Customs Duties (Import Duty and Export Tax)

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 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. Central Board of Excise and Customs (CBEC) 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 the Customs, Customs (preventive) and Central Excise zones, Commissionerate of Customs, Customs (preventive), 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.

Types of Customs Duties:

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:

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.

Additional duty is calculated on a value base of aggregate of value of the goods including landing charges and basic customs duty. Other duties like anti-dumping duty, safeguard duty etc are not taken into account. In case of goods covered by provisions of the Standards of Weights and Measures Act,1976, the value base would be the retail sale price declared on the package of the goods less the rebate as notified under the Central Excise Act,1944 for such goods

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 nill duty or are cleared without payment of duty under prescribed procedure such as clearance under bond, no cess would be levied.