Presented by: Abhishek Shah

and Siddharth Trivedi

 Customs duty is an indirect tax and is

levied on import of goods into India
and export of goods out of India. The
power to levy the Custom Duty is
conferred by entry 83 of list I of
Schedule 7 of the Constitution of
India.

Introduction
The Customs Act was formulated in 1962 to prevent illegal imports and
exports of goods. Besides, all imports are sought to be subject to a duty with a
view to affording protection to indigenous industries as well as to keep the
imports to the minimum in the interests of securing the exchange rate of
Indian currency.
The levy and the rate of customs duty in India are governed by the Customs
Act 1962 and the Customs Tariff Act 1975. Imported goods in India attract
basic customs duty, additional customs duty and education cess
The customs tariff act, 1975 has two schedules
(a) Schedule I known as, Import Tariff. This schedule refers to goods liable to
import duty of customs.
(b) Schedule II known as Export Tariff. This schedule refers to goods liable to
export duty of customs.

 In addition Customs Tariff act, makes

certain provision for levy of other
duties like additional duty of
Customs, preferential duty, antidumping duty, protective duty etc.

Applicability
This Customs Duty act is applicable
to whole of India. India, includes the
territorial waters of India. It includes
not only the surface of the sea in the
territorial water but also air space
above and the ground at the bottom
of the sea.

Territorial waters of India

Territorial water refers to that portion of the
sea, which is adjacent to the shores of a
country. Indian territorial waters extend upto,
12 nautical miles from the base line on the
coast of India and includes any bay, gulf,
harbour creek or tidal river. 1 nautical mile
equals to 1.853 Kms.
Import is completed as soon as the goods
enter a countrys territorial waters. Similarly
export is completed only when the goods
cross the territorial waters.

Indian Customs Water

Indian Customs Water means the water extending
into the sea upto the limit of contiguous zone of
water of India and includes any bay, harbour creek
or tidal river.
Indian Customs water cover both the India
Territorial waters and contiguous zone. India
territorial extend upto 12 nautical miles from the
base line whereas the contiguous zone extend to a
further 12 nautical miles from the outer limit of the
territorial water. Therefore, India Customs waters
extend upto a total of 24 nautical miles from the
base line.

Establishments
Customs established can be divided into three
categories as goods can be imported or exported by
water, land and air.
The Customs Station is a place where the Customs
officer are stationed to perform various functions
such as checking cargo, passengers and conveyance.
1. Customs Sea port and Costal Ports
For the water borne goods there are sea ports called
the custom ports and costal goods. In costal ports only
local trade takes place. Local trade involves
movements of goods from one port of India to another
port in India.

2. Customs Airport
Import or export of goods by air takes place
through international airports. These are
called Customs airports. The board can also
appoint Air Freight Stations enabling the
clearance of goods outside the airport.
3. Land Customs Station
Import and export takes place by land route
as well. The customs established for this
purpose are called land customs stations.

Definitions
S.2 (22) "goods" includes- (a) vessels, aircraft and vehicles; (b)
stores; (c) baggage; (d) currency and negotiable instruments; and
(e) any other kind of movable property;
S.2(14) "dutiable goods" means any goods which are chargeable
to duty and on which duty has not been paid. Here it does not
matter whether the goods carry NIL duty or the goods have been
fully exempted . Hence almost all the imported goods and the
exported gods are dutiable goods.
S.2(7) "coastal goods" means goods, other than imported goods,
transported in a vessel from one port in India to another;
S.(24) "import manifest" or "import report" means the manifest or
report required to be delivered under section 30;
S.(25) "imported goods" means any goods brought into India from
a place outside India but does not include goods which have been
cleared for home consumption;

 S.2(33) "prohibited goods" means any goods the import or export

of which is subject to any prohibition under this Act or any other
law for the time being in force but does not include any such
goods in respect of which the conditions subject to which the
goods are permitted to be imported or exported have been
complied with
S.2(21) "foreign-going vessel or aircraft" means any vessel or
aircraft for the time being engaged in the carriage of goods or
passengers between any port or airport in India and any port or
airport outside India, whether touching any intermediate port or
airport in India or not, and includes- (i) any naval vessel of a
foreign government taking part in any naval exercises; (ii) any
vessel engaged in fishing or any other operations outside the
territorial waters of India; (iii) any vessel or aircraft proceeding to
a place outside India for any purpose whatsoever;

