information to
the SVB. In the event of his failing to do so, the EDD can be increased to 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. 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 within this extended period, the Commissioner in charge of SVB may
consider the use of other provisions of the Customs Act for obtaining documents / information
from an importer for conducting investigations. In no case shall the imposition of Security Deposit
exceed the period of three months specified above. Furthermore, the Board has also decided
that the importer would be free to choose whether the Security Deposit to be provided for the
purposes of provisional assessment shall be by way of cash deposit or a Bank Guarantee. The
form of Bond to be initially furnished by the importer is attached as Annexure D. The form of Bond
to be used in a case where taking a Security Deposit becomes necessary is attached as
Annexure E.
3.3 It has also been decided that the existing system of adjudication, wherein the proper
officer of the SVB passed an appealable order followed by the assessing officer passing another
corresponding order finalizing provisional assessments should be replaced. It has now been
decided that the SVB shall not issue an appealable order. Instead, the SVB shall convey its
investigative findings by way of an Investigation Report to the referring customs formation for
finalizing the provisional assessments. This would obviate multiple streams of appeals for the
trade.
3.4 During consultations with field formations, it has been reported that while circular
11/2001- Cus dated 23.2.2001 cast the responsibility upon the Commissioner to carefully
examine whether a case merits SVB investigations, lack of adequate information at the stage of
assessment did not facilitate making a judicious decision on whether a case needs to be referred
to SVB or not. Accordingly, it has been decided to introduce a questionnaire to be filled by the
importer (attached as Annexure A to the circular), which would enable the jurisdictional
Commissioner to take a decision on whether a case needs to be referred to SVB for
investigations.
3.5 The Board has also decided that in order to ensure that only cases with significant
revenue implications are taken up for SVB investigations, the following cases shall not be taken
up for inquiries by SVBs :
(i) Import of samples and prototypes 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 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
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 examined to determine whether SVB
investigations are necessary. Accordingly, transactions where any payments are sought to be
made which are in the nature of instances given below, shall be examined with respect to the
need for SVB investigations:
(a) ‘royalty and licence fee’ under Rule 10 (1)(c) of CVR, 2007
or
(b) where the value of any part of proceeds of any subsequent resale,
disposal or use of imported goods accrues to the seller [i.e. Rule (10)(1)(d)]
of CVR, 2007
or
(c) where any other payments are made or are contemplated to be made in
future by buyer to seller as a condition of sale of imported goods etc., [i.e.
Rule 10(1)(e)] of CVR, 2007
4.2 However, no reference to SVB would be necessary where any additions are sought to be
made under Clauses (a) and (b) of Rule 10(1), as it is expected that such matters would be
decided routinely by Appraising Groups.
Procedure for considering reference to SVB
5. Scrutiny of a transaction between related persons or involving additions to value on
account of royalty, licence fee etc. can pose complex issues and may lead to delay in clearance.
Therefore, importers are advised that if their transaction falls in such a category they should, in
so far as possible, file a prior bill of entry as provided under the second proviso to subsection (3)
of section 46 of the Customs Act, 1962, preferably 15 days prior to the import. The importers are
also advised to provide information as prescribed in Annexure A to this circular as well as
information enjoined under Rule 3 (3) (b) of CVR 2007 at the time of filing of the Bill of Entry itself.
Such advance filing of the Bill of Entry is expected to provide sufficient time for taking a decision
on whether the transaction needs to be referred to SVB or not and therefore ensuring timely
clearance of the goods. This would be necessary only in the first instance of import and once a
decision has been taken regarding referring the matter to SVB or not, there would be no need for
such advance filing of the Bill of Entry for each subsequent import.
5.1 Upon filing of the Bill of Entry, and receipt of information in Annexure A, the proper officer
shall proceed to determine whether, prima facie, there is a need for investigation by the SVB. He
shall complete such examination within 3 days of the filing of Bill of Entry and the matter submitted
before the Commissioner. 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, directly or indirectly, to the seller?
viii. What is the nature of other payments, if any, made or to be made by the buyer as a
condition of sale of the imported goods?
ix. Has the importer entered into an Advance Pricing Agreement with the Income Tax
Authorities or obtained an Advance Ruling?
x. Will the prices paid or payable by the importer be settled with the seller at the end of a
defined period by means of a debit note / credit note?
