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What is the Customs
Duty in India?
Customs duty in India is defined under
the Customs Act, 1962 and enables the
government to levy duty on exports and
imports, prohibit export and import of
goods, procedures for importing/
exporting,
penalties etc. All matters related to
customs duty fall under the Central
Board of Excise & Customs (CBEC).
The CBEC is a division of the
Department of Revenue of the Ministry
of Finance. CBEC formulates policies
that concern collection or levying of
customs duties, customs duty evasion,
smuggling prevention, and
administrative decisions.
Types of Customs Duty:
Customs duties are levied almost on
all goods imported into the country.
Import duties are not applicable on items
including lifesaving drugs/equipment,
fertilizers, food grains e tc. Import duties
are further divided into basic duty,
additional customs duty, true
countervailing duty, protective duty,
education cess and anti-dumping duty
or safeguard duty.
Basic Custom Duty
Basic customs duty is levied on
imported items that fall under the ambit
of Section 12 of the Customs Act, 1962.
These duties are levied at the rates
prescribed in First Schedule to Customs
Tariff Act, 1975, under the terms
specified in Section 2 of the act. The
levied rates may be standard or
preferential as per the country of import.
In India basic customs duty levied on
import of goods is depends on the HSN
codes of the goods. The HSN code of
beauty products is given in chapter 33.
Basic customs duty on import of beauty
products in India is 10%.
Additional Customs
Anti-dumping Duty:
duty may be
Duty (Countervailing Anti-dumping
imposed if the imported goods
are at below fair
Duty (CVD)):
This duty is applied on
imported items under Section 3 of
Customs Tariff Act, 1975. It is equal
to the Central Excise Duty that is
levied on goods produced within
India. This duty is calculated on the
aggregate value of goods
including BDC and landing charges.
The CVD on Import
Cosmetics from China is 12%.
And special customs duty is levied
at 4%.
Protective Duty:
Protective duty is imposed to shield
the domestic industry against
imports at a rate recommended
by the Tariff Commissioner.
Education Cess:
This duty is levied at 2% and
higher education cess at another
1% of the aggregate of other
customs duties.
market price; however, the Chinese
government has provided certain
industries and/or domestic
manufacturers with subsidies. This
means that the relevant Chinese
manufacturers are allowed to sell
products below the market price.
These practices are not liked by the
EU and US – which often react with
Anti-Dumping Duty measures. The
Anti-Dumping Duties sometimes
target entire industries, and
sometimes individual
manufacturers.
An Anti-Dumping Duty must be
taken seriously since these are often
in the range of 40 – 60% (as a
comparison, the average duty
rate is around 5% in most western
countries).
Safeguard Duty:
Safeguard duty is applied if the
government feels that a sudden
increase in exports can potentially
damage the domestic industry.
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