Levy and types of duties

Basically there are 5 types of custom
duties and they are:
1. Basic Custom duty
2. Additional Duty of Customs
3. Safeguard duty
4. Anti-dumping duty
5. Protective duty

Basic duty
It is levied under section 12 of the Customs Act and specified under
section 2 of the Tariff act. The basic customs is levied on imported
goods at the rate specified in the first schedule of the Customs
Tariff Act. The basic customs duty on export is levied at the rate
specified in Second Schedule of the Customs Act.
Such duty is levied either :
On the basis of transactional value under section 14(1) , or
Tariff value determined under section 14(2) of the Customs Act.
There are two rates of duty in First schedule
i. Standard rate: there are different rates for different goods. But the
general basic rate is 10% which is also known as peak rate of
customs duty. This basic duty rate may be exempted by
notification under section 25.
ii. Preferential rate: preferential rate is applicable when goods are
imported from most favored nations.

 In such cases, lower preferential rate

of duty will be applicable on such
goods subject to fulfillment of certain
condition. The benefit of the
preferential rate shall be given to the
importer only when he submits, at
the time of importation, proof as to
Country of Origin, otherwise standard
rate shall be applied.

Additional duty of Customs aka

countervailing duty
This is levied under section 3 of the Tariff Act, on the imported
articles. Under section 3(1) CVD is imposed on final products
and under section 3(3) it is imposed on few raw materials
CVD U/S 3(1) OF THE CUSTOMS TARIFF ACT
The amount of CVD is equivalent to the amount of excise duty
payable on such goods as if manufactured or produced in
India.
When excise duty is exempt or nil rate of excise is applicable
on goods imported no CVD is levied.
Exemptions of basic duty does not automatically mean
exemption of CVD.
No CVD is leviable on imported goods, if they do not amount to
manufacture as per Central Excise law.
Educational cess is also payable on basic duty and CVD

CVD u/s 3(3) of Custom

Tariff Act
CVD is leviable u/s 3(3) on any
imported article whether on such
article duty is leviable u/s 3(1) or not.
It is the duty equal to additional duty
representing such portions of excise
duty leviable on such raw material,
components and ingredients as
determined by the rules made by the
Central Government in this behalf.

Special CVD S.3(5)

This duty is imposed on imported
goods in addition to other duties if
any. This is in lieu of the sales
tax/VAT, Local tax or any other
charge for the time being in force
leviable on a like article on its ale,
purchase or transportation in India.
it is all the goods at the rate as
notified by the Government but not
exceeding 4%.

Safeguard duty
The Central Government may impose safeguard duty on specified
imported goods, if it is satisfied that certain goods are being
imported in LARGE quantities and they are causing serious injury
to domestic industry
This duty can be imposed only for a limited period, by way of
notification, after an enquiry
It can be imposed provisionally for a maximum period of 200 days
pending final determination of inquiry
If no duty is imposed within 200 days of the provisional levy or it
was determined that there was no serious trouble to domestic
industry, then the amount collected provisionally is refundable.
In case of imports from developing countries, Safeguard duty
imposed if any shall exceed 9% of the total imports
The safeguard duty is imposed initially for a period of 4 years and
is extendable upto 10 years.

Anti-dumping duty
To prevent the dumping, the Central
Government, may levy Anti-dumping duty not
exceeding the margin of dumping in relation to
such article or margin of injury whichever is less.
Here margin of dumping means normal value of
goods and margin of injury means difference
between fair market value and landed price. And
fair market value means domestic price of the
imported goods and landed price means the
price which is assessable value basic custom
duty with its cesses.

Protective duty
This duty is levied to protect the interest of ant
industry established in India.
It is levied by the Central Government, upon a
recommendation made to it this behalf by the
Tariff Commission
It is levied for a period as specified in the
notifications issued by Central Government
The rate of the duty shall be the rate specified
by the Central Government in notification but it
cannot exceed the amount recommended by the
tariff commission.