Custom Duty [2] is imposed under the Indian Customs Act formulated in 1962 [3] by the Constitution of India under the Article 265, which states that “no tax shall be levied or collected except by authority of law. So, the Indian Custom [4] Act was introduced that allow the Central Government to collect the taxes under the name of Custom Duty.
Custom Duties are usually levied with ad valorem rates and their base is determined by the domestic value 'the imported goods [5] calculated at the official exchange rate [6]. Similarly, export duties are imposed on export values expressed in domestic currency [7].
Export duties are levied occasionally to clear up excess profitability in international price [8] of goods in respect of which domestic prices may be low at given time. But the concept of import duty is wide and almost universal, except for a few goods like food grains, fertilizer, life saving drugs and equipment etc.
The Indian Customs Duties are major source of revenue for the Union Government and constitute around 30% of its tax revenues. Together with Central Excise duties [9], the contribution amount to nearly three-fourth of total tax revenue of the Union Government.
Custom duty not only raises money for the Central Government but also helps the government to prevent the illegal imports [10] and illegal exports [11] of goods from India. The Central government has emergency powers to increase import or export duties whenever necessary after a notification [12] in the session of Parliament.
The Custom Duty in its present form dates back to 1786, when Bruisers formed the first Revenue Board in Calcutta. In 1808, a new Trade Board [13] was introduced for export and import of goods from India. [14] Once again, in 1859 Customs Duties Act was introduced in which provincial import duties were replaced by uniform Tariff Act and was applicable to all Indian territories within the country.
In the subsequent year several changes in the Custom Policy took places and are as follow:
After Independence, the Sea Customs Act and other allied enactments were repealed by a consolidating and amending legislation entitled the Customs Act, 1962 [3] (CA). Similarly the Act of 1934 was repealed by the Customs Tariff Act, 1975(CTA [15]).
As per Section12 of the India Customs Act, Custom Duty [2] is imposed on Goods, belonging to Government as well as goods not belonging to Government. Section 2(22), gives inclusive definition of ‘goods' as - 'Goods' includes:
As per Section12 [16] of the India Customs Act, Custom Duty is imposed on Goods, belonging to Government as well as goods not belonging to Government. Section 2(22), gives inclusive definition of ‘goods' as - 'Goods' includes:
The customs duty is levied, primarily, for the following purpose:
Basically there are three modes of imposing Customs Duty:
Decline in Customs Duty
India’s customs tariff rates [2]have been declining since 1991. The “peak” rate has come down from 150% in 1991-2 to 40% in 1997-98. The downward momentum was reversed the next year with the imposition of a surcharge. This momentum has resumed with the reduction of the “peak” rate to 35% in 2001-2 and 30% in 2002-3.
Links:
[1] https://www.volza.com/?utm_source=Custom_Duty_hp&utm_medium=banner&utm_campaign=volza-affiliate
[2] http://www.eximguru.com/indian-customs-duty/default.aspx
[3] http://www.eximguru.com/exim/indian-customs/customs-acts-1962.aspx
[4] http://www.eximguru.com/exim/indian-customs/default.aspx
[5] http://www.infodriveindia.com/russia-imports-trade-data.aspx
[6] http://www.eximguru.com/forex/custom-exchange-rates.aspx
[7] http://www.eximguru.com/traderesources/currency.aspx
[8] http://www.infodriveindia.com/global-trade-data.aspx
[9] http://www.eximguru.com/excise-duty/default.aspx
[10] http://www.infodriveindia.com/india-imports-trade-data.aspx
[11] http://www.infodriveindia.com/india-exports-trade-data.aspx
[12] http://www.eximguru.com/notifications/48259-customs.aspx
[13] http://www.eximguru.com/traderesources/exportpromotion.aspx
[14] http://www.infodriveindia.com/india-trade-data/default.aspx
[15] http://www.eximguru.com/exim/indian-customs/cta-1975/customs-tariff-act-1975-act-no-51-of-1975.aspx
[16] http://www.eximguru.com/exim/indian-customs/customs-acts-1962/chapter-xii-provisions-relating-to-coastal-goods-and-vessels-carrring-coastal-goods.aspx
[17] http://www.eximguru.com/exim/indian-customs/customs-rules/baggage-amendment-rules-2006.aspx
[18] http://www.eximguru.com/exim/dgft/acts-and-rules/foreign-trade-development-and-regulation-act-1992.aspx
[19] http://www.eximguru.com/exim/reserve-bank/foreign-exchange-regulation-act.aspx
[20] http://www.eximguru.com/exim/reserve-bank/smugglers-and-forex-manipulators/smugglers-and-foreign-exchange-manipulators-forfeiture-of-property-act-1976.aspx