Customs Duty

In India, Customs Duty is levied on the import of goods into the country and is payable at the time of clearance of goods for home consumption from the customs station / customs bonded warehouse.

Customs Duty comprised of the following elements:

• Basic Customs Duty (BCD) (typically ranging between 10% to 40%)
• Social Welfare Surcharge (SWS) (10% on BCD)
• Integrated GST (IGST) (same as GST rate applicable on local supply, in lieu of Countervailing Duty and Special Additional Duty)
• Compensation cess (Applicable on a few goods ranging from 1% to 290%) depending on the nature of the goods

Furthermore, ‘Health Cess’ at the rate of 5% of the assessable value is leviable on the import of medical equipment falling under Chapter Headings 9018, 9019, 9020, 9021 and 9022 (such as ECG, ultra-sound scanner, etc.), whereas ‘Agriculture Infrastructure and Development Cess’ at varying rates is applicable on the import of gold, silver, alcohol beverages, apples, coal, etc.

With a view to protecting the domestic industry from unfair injury, Anti-Dumping Duty (ADD)/Safeguard Duty (SD) is imposed on the import of notified goods (such as steel products, jute products, tiles, etc.) from specified countries (such as China PR, Vietnam, Korea PR, Nepal, etc.)

BCD, SWS, Health cess, and ADD/SG are not available as input tax credit. However, credit can be availed in respect of IGST and Compensation Cess under the GST Law (subject to the fulfilment of certain conditions and documentation requirements).

In addition to the above, export duties are levied on a limited number of products such as leathers, iron ores and concentrates, raw sugar, coffee, tea, etc.

The Customs Law provides for the valuation of imports, prescribing the declared transaction value as the assessable value for the purpose of calculating the applicable Customs Duty, where price is the sole consideration, and the buyer and seller of goods are not related. Certain inclusions are prescribed such as the amount paid or payable for costs and services such as commissions and brokerages, engineering, design work, royalties and license fees, insurance, etc.

Imports from a related seller may be subjected to an investigation by a special valuation branch to determine whether or not the circumstances surrounding the sale and price thereof have been influenced by their relationship. However, certain exceptions have been prescribed in this regard.