Types Of Customs Duty

Basic Customs Duty

Basic custom duty is the duty imposed on the value of the goods at a specific rate. The duty is fixed at a specified rate of ad-valorem basis. This duty has been imposed from 1962 and was amended from time to time and today is regulated by the Customs Tariff Act of 1975. The Central Government has the right to exempt any goods from the tax.

Countervailing Duty (CVD)

This duty is imposed by the Central Government when a country is paying the subsidy to the exporters who are exporting goods to India. This amount of duty is equivalent to the subsidy paid by them. This duty is applicable under Sec 9 of the Customs Tariff Act.

Additional Customs Duty or Special CVD

In order to equalize imports with locals taxes like service tax, VAT and other domestic taxes which are imposed from time to time, a special countervailing duty is imposed on imported goods. Hence, is imposed to bring imports on an equal track with the goods produced or manufactured in India. This is to promote fair trade & competition practices in our country.

Safeguard Duty

In order to make sure that no harm is caused to the domestic industries of India, a safeguard duty is imposed to safeguard the interest of our local domestic industries. It is calculated on the basis of loss suffered by our local industries.

Anti Dumping Duty

Often, large manufacturer from abroad may export goods at very low prices compared to prices in the domestic market. Such dumping may be with intention to cripple domestic industry or to dispose of their excess stock. This is called 'dumping'. In order to avoid such dumping, Central Government can impose, under section 9A of Customs Tariff Act, anti-dumping duty up to margin of dumping on such articles, if the goods are being sold at less than its normal value. Levy of such anti dumping duty is permissible as per WTO agreement. Anti dumping action can be taken only when there is an Indian industry producing 'like articles'.

National Calamity Contingent Duty

This duty is imposed by Sec 129 of the Finance Act. The duty is levied on goods like tobacco, pan masala or any items that are harmful for health. The rate of the tax varies from 10% to 45% and different rates are applied for different reasons.

Education Cess on Customs Duty

At the prescribed rate is levied as a percentage of aggregate duties of customs. If goods are fully exempted from duty or are chargeable to nil duty or are cleared without payment of duty under prescribed procedure such as clearance under bond, no cess would be levied.

Protective Duties

Tariff Commission has been established under Tariff Commission Act, 1951. If the Tariff Commission recommends and Central Government is satisfied that immediate action is necessary to protect interests of Indian industry, protective customs duty at the rate recommended may be imposed under section 6 of Customs Tariff Act. The protective duty will be valid till the date prescribed in the notification.

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Frequently Asked Questions

Common questions about Understanding Customs Duties in Financial Services.

Basic Customs Duty is the duty imposed on the value of imported goods at a specific ad-valorem rate. It was introduced in 1962 and is currently regulated by the Customs Tariff Act of 1975. The Central Government has the authority to exempt certain goods from this duty.

Countervailing Duty (CVD) is imposed by the Central Government when a country provides subsidies to exporters who export goods to India. The amount of duty is equivalent to the subsidy paid by the exporting country. This duty is applicable under Section 9 of the Customs Tariff Act.

Additional Customs Duty or Special CVD is imposed on imported goods to equalize them with domestic taxes like service tax, VAT, and other local taxes. This ensures fair competition between imported goods and domestically produced or manufactured goods in India.

Safeguard Duty is imposed to protect the interests of domestic industries in India from potential harm caused by imports. It is calculated based on the loss suffered by local industries due to increased imports.

Anti-Dumping Duty is imposed under Section 9A of the Customs Tariff Act when foreign manufacturers export goods to India at prices significantly lower than their domestic market prices (known as "dumping"). This duty aims to prevent such dumping practices from crippling domestic industries or allowing foreign companies to dispose of excess stock.

National Calamity Contingent Duty is imposed under Section 129 of the Finance Act on goods that are harmful to health, such as tobacco, pan masala, and other similar products. The duty rate varies from 10% to 45%, depending on the specific reasons for imposing the duty.

Education Cess on Customs Duty is a prescribed percentage levied on the aggregate customs duties. It is not applicable if goods are fully exempted from duty, chargeable to nil duty, or cleared without payment of duty under prescribed procedures like clearance under bond.

Protective Duty is a customs duty that may be imposed on the recommendation of the Tariff Commission, established under the Tariff Commission Act, 1951. If the Central Government is satisfied that immediate action is necessary to protect the interests of the Indian industry, it can impose protective customs duty at the recommended rate under Section 6 of the Customs Tariff Act.

Protective Duty is valid until the date prescribed in the notification issued by the Central Government for imposing the duty.

The different types of customs duties serve various purposes, such as protecting domestic industries, ensuring fair competition, preventing dumping practices, generating revenue, and regulating the import of certain goods for specific reasons like health concerns or calamities. These duties help the government maintain a balance between promoting domestic industries and facilitating international trade.