What is a Provisional Duty Bond & Special Valuation Branch?

When importing goods into India, businesses often encounter valuation complexities, especially in transactions involving related parties. To address such concerns, the Special Valuation Branch (SVB) of Indian Customs evaluates related-party transactions to ensure fair pricing and prevent duty evasion. One of the key requirements in the SVB process is the Provisional Duty Bond (PDB).

Understanding the Provisional Duty Bond

A Provisional Duty Bond is a financial guarantee provided by importers undergoing SVB customs investigation. Since the final duty assessment may take time, the bond ensures that the government does not face revenue losses due to under-valuation. This bond is typically accompanied by a bank guarantee as additional security.

Purpose of a Provisional Duty Bond:

  • Allows clearance of goods while SVB verification is in progress.
  • Ensures the customs department recovers any additional duty, if applicable.
  • Acts as a safeguard against potential under-declaration of transaction value.

Role of the Special Valuation Branch (SVB) in Customs

The Special Valuation Branch Registration is mandatory for importers involved in transactions with related parties, such as subsidiaries, parent companies, or joint ventures. The SVB customs investigation ensures that the declared transaction value aligns with the arm’s length principle.

SVB Registration Process:

  1. Application Submission: Importers must file an application along with supporting documents such as invoices, transfer pricing reports, and agreements.
  2. Review by SVB Customs: The authorities assess the relationship between the buyer and seller and determine if it impacts the valuation.
  3. Issuance of Final Order: After verification, SVB issues a ruling on whether the declared value is accepted or needs adjustments.

Why is SVB Registration Important?

  • Prevents disputes related to customs valuation.
  • Ensures compliance with Indian customs regulations.
  • Helps businesses avoid penalties and additional duties.

Conclusion

A Provisional Duty Bond is essential for importers dealing with related-party transactions under SVB customs scrutiny. By obtaining Special Valuation Branch Registration, businesses can ensure smooth import operations and avoid legal complications. If you need assistance with SVB registration, consulting experts can help streamline the process.

For professional guidance on SVB customs and compliance, connect with ASC Group at 9999043311.

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