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Use of tariff to calculate Customs Duty Duties of Customs :Imports First Schedule
- Surcharge - Additional Duty(Equal to Excise Duty) - Special Additional Duty - Anti Dumping Duty - Other Additional Duties - Notifications Duties of Customs become payable when there is
import into India. Accordingly, customs duty would be levied on such goods and
the amount of duty has to be determined. There are several types of duties
leviable on import and there are prescribed methods of computation of duties.
It is useful to consider the following steps in determining the amount of duty
payable. (1) Obtain the Tariff Classification of goods. (2) Compute the (i)
Basic Customs Duty, (ii) Surcharge (iii) Additional Duty of Customs (equal to
excise duty) and (iv) Special Additional Duty. (3) Determine if there are any
additional levies under different statutes (4) Whether there are concessions
and exemptions available on the item. (1) Tariff Classification Since
there are thousands of different goods, which are imported into India, it is
not possible to prescribe rates of duty for each type of merchandise.
Therefore, all goods are classified into categories (called
"headings" and "subheadings") for the purpose of levy of
duty. For each sub-heading, a specific rate of duty has been prescribed. The
process of assigning the goods to a "headings" or a
"subheadings" is known as "Classification of Goods" i.e.
determination of heading or sub-heading under which a particular item is
covered. The classification is as per the Schedules to the Customs Tariff Act,
1975, commonly referred to as the tariff, and is based on the Harmonized System
of Nomenclature (HSN) which has been established by the World Customs
Organization. The import invoice would indicate all items of purchase. If you
wish to compute the total duty payable on each of the items, you have to first
identify the various types of duties leviable on each of the items. For this
purpose, you are required to determine the classification of each of the items
of import as given in the import invoice based on your understanding of the item
description. The rules of to be followed while determining the classification
have been given in the General Rules of Interpretation of the First Schedule to
the Customs Tariff Act,1975. 2) Computing the (i) Basic Customs Duty (ii)
Surcharge (iii) Additional duty of customs (iv) Special additional duty
Under the Custom Tariff Act, 1975 and other laws, there are various types of
duties which are leviable. As a first step, the following three types of
customs duties have to computed:- (i) Duty which is specified against each
Heading or Sub-Heading in the First Schedule to the Customs Tariff Act, 1975.
This is usually referred to as Basic Customs Duty. There are different rates of
duty for different commodities. You may find these rates in column no. 4 (labeled
as "standard rates") of the tariff . There is also a 5th column
specifying the "preferential rates". These are different rates of
duty for goods imported from certain countries in terms of bilateral or other
agreements with such countries--which are called preferential rates of duties.
The duty may be a percentage of the value of the goods ( in such cases it is
called ad valorem duty) or at a specific rate, which is based on unit of
measurement which is specified in the tariff entry. The rate of duty in
percentage (in the case of advalorem duties) has to be applied on the Cost
Insurance and Freight (ii) A Surcharge at the rate of 10% of the Basic Customs
Duty is leviable on imported goods under Section 90 of the Finance Act, 2000 (
unless exempted by a notification). (iii) Additional duty of customsequal to
the, excise duty leviable on like goods produced or manufactured in India. This
is levied under Section 3 of Customs Tariff Act, 1975. This is usually referred
to as "countervailing duty" (CVD). However, the correct description
of this duty is Additional Duty of Customs. In order to determine the
applicable rate, you have to obtain the correct classification of the goods
under the Central Excise Tariff Act, 1986. The duties under the Central Excise
Tariff are on ad valorem basis. However, specific rates have been prescribed
for some items. Importantly, the value for the purpose of computing additional
duties of Customs is the total of the assessable value (generally the
transaction value - roughly equal to the c.i.f. value) and the basic customs
duty. If you are a manufacturer, importing goods to be used as inputs for
manufacture of other goods, you would be generally eligible for obtaining
credit (called CENVAT credit) equal to the additional duty of customs paid on
the imported goods. This duty amount is eligible for credit under input duty
Central Excise Rules, 1944. This credit can be used for paying central excise
duties on your manufacture. (iv) Imported goods are also liable to a Special
additional duty at a rate specified in Section 3A of the Customs Tariff Act,
1975. The amount of Special Additional duty is computed by applying this rate
on value which is equal to the total of the assessable value, the basic customs
duty and the additional duty of customs described above. (3) Additional
Levies Having computed the above mentioned duties, you have to determine
whether there are any additional levies on the particular items you intend to
import. Some of the levies are commodity specific and would be applicable
regardless of the time of import. These include cesses under various enactments
as also Additional Duties on specified commodities. There are certain other
levies which are specific to the country of origin. Please consider the
following levies. Countervailing Duty on bounty-fed articles is leviable under
Section 9, of the Customs Tariff Act 1975. No such duty is however, being
levied at present. Anti-dumping Duty (under Section 9A, Customs Tariff Act
1975) on specified goods imported from specified countries to protect
indigenous industry from injury resulting from dumping of goods. This is
notified and published from time to time. Safeguard Duty (under Section 8B of
the Customs Tariff Act, 1975) is applicable on certain goods at the time of import
for specified periods in order to check thier excessivr imports which may be
injurious to the Indian industry. 4. Exemptions: These exemptions and
concessions can be granted in a number of ways. Some of these exemptions are
briefly discussed below :- Exemption by Notification : The Central
Government may notify by publication in the Official Gazette certain exemptions
and concessions. Such exemptions or concessions may be conditional or absolute.
There are general exemptions given to a variety of items imported under certain
conditions These include exemption of imports for promotion of exports, import
by UN bodies, defence imports etc.,.. There are also exemptions which are
unconditional and are applicable across the board. There are other exemptions
based on conditions of end use. Preferential Rates : Preferential rates
of customs duty have been made applicable in respect of imports from certain
countries such as Sri Lanka, Mauritius, Seychelles and Tonga provided certain
conditions are satisfied. The goods in question must actually be manufactured
or produced in such preferential areas. Rules have been framed in order to
determine whether the goods have been manufactured or produced in such areas.
Determination of origin of the goods is very essential in order to avail of the
benefits of such concessional rates of duty. Duties of Customs :Exports Second Schedule Cesses Very few items are
subjected to customs duties on their export. For details refer to the Second
Schedule and the exemption notifications for exports. However, cesses are
leviable on export of several commodities under various Acts.
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