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Import Duties


Frequently Asked Question (FAQ)
Import Duties

Question: What is Customs duty?

Customs duty is the duty charged on goods on their importation into India or exportation out of India





 

Question: What are the different types of rates of duties of Customs ?

There are two types of rates of duty of Customs:

1. Ad valorem rate i.e., the duty is charged on the basis of value.

2. Specific rate i.e., on the basis of quantity/number/ volume/ weight. 









 

Question: What are the different kinds of duties of Customs levied on imported goods? What is the authority to levy and collect duties of Customs on imported goods?

Different kinds of duties of customs levied on imported goods are

(i) Basic Customs Duty

(ii) Additional duty of customs

(iii) Special additional duties

(iv) Additional levies like Countervailing duty, Anti dumping duty,Safe guard duty etc.,

In addition, cess duty is leviable on certain goods.

Section 12 of the Customs Act, 1962 authorises the Customs Officers to levy and collect these duties









 

Question: What is meant by special additional duty of customs?

Special additional dutyis specified under Section 3A of the Customs Tariff Act, 1975. The amount of Special Additional duty is computed by applying this rate on value, which is equal to the total of the assessable value, the basic customs duty and the additional duty of customs described above. 






 

 

Question: What is the additional duty of customs? What is the authority to levy it on imported goods?

Additional duty of customs equal to the, excise duty leviable on like goods produced or manufactured in India. This is levied under Section 3 of Customs Tariff Act, 1975. This is usually referred to as "countervailing duty" (CVD). However, the correct description of this duty is Additional Duty of Customs. In order to determine the applicable rate, you have to obtain the correct classification of the goods under the Central Excise Tariff Act, 1986. The duties under the Central Excise Tariff are on ad valorem basis. However, specific rates have been prescribed for some items. Importantly, the value for the purpose of computing additional duties of  Customs is the total of the assessable value (generally the transaction value - roughly equal to the c.i.f. value) and the basic customs duty.

If you are a manufacturer, importing goods to be used as inputs for manufacture of other goods, you would be generally eligible for obtaining credit (called CENVAT credit) equal to the additional duty of customs paid on the imported goods. This duty amount is eligible for credit under input duty Central Excise Rules, 1944. This credit can be used for paying central excise 




 

 

Question: How to compute the duty amount in respect of imported goods?

Under the Custom Tariff Act, 1975 and other laws, there are various types of duties, which are leviable. As a first step, the following three types of customs duties have to computed:-

(i) Duty which is specified against each Heading or Sub-Heading in the First Schedule to the Customs Tariff Act, 1975. This is usually referred to as Basic Customs Duty. There are different rates of duty for different commodities. You may find these rates in column no. 4 (labeled as "standard rates") of the tariff. There is also a 5th column specifying the "preferential rates". These are different rates of duty for goods imported from certain countries in terms of bilateral or other agreements with such countries--which are called preferential rates of duties. The duty may be a percentage of the value of the goods ( in such cases it is called ad valorem duty) or at a specific rate, which is based on unit of measurement which is specified in the tariff entry. The rate of duty in percentage (in the case of advalorem duties) has to be applied on the Cost Insurance and Freight

 (ii) Additional duty of customs equal to the, excise duty leviable on like goods produced or manufactured in India. This is levied under Section 3 of Customs Tariff Act, 1975. This is usually referred to as "countervailing duty" (CVD). However, the correct description of this duty is Additional Duty of Customs. In order to determine the applicable rate, you have to obtain the correct classification of the goods under the Central Excise Tariff Act, 1986. The duties under the Central Excise Tariff are on ad valorem basis. However, specific rates have been prescribed for some items. Importantly, the value for the purpose of computing additional duties of  Customs is the total of the assessable value (generally the transaction value - roughly equal to the c.i.f. value) and the basic customs duty.

If you are a manufacturer, importing goods to be used as inputs for manufacture of other goods, you would be generally eligible for obtaining credit (called CENVAT credit) equal to the additional duty of customs paid on the imported goods. This duty amount is eligible for credit under input duty Central Excise Rules, 1944. This credit can be used for paying central excise duties on your manufacture.

(iii) Imported goods are also liable to a Special additional duty at a rate specified in Section 3A of the Customs Tariff Act, 1975. The amount of Special Additional duty is computed by applying this rate on value which is equal to the total of the assessable value, the basic customs duty and the additional duty of customs described above.

(iv) Additional Levies

Having computed the above mentioned duties, you have to determine whether there are any additional levies on the particular items you intend to import. Some of the levies are commodity specific and would be applicable regardless of the time of import.  These include cesses under various enactments as also Additional Duties on specified commodities.

 There are certain other levies which are specific to the country of origin like:

Countervailing Dutyleviable under Section 9, of the Customs Tariff Act 1975. No such duty is however, being levied at present.

Anti-dumping Duty(under Section 9A, Customs Tariff Act 1975) on specified goods imported from specified countries to protect indigenous industry from injury resulting from dumping of goods. This is notified and published from time to time.

Safeguard Duty(under Section 8B of the Customs Tariff Act, 1975) is applicable on certain goods at the time of import for specified periods in order to check their excessive imports, which may be injurious to the Indian industry.

 

 

 


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