Who Should Register with SVB? A Complete Guide for Importers

If your company imports goods from a foreign supplier that is connected to your business, you may have heard about Special Valuation Branch (SVB).

Many importers think that SVB registration means higher customs duty. However, this is one of the biggest misconceptions.

SVB is not a penalty. It is a Customs valuation mechanism used to determine whether the relationship between the importer and the foreign supplier has influenced the import price.

In this guide, we’ll explain who should register with SVB, using simple language and practical business examples.

What is Special Valuation Branch (SVB)?

The Special Valuation Branch (SVB) is a specialized unit of Indian Customs that examines imports where there is a relationship between the importer and the overseas supplier, or where agreements such as royalty, technical collaboration, trademark licensing, or technical assistance may affect the customs value of imported goods.

Its primary objective is to determine whether the declared transaction value can be accepted under the Customs Valuation Rules.

Infographic explaining that the Special Valuation Branch (SVB) of Indian Customs examines imports involving related party transactions and payments such as royalty, licence fees, and technical assistance that may influence the customs value of imported goods.

Why Does Customs Check Related Party Transactions?

Imagine this situation.

A company in Germany owns a company in India.

The German company exports machinery worth ₹1 crore.

Instead of invoicing ₹1 crore, it invoices only ₹70 lakh.

If Customs accepts the lower invoice value without verification, the importer may pay lower customs duty.

Therefore, Customs examines whether the relationship between the buyer and seller has influenced the price.

This is exactly where SVB comes into the picture.

Who Should Register with SVB?

Under the Customs Valuation Rules, importers may be required to undergo SVB examination if they have a specified relationship with the foreign supplier or if certain agreements exist that may influence the import value.

Below are the most common situations.

1. Same Directors

If the importer and foreign supplier have the same directors, or one company’s director is also a director in the other company, Customs may consider them related parties.

Example

Mr. Raj is a director of:

ABC India Pvt. Ltd.
ABC Singapore Pte. Ltd.

If ABC India imports goods from ABC Singapore, Customs may examine whether the declared price has been influenced by this relationship.

"Case 1: Same Directors = Related Parties. Infographic explaining that when an Indian importing company and a Singapore foreign supplier have the same director, Customs may treat them as related parties under Special Valuation Branch (SVB) provisions. Includes an example of Mr. Raj serving as director in both companies, illustrating a related party import transaction.

2. Business Partners

Legally recognized business partners are also considered related persons under Customs valuation rules.

Example

Raj and Amit operate:

A partnership firm in India
Another partnership firm in Singapore

If the Indian partnership imports goods from the Singapore partnership, Customs may examine the transaction under SVB.

Case 2: Business Partners = Related Parties. Infographic explaining that if an Indian importer and a Singapore supplier are legally recognized business partners, Customs may treat them as related parties under Special Valuation Branch (SVB) rules. Includes an example of Raj and Amit operating partnership firms in both India and Singapore and importing goods between them, illustrating a related party transaction.

3. Employer and Employee Relationship

Although uncommon in international trade, Customs rules also recognize employer-employee relationships.

If the importer and supplier have such a relationship, Customs may treat them as related persons.

"Case 3: Employer & Employee = Related Parties. Infographic explaining that when an Indian importer and a foreign supplier have an employer–employee relationship, Customs may treat them as related persons under Special Valuation Branch (SVB) and Customs Valuation Rules. Shows an Indian company (employer), a foreign company (employee), and an import transaction illustrating a related party relationship for customs valuation.

4. Common Shareholding (5% Voting Rights Rule)

This is one of the most important SVB provisions.

If any individual or entity directly or indirectly owns 5% or more voting shares in both the importer and the foreign supplier, the parties may be considered related.

Example

Mr. Sharma owns:

10% voting shares in India Company
10% voting shares in Foreign Company

Since the same person owns more than 5% in both companies, Customs may classify them as related parties.

"Case 4: Five Percent Shareholding Rule. Infographic explaining that if the same person directly or indirectly holds 5% or more voting shares in both an Indian importing company and a foreign supplier, Customs may treat them as related parties under the Customs Valuation Rules and Special Valuation Branch (SVB). The example shows Mr. Sharma holding 10% voting shares in both the Indian and foreign companies, making them related parties for customs valuation purposes.

5. Parent Company and Subsidiary

This is the most common type of related-party import.

