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Types of Customs Duty for Import & methods of payment in India


The tax imposed on the Products when they are transported across international borders is known as Customs Duty.  It has a predefined rate of duty which determined on the following factors – 

  • From where good was acquired
  • Where good was made
  • Raw material used to make good

Types of Customs duty:

  • Basic Customs Duty (BCD)
  • Additional Customs Duty (ACD)
  • Countervailing Duty (CVD)
  • Protective Duty
  • Anti – Dumping 
  • Educational Cess on Custom Duty

Basic Customs Duty:-

It is imposed under Custom Act (1962) It varies from 5% to 40% . Rates are given in the first schedule of the custom tariff act 1975 and have been amended from time to time. Rules and regulations made by the central government.

Additional Customs Duty:-

Additional duty is known as a countervailing duty or CVD is an equal duty imposed on similar products. The Government has exempted all goods when imported into India for subsequent sale. Importers need to pay this duty then they can take a refund of the same under the various schemes.

Special Additional Duty

It is imposed at the rate of 4% in order to provide a level playing field to indigenous goods which have to bear sales tax. Calculation done on the following basis – 

  • Assessable value
  • Basic custom Duty
  • Surcharge
  • Additional duty of Customs leviable under section 3 of the Customs Tariff Act, 1975 (c.v.d.)

Anti Dumping Duty:-

Dumping means export of goods in foreign market at a price less than their production cost it gives hard competition to the goods manufacturer. To counteract this Indian government formulated the guidelines and policies.

Objective of Customs Duty:

Objectives behind levying customs duty is to safeguard following

  • Each Nations economy
  • Jobs
  • Environment
  • Residents

Calculation of the Customs Duty:

Calculation done on the basis of value of the goods by following way – 

From Rule 4 & 5:- Comparative Value Method – Which compares the transaction value of similar items.

Rule 7:- Deductive Value Method – that uses sale price of such good in the importing country.

From Rule 8:- Computed Value Method – It employs cost related to materials, fabrication, Profit in the country of manufacturing.

Rule 9:- The Fallback Method – it is based on previous methods with an element of higher flexibility.

Payment of Custom Duty:-

Steps in the Payment of custom Duty

  • Do the Login on ICEGATE  into the e-payment option
  • Enter the Import-Export code into the credentials provided by ICEGate
  • Now click on e-Payment button
  • Check all e-challans under the name of Director/Proprietor
  • Select the challan that wishes to pay and select the payment method and you would be redirected to the payment gateway.
  • After Payment completion redirected back to ICEGATE
  • Save Payment Copy

What is MEIS License and how it is used for waiver of Custom Duty:-

MEIS License received under MEIS scheme which is the Government Incentive scheme under which goods exporters can avail the benefits of 2% to 5% of the FOB value of exports in the form of MEIS license which is transferable in nature and can be used for the waiver of customs duty. 

Application done on DGFT site 

After verifying all the data and reviewing application DGFT grant the License

License needs to be verified from custom to check it’s genuineness

IF License holder has import then he can use license in waiver of customs duty or he wish to sell then he can sell it to the importer directly or through the agent at discounted rate.

The Government of India approved RoDTEP scheme to replace existing MEIS Scheme and RoSCTL scheme in a phased manner.

Customs Duty Exemption:-

Customs duty can be exempted through Advance License Scheme & EPCG License on inputs required to obtain the final export products & capital goods respectively.

Advance Authorisation Scheme:-

Advance License issued to allow duty free import of inputs required to manufacture the export products in addition with Fuel, Oil, Energy, Catalysts which are utilized to obtain the export products.

The inputs/Raw materials are exempted duties like Basic Custom Duty, Additional customs duty, Educational cess, Anti Dumping Duty, safeguard Duty, Integrated tax, and compensation cess wherever applicable.

There are four methods to obtain the Advance License-

  1. Standard Input Output Norms (SION) notified
  2. Self-declaration
  3. Application prior to fixation of the norm by the Norms Committee
  4. Self Ratification Scheme

Export Obligation:-

Value of the export that needs to compulsorily be achieved within a prescribed time Period and it is mentioned in the license. After achieving EO, Evidence of the same needs to be provided and application for the redemption needs to be done from DGFT.

EPCG Scheme:-

EPCG License issued to allow the import of capital goods for pre-production, production, post-production without payment of customs duty. It enables the importer to import capital goods at zero custom duty. It includes machinery as well as spares. 

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