5.2 While examining the information provided by the importer in terms of Rule 3(3) (b), if any,
the proper officer shall bear in mind that the interpretative note to CVR 2007 states:
“A number of factors must be taken into consideration in determining
whether one value "closely approximates" to another value. These
factors include the nature of the imported goods, the nature of the
industry itself, the season in which the goods are imported, and
whether the difference in values is commercially significant. Since
these factors may vary from case to case, it would be impossible to
apply a uniform standard such as a fixed percentage, in each case.
For example, a small difference in value in a case involving one type
of goods could be unacceptable while a large difference in a case
involving another type of goods might be acceptable in determining
whether the transaction value closely approximates to the "test"
values set forth in rule 3(3)(b).”
5.3 After examining the transaction on the above lines, the proper officer at the customs
station of import shall submit the findings to the Commissioner for a decision on whether the case
is fit for being referred to the SVB for investigations.
5.4 The Commissioner shall after due consideration of the preliminary findings, take a
considered view whether:
(a) the matter be referred to the SVB for further investigations and the goods be
provisionally assessed to duty in terms of section 18 of the Customs Act, or
(b) the transaction does not merit investigations by SVB and that assessment be finalised
on the basis of enquiries to be conducted by the proper officer in terms of Rules 4 to
9 of the CVR 2007 or
(c) the transaction be assessed in terms of Rule 3 of CVR 2007
Procedure for reference to SVB:
6. 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 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 examination of the transaction, it is decided by the Commissioner that
a reference to SVB is not necessary, 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.
Procedure in Special Valuation Branch
8. 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 to
ensure provisional assessments during the currency of SVB inquiries.
8.1 Upon receipt of information from the importer as per Annexure B, SVB shall commence
inquiries, during the course of which the Deputy Commissioner / Asst. Commissioner (SVB) may
call for further documents or information as required. The importer shall also be given suitable
opportunity to submit evidence in support of the declared value.
8.2. The SVBs shall, as far as possible, complete the investigations and issue its findings
within 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 fit.
8.3 Upon completing investigations, the SVB shall submit the findings before the Principal
Commissioner/Commissioner, quantifying the extent of influence on the transaction value due to
the relationship or payments towards royalty or licence fee or other payments actually made or
to be made as a condition of sale of the imported goods. Upon approval by the Principal
Commissioner / Commissioner, an Investigation Report (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
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 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 provisional assessments.
9.3 The adjudicating authority shall, after following the principles of natural justice, pass an
order quantifying the extent of influence on the declared transaction value. The Order shall be
endorsed to the Risk Management Division and the DGoV, for updating the Central Registry
Database.
9.4 The appellate provisions under Section XV of the Customs Act would apply for filing
appeals against the order passed by the adjudicating authority.
Change in circumstances surrounding the sale
10. 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 jurisdictional Commissioner shall refer the matter to the jurisdictional SVB, where
required.
10.1 In view of the above, it may be noted that the system of renewal of SVB orders has been
discontinued with immediate effect.
10.2 Instructions regarding disposal of pending cases are contained in circular 4 / 2016 dated
9
th February 2016.
Monitoring of SVB investigations:
11. DGoV shall facilitate co-ordination amongst the SVBs. Once a case is registered by the
SVB, detailed information regarding the same along with the IEC code of the importer should be
entered in the Central Registry Database (CRD) maintained by the Directorate General of
Valuation. DGoV shall monitor the progress of the investigations and report to the Board cases
involving any inordinate delays.
12. This circular is issued in supersession of Circular No. 1/98 – Cus dated 1.1.98 and
11/2001-Cus dated 23rd February 2001 and comes into immediate effect.
13. Difficulties, if any, faced in the implementation of this Circular may be brought to the notice
of the Board.
14. Hindi version follows.
Yours faithfully,
(S.Kumar)
Commissioner (Customs)
Circular No.5 / 2016-Customs
F. No. 465/12/2010-Cus V
BE No:
Customs Station:
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 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 imported
4.1 Whether the seller is the manufacturer of the imported goods or a trader?
4.2 Please specify the clause of Rule 2(2), CVR 2007 in terms of which the Buyer (importer)
and seller are related, if applicable. Please provide details of the relationship.
4.3 Please provide a gist and title of all agreements between the buyer (importer) and the
seller and/or with their associates
Goods
5 Have goods identical to the goods imported under the present BE, been imported
earlier? If yes, please provide details.
