Customs Excise - Customs Excise Duty, Custom Duty in India and Excise Duty in India

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Custom Excise

Customs duties are levied on import of goods into India at the rates specified in the Customs Tariff Act, 1975. The effective rates of customs duties may vary pursuant to general and / or specific exemption or concession notifications issued by the government in this regard.
Customs duties currently comprise the following:

Basic Customs Duty (BCD) - Current general peak rate is 15 per cent.
Countervailing Duty (CVD) - This duty is equivalent to central excise duty leviable on a like product manufactured in India. Current rate applicable to majority of the industrial products is 16 per cent plus 2 per cent education cess, taking the effective rate to 16.32 per cent. This duty is calculated on the value of product + basic customs duty.
Additional Duty of Customs (ADC) - This duty is levied to countervail the sales tax, value-added tax, local taxes and other charges leviable on the like goods on their sale or purchase or transportation in India. Presently, this duty is levied at 4 per cent on certain items viz items bound under the Information Technology (IT) Agreement and on specified inputs / raw materials for manufacture of electronic / IT goods. This duty is levied on value of product +basic customs duty + countervailing duty.
Education Cess - This cess is levied at 2 per cent on the amount of BCD +CVD.

In addition, government also levies anti-dumping and safeguard duties on specified products for specified periods. "Value" for the purpose of levy of customs duty is "transaction value" in the course of international trade in arm's length unrelated party transaction.

Import-Export Policy
Import of goods into and export from India is regulated by the Foreign Trade Policy (the Policy) issued from time to time by Government of India. The Policy remains in force for five years and is amended from time to time. The Policy currently in force is for tax year 2004-09. Majority of goods are now freely importable.

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Central Excise Duty (CENVAT)
Central Excise Duty (CENVAT) is levied on goods manufactured and produced in India. It is levied under the authority of the Central Excise Act, 1944 at the rates prescribed in the First Schedule and Second Schedule to the Central Excise Tariff Act, 1985 as amended by Central Excise Tariff (Amendment) Act, 2004. In addition, education cess at 2 per cent on excise duty amount is levied by Finance (No. 2) Act, 2004. The effective rates may be lower pursuant to general /specific notifications issued by the government granting whole or partial exemption from duty. The duty, in most cases, is levied on the basis of value of the excisable goods.
Value, for this purpose, with effect from 1 July 2000 is the "transaction value" which is:

For delivery at the time and place of removal;
Where buyer is not a related person; and
Price is the sole consideration.

CENVAT is payable by the manufacturer but is, ordinarily, recovered from the buyer as a part of consideration for sale of goods. To reduce the cascading effect of CENVAT, a scheme known as MODVAT was introduced in 1986, which has now been renamed as CENVAT (effective 1 April, 2000). Under the CENVAT Scheme, a manufacturer can avail of the credit of the central excise duties or additional duties of customs (i.e. CVD) paid on specified inputs and capital goods used in the manufacture of excisable goods and also service tax paid on eligible input services and utilize it in discharging central excise duty on finished excisable goods.

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