Different Types of Duties in Customs

Protective Duty

It is a duty imposed to protect the interests of Indian Industry.

It is imposed by Tariff Commission.

Tariff Commission prescribes by notification

• the rate of Protective Duty
• and period of this duty

Protective duty will be valid till the date prescribed in notification by Tariff Commission

Safeguard Duty

It is levied by Central Government.

It is imposed if

• An article is being imported into India in such increased quantity
• Such increased quantity is causing threat to domestic industry

This duty is product specific i.e., levied on a particular product.

Period of Imposition

Duty is imposed for a period of 4 years. This period can be extended for maximum 6 more years (i.e. total 10 years)

In case, goods are imported from China, a specific safeguard duty is imposed under Section 8C.

Earlier

Where the goods were imported in increased quantities from People’s Republic of  China, a specific safeguard duty was imposed under section 8C of the Customs Tariff Act, 1975

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Now

This duty has been abolished from 14/04/2016

Counterveiling duty on Subsidized Articles

Certain countries give subsidy on their products.

Therefore, their products become cheaper when imported into India as compared to Indian products.

Hence, to counter this, the Central Government imposed  Counterveiling duty on Subsidized Articles

Features of Counterveiling duty on subsidized Articles

• This duty is imposed for 5 years and can be extended for 5 more years (total 5+5=10 years)
• Duty is equal to subsidy given by foreign country.
• It is not necessary that import is from country of manufacture (it may happen that first goods are imported to some other country and then imported into India)
• The article may be in same condition in which they are exported from country of manufacture or may change form (i.e. further processing or manufacturing may be done on it)

Anti-Dumping Duty

This is imposed when a foreign country is dumping goods into India.

Dumping occurs when on e co u n tr y e x port s g ood s t o a n o t h e r co u n tr y a t a p r ic e l o w e r t h a n its normal value

In this case, Central Government may impose Anti Dumpting Duty.

Amount of duty is equal to margin of dumping.

Margin of Dumping=Normal Value-Export Price.

This duty is also imposed for 5 years and can be extended for 5 more years (total 5+5=10 years)

The anti-dumping duty is normally not applicable on articles imported by a 100% EOU (However Central government may specifically make it applicable for such units)

Basic Custom Duty(BCD)

It is duty imposed, under section 12 of Customs Act on

Transaction value

Or

Tariff value

It is imposed as per Rates given in Custom Tariff Act (First and Second Schedules of the Customs Tariff Act, 1975)

Additional Duty of Customs under section 3(1) of the Customs Tariff Act, 1975

It is a l s o known as Countervailing duty (CVD) for excise

It is a duty charged in place of excise duty, On purchase of goods within India, excise duty is charged but for purchase from outside India, CVD is charged at a rate equivalent to rate of excise on goods manufacture in India

What is the rate of CVD u/s 3(1) if similar article is not produced or manufactured in India?

Duty as imposed on class of goods or description of goods to which goods belongs.

If there are more than one rates, then higher of such rates to be taken.

Additional Duty of Customs under section 3(3) of the Customs Tariff Act, 1975

It is duty imposed, on rate of excise

equal to rate of excise on

Raw materials/components produced or manufactured of article imported into India.

It is levied as per rules made by Central Government in this behalf

How is Assessable Value determined for purpose of 3(1) and 3(3)?

There are 3 methods

• On basis of Tariff Value
• On basis Of MRP under Section 4A of Central Excise Act
• Other Cases (Transaction Value)

Duty is imposed on assessable value as follows

Additional Duty of Customs under section 3(5) of the Customs Tariff Act, 1975

It is a l s o known as Countervailing duty (CVD) for VAT or Special Additional Duty (SAD)

It is a duty charged in place of VAT. On purchase of goods within India, VAT is charged but from purchase from outside India, CVD u/s 3 (5) is charged at equivalent VAT rate of goods in India

Since VAT rates are different from state to state, Max rates applicable is 4%

It is charged on Assessable Value+BCD+CVD u/s 3(1)+Primary Cess + Secondary Cess

Since there is no cess on VAT, there is no cess on SAD also

What is the rate of CVD u/s 3(5) if similar article is not produced or manufactured in India?

Duty will be imposed on class of goods or description of goods to which goods belong

If there are more than one rates, then higher of such rates to be taken.

However, maximum rate is 4%

Exam Questions

Question 8
A German manufacturer is exporting magnets to India. He is selling the magnets in Germany
@ ` 100 per piece, but exports same magnets to India @ ` 50 per piece. Due to availability
of cheap imported magnets, Indian manufacturers of the magnets are suffering. What action
can be taken by the Government in this regard?