5.1 Whether the importer has imported any capital goods, plant, machinery, equipment, etc.,
from the seller of the imported goods or its related or associated concerns?
5.2 Does the seller of the imported goods supply the same directly to any other unrelated
person in India? If so, please furnish details of other importers in India, if available.
5.3 Has the price of the goods been settled in manner consistent with the way the price is
settled by the seller with unrelated buyers?
5.4 Please provide the information under Rule 3 (3) (b) of CVR, 2007, if any.
5.5 Is the price of the imported goods determined on the basis of a price list? If yes, please
provide copy of the price list and the basis of arriving at the invoice value.
5.6 If the price is not based upon a price list, then is the price declared a ‘Transfer Price’?
5.7 What is the basis on which the price has been settled between the buyer and seller?
Other Payments (Costs & Services under Rule 10 of CVR, 2007)
6. Whether the goods imported by the importer are sold under a trade mark, design,
licencing/royalty agreement or patent owned or controlled by the seller of the goods or
any other person?
6.1 Whether the product manufactured by the importer using the imported goods is sold
under a trade mark, design, licencing/royalty agreement or patent owned or controlled
by the seller of the goods or any other 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)?
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 Import or the Customs House most proximate to
the Corporate Office, as convenient to him.
Company Seal
(Signature of Authorised Representative)/ Director (Finance)/CFO
Name:
Designation:
Tel no. / email:
Circular No. 5 / 2016-Customs
F. No. 465/12/2010-Cus V
Annex-B
Questionnaire and documents to be filed by the importer to SVB within 60 days
Details of Importer
1. Name of the importer with full address of the Corporate office, registered office,
administrative office/factory
1.1 Please attach a copy of the Annex A filed at the customs station.
1.2 Please provide the copy of the bill of entry, invoice, bill of lading, packing list and LC in
respect of which Annex A was filed.
1.3 Please provide copies of all provisionally assessed bills of entry and accompanying,
invoice, bill of lading, packing list and LC since filing of Annex A at all ports.
1.4 Please provide Annual reports, if any, for a period of upto three preceding years.
1.5 Please provide Balance Sheets, if any, for a period of upto three preceding years.
1.6 Please provide, copy of Transfer Pricing report filed before Income Tax Dept, if any, or
a Transfer Pricing Report prepared for Customs Purposes / Tax Purposes, if any
1.7 Please provide copy of Advance Pricing Agreement, if any
1.8 Whether the importer has imported any capital goods, plant, machinery, equipment, etc.,
from the seller of the imported goods or its related or associated persons? Please furnish
copies of Bills of Entry, invoice, packing list, bill of lading & LC (or remittance details), as
applicable.
Details of goods imported
2. Whether the imported goods are component parts of CKD/SKD sets for local assembly
into finished goods? If yes, furnish a complete list of the items imported in CKD/SKD
condition.
Pricing Pattern
3. Are the imported goods or identical or similar goods (meaning assigned in terms of CVR,
2007) internationally 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?
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, quality control, marketing, sub-licensing of patent,
franchise, etc?
5.1 Whether any legal liabilities created by contracts or agreements entered into by the seller
devolve on the importer? If so, details thereof.
5.2 Whether the seller is in a position, directly or indirectly, to exercise restraint over the
importer, legally or operationally, in any manner? If so, details thereof.
5.3 Whether the converse position for serial no. 5.2. or 5.3 applies? If so, details thereof.
5.4 Whether any third party is in a position, directly or indirectly, to exercise restraint over
both the importer and the seller of imported goods, legally or operationally, in any
manner? If so, details thereof
5.5 Whether the importer and the seller of the imported goods, together, are in a position,
directly or indirectly, to exercise restraint over a third person, legally or operationally, in
any manner? If so, details thereof.
Please note:
After scrutiny of the information & documents provided by the importer under
Annexure A and B, the Special Valuation Branch of the Customs House may
require additional information / documents, which shall be communicated to the
Importer in writing.
Company Seal
Signature of Authorised Representative/Director (Finance)/CFO
Name:
Designation:
Tel no. / email:
ANNEXURE – C
(Para 10 of Circular 5 / 2016 dated 9
th February 2016 refers)
(on the letterhead of the importer)
To,
Commissioner of Customs
Customs House____________
I ( Name of the person) , (Designation) , of M/s (Name of Company) do hereby declare &
confirm that, –
This declaration is in relation to the Bill of Entry No._________
dated__________
(a) there is a change in the circumstances surrounding the sale of 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:
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 9
th 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,
administrators and legal representatives firmly by these presents.
