An SVB bond is a Provisional Duty (PD) bond executed by an importer under Section 18 of the Customs Act, 1962 so that goods can clear customs while the Special Valuation Branch investigates whether a related-party relationship influenced the declared price. The bond is an undertaking to pay any differential duty that becomes payable if the finalised value turns out higher than the provisionally assessed value. It lets the consignment move without waiting months for the investigation to conclude, while protecting revenue in the meantime.
Importantly, the SVB bond is a separate instrument from any security deposit, and the two are often confused.
When the Commissioner refers a related-party transaction to the SVB, the proper officer assesses the goods provisionally under Section 18 and releases them promptly, so no delay occurs at the port. Because the final duty is unknown until the investigation concludes, the importer executes a bond covering the potential differential duty liability. That is the whole function of the SVB bond: it substitutes a legal undertaking for an immediate cash payment, keeping the supply chain moving during the enquiry.
These are two distinct things and importers frequently conflate them:
The importer may choose whether to provide any security as a cash deposit or a bank guarantee. Where a security deposit becomes necessary, a different bond form applies.
The bond covers the difference between the duty provisionally assessed and the duty finally assessed. Where goods are warehoused after provisional assessment, Section 18(2)(a) permits the officer to require a bond for twice the differential duty. In practice, some customs stations have taken bonds for the full assessable value rather than the differential duty alone, a practice that has drawn audit criticism. If your bond amount looks disproportionate to the potential duty exposure, it is worth questioning.
This is a material change most guidance has not caught up with. Circular No. 04/2025-Customs, issued by CBIC, introduced a Single Unified Multi-Purpose Electronic Bond, allowing an importer to furnish one all-India bond rather than executing transaction-wise bonds across different ports. For related-party importers clearing at multiple locations during an SVB enquiry, this substantially reduces the administrative burden of maintaining separate bonds at each Customs House.
The bond is discharged on finalisation of the provisional assessment. Once the SVB submits its Investigation Report, note that it issues a report and not an appealable order, the referring customs formation re-assesses the Bills of Entry. If the declared value is accepted, no further duty arises and the bond is cancelled. If the value is revised upward, the importer pays the differential duty with interest, and the bond is then cancelled. Under the Customs (Finalisation of Provisional Assessment) Regulations, 2025, bonds and securities furnished during provisional assessment are cancelled or re-credited on finalisation, provided no dues remain outstanding.
Bond cancellation is not automatic in practice, and importers often leave bonds open for years. The steps:
Finalisation is now time-bound. The 2025 Regulations prescribe a two-year limit for finalising provisional assessments, extendable by one year for recorded reasons, so an SVB bond should no longer remain open indefinitely.
At JPARKS INDIA, we handle the SVB bond from execution to cancellation. We prepare the bond in the correct prescribed form, advise on whether a security deposit is genuinely due, keep the bond amount proportionate to the actual duty exposure, track the case to finalisation, and pursue bond cancellation and bank guarantee release so your security is not left sitting with customs. We also handle the SVB refund claim where excess duty was paid. Having served 500+ importers and exporters since 2018, we close SVB bonds properly. Learn more about our SVB registration services or book a free consultation.
An SVB bond is a provisional duty bond executed under Section 18 of the Customs Act, 1962, undertaking to pay any differential duty if the SVB investigation results in an upward revision of the declared value. It allows goods to clear without delay.
No. The bond is an undertaking to pay differential duty. EDD was a cash security, and it was removed by Circular 05/2016. A 5 per cent security applies only if documents are not furnished within 60 days, for a maximum of three months.
The bond covers the differential duty between the provisional and final assessment. Where goods are warehoused, Section 18(2)(a) allows a bond for twice the differential duty. Bonds taken for the full assessable value have attracted audit criticism.
On finalisation of the provisional assessment, after the Investigation Report is received and any differential duty is paid. Under the 2025 Regulations, bonds and securities are cancelled or re-credited on finalisation if no dues remain.
Yes. Circular No. 04/2025-Customs introduced a Single Unified Multi-Purpose Electronic Bond, allowing a single all-India bond instead of transaction-wise bonds at each Customs House.