Examples

Apple Inc. USA → Apple India
Toyota Japan → Toyota India
Siemens Germany → Siemens India

Whenever a parent company supplies goods to its subsidiary, Customs may examine whether the declared import price is influenced by the corporate relationship.

"Case 5: Parent Company and Subsidiary = Related Parties. Infographic explaining that transactions between a foreign parent company and its Indian subsidiary are naturally considered related party transactions under Customs Valuation Rules and may be examined by the Special Valuation Branch (SVB). The example shows Apple Inc. (USA) supplying goods to Apple India Pvt. Ltd. (India), with similar examples of Toyota Japan and Toyota India. Highlights that Customs may review whether the relationship has influenced the import price and emphasizes the need for proper valuation documentation and justification

6. Common Control

Two companies may also be considered related if they are controlled by the same holding company.

Example

Holding Company (Germany)

India Company

Thailand Company

If India Company imports goods from Thailand Company, and both companies are controlled by the same German holding company, Customs may classify them as related parties.

"Case 6: Common Control = Related Parties. Infographic explaining that when an Indian importing company and a foreign supplier are controlled by the same holding company, Customs may consider them related parties under the Customs Valuation Rules and Special Valuation Branch (SVB). The example shows a holding company in Germany controlling both an Indian importer and a Thailand supplier, illustrating a common control relationship that may require Customs to examine the declared transaction value.

7. Joint Control

Sometimes two or more companies jointly control another company.

In such situations, Customs may also treat the parties as related depending upon the ownership and control structure.

8. Family Members

Family relationships can also create related-party transactions.

Examples include:

Father
Mother
Son
Daughter
Brother
Sister
Husband
Wife

If the importer and foreign supplier belong to the same family, Customs may examine whether the relationship has affected the transaction value.

**"Cases 7 & 8: Joint Control and Family Members = Related Parties. Infographic explaining two situations where Customs may treat an Indian importer and a foreign supplier as related parties under the Customs Valuation Rules and Special Valuation Branch (SVB). Case 7 illustrates joint control, where two companies jointly control a third company involved in an import transaction. Case 8 explains that if the importer and supplier are connected through close family relationships, such as father, mother, brother, sister, spouse, son, or daughter, Customs may examine whether the relationship has influenced the transaction value.

9. Sole Distributor, Sole Agent or Exclusive Distributor

If a foreign supplier appoints only one company to distribute or sell its products in India, Customs may examine such arrangements.

Example

A global manufacturer appoints one Indian company as its exclusive distributor.

If the conditions under the Customs Valuation Rules are satisfied, the transaction may require SVB examination.

10. Technical Collaboration Agreements

Many companies receive technology, technical know-how, or engineering support from overseas suppliers.

These agreements are also reviewed under SVB.

Examples include:

Technical Collaboration Agreement
Technical Assistance Agreement
Technology Transfer Agreement
Know-how Agreement

**"Infographic explaining two situations that may require review by the Special Valuation Branch (SVB) under Customs Valuation Rules. The left panel explains Sole/Exclusive Distributor arrangements, where a foreign supplier grants exclusive distribution rights to an Indian company, and Customs may examine whether the relationship has influenced the import price. The right panel explains Technical Collaboration, where a foreign company supplies technology, machinery, or technical know-how and receives royalty, technical assistance fees, trademark licence fees, or similar payments. Customs may examine whether these payments should be included in the assessable value of imported goods.

11. Royalty and Licence Fee Agreements

Suppose a Japanese company:

Supplies machinery
Provides technology
Receives royalty every year

Customs may examine whether these royalty payments are related to the imported goods and whether they should form part of the assessable value.

Similarly, Customs may also examine:

Trademark Licence Fees
Brand Usage Fees
Technical Assistance Fees
Engineering Fees

Frequently Asked Questions (FAQs)

Is SVB registration mandatory for every importer?

No. SVB generally applies where the importer and supplier are related under the Customs Valuation Rules or where certain agreements may influence the import value.

Does every related-party transaction result in higher customs duty?

No. Customs only verifies whether the relationship has influenced the declared price.

Does royalty always become part of customs value?

Not always. Whether royalty is includible depends on the terms of the agreement and the applicable Customs Valuation Rules.

Can imports continue during SVB proceedings?

Yes. Imports generally continue while Customs examines the valuation, subject to applicable procedures.