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 Constitutional provisions
have given to the Union, the right to legislate and collect duties on
imports and exports. The Central
Board of Excise & Customs (CBEC) is the apex body for customs
matters. It is a part of the Department
of Revenue under the Ministry
of Finance, Government of India. It deals with the task of formulation
of policy concerning levy and collection of customs duties, prevention
of smuggling and evasion of duties and all administrative matters relating
to customs formations. The Board discharges the various tasks assigned
to it, with the help of its field organizations namely Customs (preventive)
and Central Excise zones, Commissionerate of Customs, Central Revenues
Control Laboratory and Directorates. It also ensures that taxes on foreign
and inland travel are administered as per law and the collection agencies
deposit the taxes collected to the public exchequer promptly.
Import duties are generally of the following types:-
- Basic Duty :-
it may be at the standard rate or, in the case of import from some other
countries, at the preferential rate.
- 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.
- 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. Value base for this additional duty would be as in the case of
C.V.D, under Customs
Tariff Act,1975 minus the retail sale price provision. This additional
duty will not be included in the assessable value for levy of education
cess on imported goods. Manufacturers will be able to take credit of
this additional duty for payment of excise duty on their finished products.
- 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. Safeguard duties do
not require the finding of unfair trade practice such as dumping or
subsidy on the part of exporting countries but they must not discriminate
between imports from different countries. Safeguard action is resorted
to only if it has been established that a sudden increase in imports
has caused or threatens to cause serious injury to the domestic industry.
- 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.
All goods must be classified into groups and sub-groups
in order to levy the customs duty. The Customs
Tariff Act 1975, gives the classification of goods and accordingly
specifies the rate of duty. The act contains two schedules:-
- Schedule 1 classifies the goods for import and prescribes
the rate of import duties. It specifies the various categories of import
items in a systematic and in accordance with an international scheme
of classification of internationally traded goods - termed as 'harmonized
system of commodity classification'.
- Schedule 2 classifies the goods for export and prescribes
the rate of export duties.
In addition, the Customs
Tariff Act makes provisions for duties like additional duty (CVD),
preferential duty, anti-dumping duty, protective duties, etc.
The duties are levied both on specific and ad-valorem basis, while there
are few cases where at times specific-cum-ad valorem duties are also collected
on imported items. Where ad-valorem duties (i.e. duties with reference
to value) are collected, which are the predominant mode of levy, the value
of the goods has to be determined for customs duty purposes as per provisions
laid down under the Customs Act and the Customs
Valuation (determination of prices of imports goods) Rules, 1988
issued thereunder. These provisions are essentially adoption of GATT based
valuation system and followed internationally (now termed WTO Valuation
Agreement). The importer as well as the assessing officer has to carefully
study and apply these provisions so that the duties as due after proper
valuation as per law get discharged before the goods get out of customs
control.
FAQ's
on Customs duty
Queries
relating to Customs Duty
Forms
relating to Customs Duty
