Customs duty is payable upon import of goods into India and payable to the Government of India. It is also levied on export of certain goods.
The rate of duty depends upon classification of goods under the Customs Tariff Act, which is aligned with the International Harmonized System of Nomenclature. The generic rate of Customs duty is 28.85%.
Customs duty generally comprises the following components:
- Basic Customs Duty (BCD): It is levied at a standard rate or preferential rate (in case of import from certain countries) as per Section 2 of the Central Excise Tariff Act, 1975.
- Additional Customs Duty (CVD): It is levied equal to Excise Duty which is applicable on such goods manufactured in India. Depending on the nature of goods of whether the same falls under MRP based valuation under Section 4A or assessable valuation under Section 4 of Central Excise Act 1944, such valuation as provided under Central Excise is extended to Customs as well.
- Special Additional Customs Duty (SAD): It is commonly referred to as Countervailing Duty or CVD and levied as per Section 3(1) of the Customs Tariff Act, 1975. It is payable on imported article, if such an article produced in India, its process would amount to “manufacture” in terms of Central Excise Act, 1944.
- Additional Duty of Customs: It is levied as per Section 3(5) of the Customs Tariff Act, 1975 at the rate not exceeding 4% in order to counter balance various internal taxes like Sales Tax and VAT and to provide a level playing field to indigenous foods which have to bear these taxes.
Anti-dumping duty/ Safeguard duty: It is levied on import of specified goods originating in or exported from the subject country with a view to protect domestic industry from unfair injury.