Customs Duty

Customs Duty is a type of indirect tax levied on goods imported into India as well as on goods exported from India. Taxable event is import into or export from India. Import of goods means bringing into India of goods from a place outside India. India includes the territorial waters of India which extend upto 12 nautical miles into the sea to the coast of India. Export of goods means taking goods out of India to a place outside India.

In India, the basic law for levy and collection of customs duty is Customs Act, 1962. It provides for levy and collection of duty on imports and exports, import/export procedures, prohibitions on importation and exportation of goods, penalties, offences, etc.

The Central Board of Excise & Customs (CBEC) is the apex body for customs matters.

Types of Customs Duty

Export duties are levied occasionally to mop up excess profitability in international prices of goods in respect of which domestic prices may be low at the given time. But the sweep of import duties is quite wide. Import duties are generally of the following types:-

  1. Basic Duty: - it may be at the standard rate or, in the case of import from some other countries, at the preferential rate.
  2. Additional customs duty: - equal to central excise duty leviable on like goods produced or manufactured in India. Additional duty is commonly referred to as Countervailing duty or C.V.D. It is payable only if the imported article is such as, if produced in India, its process of production would amount to 'manufacture' as per the definition in Central Excise Act, 1944. Exemption from excise duty has the effect of exempting additional duty of customs.
  3. True Countervailing duty or additional duty of customs: - is levied to offset the disadvantage to like Indian goods due to high excise duty on their inputs. It is levied to provide a level playing field to indigenous goods which have to bear various internal taxes.
  4. Anti-dumping Duty/ Safeguard Duty: - for import of specified goods with a view to protecting domestic industry from unfair injury. It would not apply to goods imported by a 100% EOU (Export Oriented Units) and units in FTZ (Free Trade Zones) and SEZ (Special Economic Zones). On export of goods, anti-dumping duty is rebatable only by way of a special brand rate of drawback.
  5. Education Cess: - 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.

Please click here for more details on the Customs Duty rules.