Friday, December 28, 2018



This department in Customs is formed to investigate transactions between foreign exporter and Indian importer, if they are related.

Important Q & A :-

Who is a related party ?

Authority : Refer Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 Rule 2 ( 2)

For the purpose of these rules, persons shall be deemed to be "related" only if -         (i)    they are officers or directors of one another's businesses;              

(ii)   they are legally recognised partners in business;              

(iii)  they are employer and employee;              

(iv)  any person directly or indirectly owns, controls or holds five per cent or more of the outstanding voting stock or shares of both of them;               

(v)   one of them directly or indirectly controls the other;                       

(vi)  both of them are directly or indirectly controlled by a third person;                       

(vii)together they directly or indirectly control a third person; or                       

(viii) they are members of the same family.                              

ExplanationI. - The term "person" also includes legal persons.

Explanation II. - Persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other shall be deemed to be related for the purpose of these rules, if they fall within the criteria of this sub-rule.

Authority: CIRCULAR NO 5 /2016-Customs Dt 09th Feb 2016

What is the procedure to be followed by customs in case imports are from a related party  ?

Para 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

Para 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

Pare 3.2-  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

Para 3.3 - 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

What are the exemptions from SVB investigation even though imports from a related party ?

Para 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 ₹ 1 lac but cumulatively these transactions do not exceed ₹ 25 lacs in any financial year

Renewal of SVB orders is still required ?


Para 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.

Para 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.

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