Import duty is a type of indirect tax levied by the government of India on goods imported into India for trade purpose. Import of goods means bringing goods into India from a place outside India. The concept of import duty is very broad and is almost applicable to every product or item imported to India excepting a few goods like food grains, fertilizer, life saving drugs and equipment etc. Indian basic law for levy and collection of customs duty is Customs Act, 1962. It provides information about levy and collection of duty on imports and exports, import/export procedures, prohibitions on importation and exportation of goods, penalties, offences, etc.
A state's territorial sea extends up to 12 nautical miles (22.2 km; 13.8 mi) from its baseline. India includes the territorial waters of India which extend up to 12 nautical miles into the sea to the coast of India. Import of goods means bringing goods into India from a coastline outside India.
Basic custom duty is a standard tax rate which is applicable to imported goods. The rates of basic custom duty are mentioned in the first schedule of custom tariff act, 1975 which was amended from time to time under Finance Acts. The duty may be fixed either at ad –valorem basis or at specific rate basis. It is divided into standard and preferential rates. The Central Government has the power to reduce or exempt any good from these duties.
Additional Customs Duty (Countervailing Duty) is equal to central excise duty and is levied on imported articles produced in India. An additional CVD may be levied equivalent to sales tax or VAT, not exceeding four percent. If the rate of this duty is on ad-valorem basis, the value for this purpose will be the total of the value of the imported article and the customs duty on it (both basic and auxiliary). If the importer pays all customs duties this duty can be refunded to the importer, the sales invoice indicates the credit is not allowed, and the importer pays VAT/sales tax on the sale of the good.
The special addition duty is the duty paid on the imported goods. SAD is chargeable in lieu of sales tax and the general rate is 4 %. Specific exemption notifications may also be applicable. The special additional duty is leviable on assessable value + basic customs duty + CVD. The importer can claim for the refund after the sale of those goods.
Government may impose this if he found that large manufacturer from abroad may export goods at very low prices in comparison to prices in his domestic market. They do this intentionally either to cripple domestic industry or to dispose of their excess stock. This is called dumping. For the avoidance of such dumping, Central Government can impose anti-dumping duty up to margin of dumping on such articles, under section 9A of Customs Tariff Act (1975), if the goods are being sold at less than its normal value. Levy of such anti-dumping duty is permissible as per WTO agreement. Anti dumping action can be taken only when there is an Indian industry producing like articles.