Customs - Board revamps SVB
THE CBEC in its latest Circular on SVB states:
The 'Special Valuation Branch' ("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 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.
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were based upon the Customs Valuation (Determination of Price of imported goods), Rules, 1988, which have since been superseded by the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.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.
The monster that SVB has grown into in the recent years can be gauged from the titles of some of the articles we carried on the subject.
1. Special Valuation Branch in Customs - The Great Indian Customs Loot!!
2. Transfer Pricing: North Block stands 'sensitised'; Now needs to dismantle SVB in Customs
3. SVB & valuation of Goods Imported From Related Party
4. TARC recommendations - 'Beginning of end' for SVB?
5. Irrelevance of Special Valuation Branch in Customs
6. An illegal 'nonsense' called Special Valuation Branch!
The reformist measures of the Board are:
1. Director General of Valuation (DGOV) no more the boss: With effect from 1.1.2013, the DGOV was vested with the functional control over SVBs. Now the SVBs are given back to the Commissionerates.
2. The dreaded Extra Duty Deposit (EDD): '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. 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.
3. No appealable order by SVB: 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.
4. No SVB: No inquiries by SVB in cases of import of samples, where duty chargeable is nil or 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.
Board has also prescribed the procedure for referring a case to SVB and how it is to be dealt with in SVB.
CBEC Circular No. 5/2016 - Customs; Dated: February 09 2016