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Special Valuation Branch (SVB) was established to verify the transaction value if the overseas supplier and importer in India happen to be related parties. If the goods are imported at a price lesser than the normal transaction value, then it causes revenue loss to the exchequer as the import duty reduces. However, one pertinent question arises here – Who is considered a related party for SVB in customs? Let’s find out!
Related Parties for Special Valuation Branch For knowing who shall be considered as a related party for the special valuation branch, we need to look at Customs Valuation Rules (CVR). As per Rule 2(2) of CVR, the buyer and seller shall be considered as related in the following scenarios:
Further, the person also includes the legal persons. For instance, if a company holds 5% or more of the outstanding stocks of another company, then both companies shall be considered as related persons. Further, where two or more persons are associated with each other’s business such that one is a sole distributor, sole agent or sole concessionaire of the other person, then they shall be deemed as the related persons for these rules if they fall within the above criteria. Exemptions to Certain Transactions The following transactions have been exempted from investigations by SVB in customs even if they happen between related persons:
As the related parties have a direct influence on the transaction price, therefore, the government deemed it important that such transactions are investigated by a dedicated branch of customs. If you need any assistance with respect to the Special Valuation Branch registrations and investigations, then feel free to contact the ASC Group.
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