Page 132 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Unit 8: Custom Duties

In order to give a broad guide as to classification of goods for the purpose of duty liability, the Notes
Central Board of Excises Customs (CBEC) brings out periodically a book called the “Indian
Customs Tariff Guide” which contains various tariff rulings issued by the CBEC. The Act also
contains detailed provisions for warehousing of the imported goods and manufacture of goods
is also possible in the warehouses.
For a person who do not actually import or export goods customs has relevance in so far as they
bring any baggage from abroad.

Notes Duties of customs are levied on goods imported or exported from India at the rate
specified under the Customs Tariff Act, 1975.

8.1 Types of Duties

Under the custom laws, the following are the various types of duties which are leviable:

Basic Duty

This is the basic duty levied under the Customs Act. The rate varies for different items from 5%
to 40%.

Additional Duty

Also known as Countervailing Duty or CVD: This additional duty is levied under section 3(1) of
the Custom Tariff Act and is equal to excise duty levied on a like product manufactured or
produced in India. If a like product is not manufactured or produced in India, the excise duty that
would be leviable on that product had it been manufactured or produced in India is the duty
payable. If the product is leviable at different rates, the highest rate among those rates is the rate
applicable. Such duty is leviable on the value of goods plus basic custom duty payable. For
example if the customs value of goods is 5000 and rate of basic customs duty is 10% and excise
duty on similar goods produced in India is 20%, CVD will be 1100/-.
Additional Duty to compensate duty on inputs used by Indian manufacturers. This Additional
Duty is levied under section 3(3) of the Customs Act. It can be charged on all goods by the central
government to counter balance excise duty leviable to raw materials, components and other
inputs similar to those used in the production of such good.

Anti-dumping Duty

Sometimes, foreign sellers abroad may export into India goods at prices below the amounts
charged by them in their domestic markets in order to capture Indian markets to the detriment
of Indian Industry. This is known as dumping. In order to prevent dumping, the Central
Government may levy additional duty equal to the margin of dumping on such articles, if the
goods have been sold at less than normal value. Pending determination of margin of dumping,
such duty may be provisionally imposed. After the exact rate of dumping duty is finally
determined, the Central government may vary the provisional rate of dumping duty. Dumping
duty can be imposed even when goods are imported indirectly or after changing the condition
of goods. There are however certain restrictions on imposing dumping duties in case of countries
which are signatories to the GATT or on countries given “Most Favoured Nation Status” under
agreement. Dumping duty can be levied on imports on such countries only if the Central

LOVELY PROFESSIONAL UNIVERSITY 127