Sealed with our seal(s) this___ day of______20
WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of
Customs at the ________________ (fill in name of customs station of import) (hereinafter called
the "Proper Officer") has agreed to make provisional assessment of the goods imported
from time to time by the importer pending submission of further documents and furnishing
information and/or completion of further enquiries and the Proper Officer has agreed to
allow provisional clearance of the goods mentioned in the schedule hereto annexed upon
the importer agreeing to furnish such bond as is herein contained.
NOW THE CONDITION of the above written bond is such that -
(1) If the importer shall within ninety days from the date of importation of this
consignment or within such extended period as the Proper Officer may allow, produce
such documents and furnish such information as may be called for by the Proper
Officer/Special valuation branch, and
(2) If the importer pays to the President, the difference between the duty finally
assessed and the duty provisionally assessed in respect of the goods imported from time
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 is 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 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 written.
SIGNED AND DELIVERED by and on behalf of the importer 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 9
th 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 9
th 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, administrators and legal representatives firmly by these presents.
Sealed with our seal(s) this___ day of______20
WHEREAS the Assistant Commissioner of Customs/Deputy Commissioner of
Customs at the ________________ (fill in name of customs station of import) (hereinafter
called the "Proper Officer") has agreed to make provisional assessment of the goods
imported from time to time by the importer pending submission of further documents and
furnishing information and/or completion of further enquiries and the Proper Officer has
agreed to allow provisional clearance of the goods mentioned in the schedule hereto
annexed upon the importer agreeing to furnish such bond as is herein contained; and
WHEREAS the importer has deposited with the Principal Commissioner of Customs or
Commissioner of Customs, as the case may be, at ----------- (location),
* a bank guarantee;
OR
* a security deposit
mentioned in the schedule hereunder for the due observance of and performance of
the terms and undertakings on the part of the importer and for being applied in part or full
towards the indemnity hereby given or otherwise according to law.
* strike out whatever is not applicable
NOW THE CONDITION of the above written bond is such that –
(1) If the importer shall within ninety days from the date of importation of this
consignment or within such extended period as the Proper Officer may allow, produce such
documents and furnish such information as may be called for by the Proper Officer/Special
valuation branch, and
(2) If the importer pays to the President, the difference between the duty finally
assessed and the duty provisionally assessed in respect of the goods imported from time 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 written.
SIGNED AND DELIVERED by and on behalf of the importer 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 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. 5 / 2016 dated 9
th February 2016 issued from CBEC F.No: 465/12/2010 - Cus V)
Bill of
Entry
Number
Date Provisional
Assessable
Value
Balance
of bond
value
Details of
security
deposit or
bank
guarantee
whichever is
applicable
Balance of
security
deposit or
bank
guarantee
value
(whichever is
applicable)
Remarks
(attach
bank
guarantee
in original
countersigned
by
officer
making
this entry)
Signature /
date / name
/
designation
of officer
(1) (2) (3) (4) (5) (6) (7) (8)
Annexure F
F.No: 465/12/2010-Cus V
Cir No. 5/2016
Jurisdictions of Special Valuation Branches
Sl.
No.
Special Valuation
Branch
Commissioner In
charge
Jurisdiction
1 Bengaluru Airport and Air Cargo
Complex, Bengaluru
Karnataka
Kerala
2 Chennai Customs –III, Chennai Andhra Pradesh
Puducherry
Tamil Nadu
Telangana
3 Delhi Commissionerate of
Customs (General)
Chandigarh
NCT of Delhi
Haryana
Himachal Pradesh
Jammu and Kashmir
Punjab
Rajasthan
Uttar Pradesh
Uttarakhand
4 Kolkata Customs (Port) Andaman and Nicobar Islands
Arunachal Pradesh
Assam
Bihar
Chhattisgarh
Jharkhand
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Sikkim
Tripura
West Bengal
5 Mumbai Customs (Import-II),
Mumbai Zone I
Dadra and Nagar Haveli
Daman and Diu
Goa
Gujarat
Madhya Pradesh
Maharashtra
