Unit 2 – Different Types of Customs Duty
Introduction
1. The following are the various types of Customs duties levied with the authority of law:-
a) Basic Custom Duty [Sec.12]
b) Integrated Goods and services tax [Sec.3(7)]
c) GST compensation cess [Sec.3(9)]
d) Education Cess & Secondary and Higher Education Cess
e) Social Welfare Surcharge
f) Additional duty of customs
Countervailing duty in lieu of excise [Sec.3(1)]
Additional Duty [Sec.3(3)]
Additional Duty [Sec.3(5)]
g) Protective Duties
h) Safeguard duty [Sec. 8B]
i) Countervailing Duty on subsidized goods [Sec.9]
j) Anti-Dumping Duty
k) National Calamity Contingent Duty
l) Road and Infrastructure Cess
2. The following illustration will clear the above types of Customs Duties:
The assessable value of imports in US $ 15,000. The Basic Custom Duty is @10%. The
exchange rate at the relevant date is 1US$= Rs.75. IGST is payable @12% and Social
Welfare Surcharge is 10%. Calculate Customs Duty and IGST
Solution
Particulars Amount Amount
Assessable Value (15,000 × 75) 11,25,000
+ Basic Customs Duty (10% of Rs.11,25,000) 1,12,500
+ Social Welfare Surcharge (10% of 1,12,500) 11,250
CUSTOMS DUTY (1,12,500 + 11,250) 1,23,750
TOTAL VALUE FOR LEVY OF INTEGRATED TAX 12,48,750
Integrated tax u/s 3(7) [12% of 12,48,750] 1,49,850
TOTAL LANDED COST 13,98,600
TOTAL CUSTOMS DUTY [1,49,850 + 1,23,750] 2,73,600
3. GST Compensation Cess
a) It is not levied on all goods but on luxury and sin goods like Pan Masala, tobacco etc.
b) Any article which is imported into India shall be liable to the goods and services tax
compensation cess at such rate as is leviable u/s 8 of GST (Compensation to States) Cess Act,
2017, on a like article, on its supply in India
c) The assessable value for levying GST compensation cess is to be computed in the same
manner as the value computed for IGST u/s 3(10) of the Customs Tariff Act.
d) Therefore it is levied on assessable value + Basic Customs Duty + Education Cess +
Secondary Higher Education Cess
4. Integrated Goods and Services Tax (IGST)
a) Article 269A constitutionally mandates that the supply of goods/services/both in the course of
import into India shall be deemed to be supply in the course of inter-State trade or commerce
for levy of integrated tax.
b) Import shall be deemed to be inter-State supplies and to be subjected to IGST accordingly
c) Before introduction of GST, countervailing duty (CVD) equal to excise duty and special
additional duty (SAD) equal to VAT or Sales Tax was imposed on goods imported into India
d) Rate of GST is based on the like article if supplied in India. This rate shall never exceed 40%.
The rate is to be applied on value of imported goods as determined u/s 3(8) of the Customs
Tariff Act
e) As per Sec.3(8) of the Customs Tariff Act, the value will include the following:-
Value of the Imported Goods as determined u/s 14(1) of the Customs Act i.e. the
Assessable Value
Basic Customs Duty u/s 12 of the Customs Act
Any other sum chargeable under any law for the time being in force as an addition to
duty of customs, except IGST u/s 3(7) and Compensation Cess u/s 3(9) of the Customs
Tariff Act
5. Basic Customs Duty (BCD)
a) There are two rates of BCD i.e. Standard rate and Preferential Rate
b) It is the most common duty levied on almost all imports and some exports
c) It is levied u/s 12 of the Customs Act and Section 2 of the Customs Tariff Act, 1975 as a
percentage of value as determined u/s 14(1) or (2) of the Customs Act, 1962
6. Proforma showing Computation of Customs Duty
Particulars Amount
a)Assessable Value u/s 14(1) or Tariff Value u/s 14(2) of Customs XXX
Act
b) Add: Basic Customs u/s 12 on Assessable Value XXX
c) Add: Social Welfare Surcharge on Basic Customs Duty XXX
d) Value for the purpose of levy of Integrated Tax u/s 3(7) and GST XXX
compensation Cess u/s 3(9) [a+b+c]
e) Add: Integrated Tax u/s 3(7) at the applicable rate on [d] XXX
f) Add: GST Compensation Cess u/s 3(9) at the applicable rate on [d] XXX
g) TOTAL COST OF IMPORTED GOODS [d + e + f] XXXX
TOTAL CUSTOMS DUTY PAYABLE [g – a] XXXX
7. Special Additional Duty
Special Additional Duty is countervailing to Vat/sales tax, if the goods supposed to have
manufacture in India.
Special Additional Duty (SAD)/additional custom duty leviable under sub-section (5) of
Section 3 of the Customs Tariff Act, 1975 which charged at the rate of 4% on the goods
imported into India. It is charged on the total value of imports including CIF + Basic Customs
duty + CVD.
This 4% Special Additional Duty is refundable to the importer traders i.e. who sold their goods
in India without changing identity/modification of goods in pursuance of Notification No.
102/07-Custom Dt. 14.09.2007 subject to fulfilment of various conditions and procedure as
laid down in various subsequent circulars, instructions and public notices.
Anti-dumping duty on dumped articles. – (1) Where any article is exported by an exporter or
producer from any country or territory (hereinafter in this section referred to as the exporting
country or territory) to India at less than its normal value, then, upon the importation of such
article into India, the Central Government may, by notification in the Official Gazette, impose
an anti-dumping duty not exceeding the margin of dumping in relation to such article.
8. Anti-dumping Duty [Sec. 9A] [Students may refer to additional notes on Anti-dumping
duty]
Where any article is exported by an exporter or producer from any country or territory to India
at less than its normal value, then, upon the importation of such article into India, the Central
Government may, by notification in the Official Gazette, impose an anti-dumping duty not
exceeding the margin of dumping in relation to such article.
This is undertaken in order to protect domestic industry and to avoid dumping by the large
manufacturers from abroad
