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The article provides information about the origin of customs duty in India, the types of customs duty and the custom duty in the budget 2008.

Custom Duties

Customs regulation in India is through the Customs act. The Customs act came into existence in 1962 at a time when the “License Quota Permit Raj" system existed in the country. It came into existence to check illegal imports and exports of goods. All imports into the country would be charged a duty, to give protection to the Indian industries and to check the amount of imports with a view to secure the exchange rate of the country.

Customs duty on goods imported or exported from India are levied according to the Tariff Act 1975.To monitor imports and exports, the Central government has the authority to inform the ports and airports for the unloading of the imported goods and loading of the exported goods, the location for clearance of goods imported or exported, the routes by which above goods may pass by land or inland water into or out of Indian ports.

According to the custom laws, the following are the various types of duties which can be charged.

Basic Duty
As the name suggests, it is the normal duty charged under the Customs Act.

Additional Duty
This duty is levied under section 3(1) of the Customs Tariff Act and is equal to excise duty levied on a like product manufactured or produced in India.

Anti Dumping Duty
International sellers may at times export goods into India at prices which would be less than the prices they would be charging in their domestic market. The reason for this is to capture the Indian markets, which is against the interest of the Indian industry. This economic phenomenon is called dumping. To avoid dumping the Central government may charge additional duty equal to the margin of dumping on such articles provided the goods have been sold at less than normal price. Countries which are signatories to the GATT or countries with "Most Favored Nation Status" cannot be charged dumping duty.

India Budget 2008

Custom Duty
  • The peak rate of basic customs duty (BCD) on all agricultural products is 10 per cent. For certain industries, customs duty has been reduced.
  • For project imports the duty has been reduced from 7.5 per cent to 5 per cent. In place of sales tax/value added tax (VAT) the additional duty of customs at 4 per cent has been induced on power generation projects.
  • A Countervailing Duty (CVD) of 1 per cent has been charged on mobile phones.

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