Special Valuation Branch (hereinafter referred as SVB) has been established by the Board for investigating the exact price of importing of goods. It was brought into picture in the year 1998 and then in 2001 certain amendments were made. On 9th Feb, 2016 the board came up with a new circular amending the previous one. Here are changes which are effected by the new Circular:

SVB investigation As Prior to and after 8/2/2016



SVB Investigation till 8th Feb 2016 (from 1998)[1]

SVB Investigation from 9th Feb 2016[2]

1. SVB Investigation @ 4 Places – i.e.  Chennai, Calcutta, Delhi, Mumbai. Presently 5 places i.e.Bangalore.
2. Reference to SVB:

Responsibility of the commissioner to carefully examine whether the case merits SVB proceedings or not.


Jurisdictional Commissioner decided on the basis of reply of questionnaire in Annexure A attached withBOE[3]within 3 days of filing BOE

3. SVB Proceedings:

Consent by AC/DC

Approval by Commissioner through review mechanism

Appeal remedy was clear


Approval of the concerned Commissioner of Customs

Appeal remedy is not clear

4. Investigation Report:

Proper Officer of the SVB has been authorised to pass the order.


Investigation must be completed in 2 months after the receipt of the reply and can be extended up to 4 months after the permission from Commissioner.

Required to convey to the customs formation for finalizing the provisional assessments.

5. EDD Levied on declared assessable values:

1% levied up to four months.


Increased up to 5% if Annexure A is not filed



No EDD for the first 60 days from the date of receipt of invoice

5% after the delay up to three months

6. No SVB proceedings:

No specific Exemption.

Commissioner with his discretionary power can exempt.


Import of samples and prototypes

Import of goods fully exempted or chargeable to nil rate of duty.

Transactions less than INR 1 Lakh where cumulative value of transactions does not exceed INR 25 Lakhs in a FY.

1.Circular No.11/2001-Customs dated 23.02.2001

2.Circular No. 5/2016-Customs dated 09.02.2016

3 .BOE stands for Bill of Entry

Appeal Procedure against the order of SVB:

articleLegal Conundrum:

It is the fact that the laws and the circulars are amended to resolve the loopholes of existing laws and to improve their applicability in a more convenient way for both the importers and the government. With the same intention, the Board came up with a new circular regarding the SVB proceedings i.e. Circular 04/2016 and 05/2016 but they are unable to explain the appeal procedure for the importer which has become a debatable issue.

As per section 128[4] of Customs Act, 1962 the order passed, is only appealable to the Commissioner (Appeals) provided the order is passed by the lower rank officer.

But the question is that, if the order has alreadybeen approved by the Commissioner then whether thesame rank officer, Commissioner (Appeals),can be the appellate authority? As per the well-established legal practice, theauthority will not admit the appeal if the order has been passed by the same rank officer.

Here, there are two possibilities of filing the appeal:

  1. Either to file it before the Commissioner (A) (or)
  2. To file it before the CESTAT.

In both the situations, the appeals can be rejected on the grounds that:

a)If the order passed by the one rank officer then it cannot be appealable before the same rank officer. As per the new Circular, the Commissioner has legally approved the order and hence it can be rejected by the Commissioner (Appeal) on the ground that since the order has been approved by the same rank officer then Commissioner (A) cannot become the appellate authority.

b)On the other hand the CESTAT can reject the appeal on the ground that the signing authority is the AO, hence it is appealable before the Commissioner (A).

Now, filing of appeal becomes the conundrum as it is not clearly stated under the Circular mentioned above. The appellant cannot decide as to which appellateforum has to be approached against the order of the Assessing Officer which has already been approved by the Commissioner.

As per, Custom Circular 11/2001, we can easily interpret that the importer can go for an appeal to the Commissioner against the order passed by the AO and further to CESTAT, as statedabove.

If we refer the concept of Res-Judicata[1], then filing the case to the Commissioner (A) straight away contradicts the said provision as the same authority cannot deal with the same case again and again.

Author’s Opinion:

As per the new Circular, the AO can pass the order after the approval of the Commissioner. In a majority cases, one can expect that based on the experience that IR approved by the Commissioner will be passed by AO. But since the AO is vested with the power of going beyond the approved IRof the Commissioner, and pass an order deviating from it, two possibilities can arise.

1.When IR approved by the Commissioner is given effect in the form a speaking order by the AO.

[4](1) Any person aggrieved by any decision or order passed under this Act by an officer of customs lower in rank than a  [Commissioner of Customs] may appeal to the  [Commissioner (Appeals)]  [within sixty days] from the date of the communication to him of such decision or order:  [Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days.]

(1A) The Commissioner (Appeals) may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.

(2) Every appeal under this section shall be in such form and shall be verified in such manner as may be specified by rules made in this behalf.

[5]S.11 of CPC says“No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court”.

In thisscenario, the order is the same as approved bythe Commissioner and hence the appellate authority should be the CESTAT. An appellate authority should be one level above the authority passing an order, accordingly, under the new procedure, even though the order has been passed by the AO, he merely gives effect to what the Commissioner has approved. Hence, appeal against such order cannot lie before the same level of authority who initially approved, i.e. Commissioner (Appeals). The principle of Res-Judicata would be made applicable here as it a waste oftime and money of the authority and importer.

2.WhenAO exerciseshis power, and goes beyond the approved IR of the Commissioner

Under this situation the approval of the Commissioner and the Order of the AO are different, so it can be considered that the order passed by AO is not the order of the Commissioner, since it can be appealable before the Commissioner (A).

3.The other point is that the board should come up with necessary clarifications regarding the appeal procedure.


The current operational method of SVB is not favourable for importers as they create barriers to import goods and the procedure for completing the investigation is also not speedy. With new circulars they have added onemore serious problem of appeal for the importer or appellant. Due to this, the importer can get more into legal proceedings rather than their main business.

Author Name:

unnamedAdv Sachin Bajpai,B.A, LL.B, – Advocate Associate SAPAA

Tags: Special Valuation Branch, SVB, Circular 04/2016, Circular 05/2016, Section 128 of Customs Act, 1962, Appeal.



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