Introduction:
Importing goods from your own foreign parent company or global subsidiary seems like it should be the easiest part of your supply chain. However, as soon as those goods land at an Indian port, the dynamic changes entirely. In 2026, the government is hyper-vigilant about how multinational companies price the goods they sell to themselves across borders.
If your business involves these “related party” imports, you cannot simply pay the standard duties and walk away. You are legally required to pass through the Special Valuation Branch, a highly specialized investigative unit. Their sole purpose is to look closely at your cross-border transactions and ensure that your company is not manipulating prices to avoid paying the correct amount of import taxes. Understanding how this unit works is critical to keeping your cash flow healthy and your shipments moving.
The Trigger for Related-Party Investigations
Why does your shipment get flagged in the first place? When an Indian subsidiary imports raw materials or finished products from its global headquarters, customs officers immediately take notice.
The primary suspicion is that the parent company might be selling the goods to the Indian branch at an artificially low price. While a low invoice value sounds like a great deal for the local business, it means the Indian government collects significantly less import tax. To prevent this revenue loss, SVB customs officers step in to investigate the exact relationship between the buyer and the seller. They need to confirm that the price on your invoice is fair, objective, and identical to what you would charge a completely unrelated, independent buyer in the open market.
Navigating the Investigation Process
When your shipment is flagged, your business does not just grind to a halt. The authorities allow your goods to be cleared provisionally so your factory can keep running.
But here is the catch: to get that provisional clearance, you often have to pay an Extra Duty Deposit (EDD) or furnish a heavy bond while the investigation is ongoing. This deposit can tie up a massive amount of your daily working capital for months. The only way to stop this financial leak is to initiate your SVB Registration quickly, submit the required extensive questionnaires, and prove your pricing model is legally sound. The faster you cooperate and provide transparent data, the faster you can stop paying these restrictive deposits.
The Burden of Proof is on the Importer
Winning an assessment case requires flawless documentation. The investigating officers will not just look at your shipping invoices. They will dig deep into your corporate structure.
You must provide royalty agreements, technical collaboration contracts, brand licensing deals, and detailed pricing structures. The unit will closely scrutinize whether you are paying hidden franchise fees or royalties to your parent company that should have been added to the total value of the imported goods. If your paperwork is weak, inconsistent, or poorly explained, the authorities will simply reject your declared value and legally force you to pay much higher duties on all your past and future shipments.
How ASC Group Helps You Clear the Hurdle
At ASC Group, we understand that tying up your cash in customs deposits and endless paperwork severely hurts your business growth. We specialize in managing complex related-party pricing disputes and cutting through the bureaucratic red tape.
Our team steps in to handle the entire filing and representation process. We draft the highly detailed customs questionnaires, align your import valuation with your existing income tax transfer pricing reports, and represent your company directly before the investigating officers. Our goal is to secure a favorable final order as quickly as possible, ensuring your deposits are refunded and your future imports clear the port without unnecessary financial roadblocks.
Conclusion
Importing from a global affiliate should give your business a strategic edge, not a logistical nightmare. By proactively managing your valuation strategy, keeping your documentation flawless, and understanding what the authorities are looking for, you can easily satisfy customs requirements. Do not wait for your cargo to be held up at the port prepare your pricing defense today and keep your supply chain running at full speed.
FAQs
1. What exactly qualifies as a “related party” under Indian customs law? If two companies share directors, if one holds 5% or more of the voting stock in the other, or if they are legally recognized partners in business, they are considered related. This rule heavily targets holding companies and their subsidiaries.
2. Do I have to stop importing while the investigation is ongoing? No. Your goods will still be cleared under a process called “provisional assessment.” However, to release the goods, you will likely have to pay an Extra Duty Deposit (EDD) or submit a bank guarantee until a final legal order is passed.
3. How long does the valuation investigation usually take? Legally, customs officers are supposed to issue a final order within four months of receiving all your completed documents. However, if your replies are incomplete or delayed, the entire process can easily drag on for a year or more.
4. Can I just use my Income Tax Transfer Pricing report for Customs? While your transfer pricing study is helpful evidence, it is not an automatic free pass. Income tax authorities look at your overall profitability, while customs authorities look specifically at the transaction value of the imported physical goods. The two departments use different legal frameworks.
5. What happens if the authorities decide my import prices were artificially low? They will “load” the value, meaning they will officially increase the assessable value of your imported goods. You will then be forced to pay the difference in customs duty, along with applicable interest, on all the shipments you cleared provisionally.
