TYPES OF CUSTOM DUTY

Various duties under Customs can be levied on almost all imports whereas only a few goods are
subject to export duty. Let us understand different types of duties under Customs Law for the
purpose of import of goods.
The rates of Basic Customs Duty are as specified under the Tariff Act, 1975. Customs Tariff
Act, 1975 has two schedules. Schedule I prescribes tariff rates for imported goods, known as
―Import Tariff, and Schedule II contains tariff for export goods known as ―Export Tariff.

1. Basic Customs Duty

It is levied under Section 12 of Customs Act, 1962, and specified under Section 2 of the Customs
Tariff Act, 1975. ​The rates of this duty, popularly known as basic customs duty, are indicated in
the First Schedule of the ​Customs Tariff Act, 1975​. Generally, BCD is levied at the standard rate
of duty but if certain conditions are satisfied, the importer can avail the benefit of a preferential
rate of duty on imported goods.
Conditions for availing the benefit of a preferential rate of duty:
● Specific claim for preferential rate must be made by the importer,
● The import must be from preferential area as notified by the Central Government,
● The goods should be produced/manufactured in such preferential area.
 2. Additional Custom Duty/Countervailing Duty [Section 3(1)]
This is levied under Section 3(1) of the Customs Tariff Act, 1975. The amount of this duty is
equivalent to the amount of excise duty payable on like goods manufactured or produced in
India. In ​S.K. Patnaik v. the State of Orissa, 2000 S.C, it was held that countervailing duty is
imposed when excisable articles are imported in order to counterbalance the excise duty, which
is leviable on similar goods if manufactured in India

3. Special Additional Customs Duty (Special CVD)

U/s 3(5) of Customs Tariff Act, imported goods in addition to BCD & CVD shall also be liable
to Special CVD at the rate notified by Central Government (CG) (at present, it is @4%).
Special CVD is fully exempt in respect of the following imported goods:
a) Goods packed for retail sales covered under Standards of Weight & Measurement Act (Legal
Metrology Act, 2009)
b) Wristwatches & pocket watches
c) Telephones for cellular networks
d) Articles of apparel excluding parts of made-up clothing accessories

4. Protective Duties
Tariff Commission has been established under Tariff Commission Act, 1951. If the Tariff
Commission recommends and Central Government is satisfied that immediate action is
necessary to protect the interests of the Indian industry, a protective customs duty at the rate
recommended may be imposed under section 6 of the Customs Tariff Act. The protective duty
will be valid till the date prescribed in the notification.

5. Safeguard Duty
Central Government is empowered to impose 'safeguard duty' on specified imported goods if
Central Government is satisfied that the goods are being imported in large quantities and under
such conditions that they are causing or threatening to cause serious injury to the domestic
industry. Such duty is permissible under the WTO agreement. ​Safeguard duty is a step in
providing need-based protection to the domestic industry for a limited period, with the ultimate
objective of restoring free and fair competition.

6. Countervailing Duty on Subsidized goods

If a country pays any subsidy (directly or indirectly) to its exporters for exporting goods to India,
Central Government can impose Countervailing duty up to the amount of such subsidy under
section 9 of the Customs Tariff Act.

7. Anti Dumping Duty on dumped articles

Often, large manufacturers from abroad may export goods at very low prices compared to prices
in his domestic market. Such dumping may be with the intention to cripple domestic industry or
to dispose of their excess stock. This is called 'dumping'. In order to avoid such dumping, Central
Government can impose, under section 9A of Customs Tariff Act, anti-dumping duty up to the
margin of dumping on such articles, if the goods are being sold at less than their normal value.
Levy of such ​anti-dumping duty is permissible as per WTO agreement. Anti-dumping action can
be taken only when there is an Indian industry producing 'like articles'.

8. National Calamity Contingent Duty

A National Calamity Contingent Duty (NCCD) of customs has been imposed vide section 129 of
Finance Act, 2001. This duty is imposed on pan masala, chewing tobacco, and cigarettes. It
varies from 10% to 45%. - - NCCD of customs of 1% was imposed on PFY, motor cars,
multi-utility vehicles and two-wheelers and NCCD of Rs 50 per ton was imposed on domestic
crude oil.