Types of Custom Duties

Basic customs duty levied u/s 12 of Customs Act.
• The rate of basic customs duty is specified in Customs Tariff Act, read with relevant exemption notification.
Generally, basic customs duty is 10% of non-agricultural goods.
• CVD equal to excise duty is payable on imported goods u/s 3(1) of Customs Tariff Act. General excise
duty rate is 10.30% (10% basic plus 2% education cess and SAH Education cess of 1%)
• Special CVD (SAD) is payable @ 4% on imported goods u/s 3(5) of Customs Tariff Act. This is in lieu of Vat/ sales tax to provide level playing field to Indian goods.
• Education cess of customs @ 2% and SAH Education cess of 1% is payable.
• Total import duty considering all duties plus education cess on non-agricultural goods is generally
26.85% w.e.f 27-2-2010
• NCCD has been imposed on a few articles. In addition, on certain goods, anti-dumping duty, safeguard
duty, protective duty etc. can be imposed.

Additional Customs Duty u/s 3(1) (CVD)
• CVD (Countervailing Duty) is payable on imported goods u/s 3(1) of Customs Tariff Act to counterbalance
impact of excise duty on indigenous manufactures, to ensure level paying field.
• CVD is payable equal to excise duty payable on like articles if produced in India. It is payable at effective
rate of excise duty, which is generally 10.30%.
• CVD is payable on assessable value plus basic customs duty. In case of products covered under MRP
provisions, CV duty is payable on MRP basis as per section 4A of Central Excise.
• CVD can be levied only if there is ‘manufacture’.
• CVD is neither excise duty nor basic customs duty levied under Customs Act. However, all provisions of
Customs Act apply to CVD. Calculation of duty payable is as follows –

Additional Duty under section 3(5) (Special CVD – SAD)
Section 3(5) of Customs Tariff Act empowers Central Government to impose additional duty. This is in addition
to Additional Duty leviable u/ss 3(1) and 3(5) of Customs Tariff Act. Provision for this duty has been made w.e.f.
1-3-2005. Purpose of the Additional Duty is to counter balance sales tax, VAT, local tax or other charges leviable
on articles on its sale, purchase or transaction in India.
The obvious intention is to provide level playing field to manufacturers in India who are manufacturing similar
goods. Hence, it is termed as ‘Special CVD” or ‘SAD’ (Special Additional Duty).

Exemption from SAD – Some categories of imports have been exempted from this special CVD (SAD), vide
customs notification No. 20/2006-Custom dated 1-3-2006. The main among these are: Articles of jewellery
attracts a lower rate of special CVD at 1%.

Departmental clarifications – Department has clarified as follows, vide MF(DR) circular No. 18/2006-Cus dated
5-6-2006 –
• Special CVD of 4% is not leviable in case of imports under advance authorisation, EOU, EPCZ and SEZ
schemes
• In case of export promotion schemes like DEPB, target plus, service from India, DFCE and Vishesh Krishi and Gram Udyog Yojana, 4% Special CVD is required to be debited to the duty scrip/entitlement certificate.
• In case of DFRC scheme, 4% special CVD is payable.
• Duty debited through DEPB, DFCE, target plus scheme etc. will be eligible for Cenvat credit or duty drawback.

Refund of Special CVD to traders – Traders selling imported goods in India after charging sales tax/Vat can
claim refund of special CVD from customs department – Notification No. 102/ 2007-Cus dated 14-9-2007.

Anti-Dumping Duty
• Anti dumping duty is leviable u/s 9A of Customs Tariff Act when foreign exporter exports his good at low prices compared to prices normally prevalent in the exporting country.

• Dumping is unfair trade practice and the anti-dumping duty is levied to protect Indian manufacturers
from unfair competition.

• Margin of dumping is the difference between normal value (i.e. his sale price in his country) and export
price( price at which he is exporting the goods).

• Price of similar products in India is not relevant to determine ‘margin of dumping’.

• ‘Injury margin’ means difference between fair selling price of domestic industry and landed cost of
imported products. Dumping duty will be lower of dumping margin or injury margin.

• Benefits accruing to local industry due to availability of cheap foreign inputs is not considered. This is a
drawback.

• CVD is not payable on antidumping duty. Education cess and SAH education cess is not payable on  antidumping duty · In case of imports from WTO countries, antidumping duty can be imposed only if it cause
material injury to domestic industry in India.

• Dumping duty is decided by Designated Authority after enquiry and imposed by Central Government by notification. Provisional antidumping duty can be imposed.

• Appeal against antidumping duty can be made to CESTAT.

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