Indirect Tax Laws · Levy of and Exemptions from Customs Duty

Types of Duties: Safeguard, Anti-Dumping and CVD

Q: What is the difference between anti-dumping duty and safeguard duty?

Anti-dumping duty responds to unfair pricing, where export price is below normal value, and is aimed at specific countries or exporters. Safeguard duty responds to a sudden import surge even when trade is fair, and applies generally to imports from all sources. ADD needs material injury, while safeguard needs serious injury.

Q: What is countervailing duty in customs?

For this topic, it is a duty on imports that benefit from a subsidy in the exporting country. It cannot exceed the amount of the subsidy, and injury to domestic industry must be shown. It is different from the old additional duty equal to excise, which now works as IGST on imports.

Q: Who imposes anti-dumping duty in India?

The Directorate General of Trade Remedies investigates and gives findings. The Central Government then decides and imposes the duty by notification. Findings alone do not create the duty.

Q: Is Social Welfare Surcharge charged on anti-dumping duty?

No. SWS is levied at 10% on the aggregate of duties of customs (Section 110 of the Finance Act, 2018). That aggregate excludes IGST, compensation cess, safeguard duty, anti-dumping duty and CVD on subsidised goods. In the usual exam case the base is BCD, and many goods are exempt from SWS by notification, so check the question.

Updated 5 October 2026 · Fact-checked

Anti-dumping, countervailing and safeguard duties are protective customs duties that shield domestic industry. Anti-dumping offsets low export prices, countervailing offsets foreign subsidies, and safeguard offsets a harmful import surge even when trade is fair. To solve a question, identify the trigger, injury, who recommends, who levies, the duty cap and the period.

Understand Types of Duties: Safeguard, Anti-Dumping and CVD

Basic customs duty raises revenue and gives general protection. Protective duties are different. They are imposed only when imports hurt a domestic industry in a specific way. Think of them as three different medicines for three different diseases.

Anti-dumping duty (ADD) treats dumping. Dumping means a foreign producer exports a product at a price lower than its normal value, usually the price in its home market. The duty is meant to remove the margin of dumping. It can be levied only if the domestic industry suffers material injury (or threat of it, or material retardation of its establishment) and the injury is caused by the dumped imports. The duty is levied on goods from the named countries or exporters, and it cannot exceed the margin of dumping.

Countervailing duty (CVD) on subsidised goods treats foreign subsidies. If the exporting country gives a subsidy on making or exporting an article, the Central Government can levy a duty to offset it. The duty cannot exceed the amount of the subsidy. Injury to the domestic industry is again required. Do not confuse this with the old popular use of 'CVD' for the additional duty equal to excise on like goods. That additional duty now operates as the IGST and compensation cess charged on imports.

Safeguard duty treats a sudden surge. No unfair pricing or subsidy is needed. If increased imports, from any source, cause or threaten serious injury to the domestic industry, a safeguard duty can be imposed. It is temporary. It is leviable at a rate and for a period needed to prevent or remedy the serious injury and to facilitate adjustment by the industry. The initial period is within four years. It can be extended, but the total period cannot exceed ten years. The duty is generally applied to imports from all countries, with limited relief for small developing-country suppliers as the rules provide.

ADD and CVD on subsidised goods are imposed for five years from the date of imposition, unless revoked earlier or extended after a sunset review.

In all three cases the usual process is: a domestic industry applies, the Directorate General of Trade Remedies investigates and gives findings, and the Central Government decides and imposes the duty by notification.

Social Welfare Surcharge (SWS) is a different kind of levy. It is a surcharge, not a trade remedy. It is charged at 10% on the aggregate of duties of customs (Section 110 of the Finance Act, 2018). That aggregate excludes IGST, the compensation cess, safeguard duty, anti-dumping duty and countervailing duty on subsidised goods. So in the usual exam case, the SWS base is the basic customs duty (BCD). Always check the notification position in the question, because exemptions from SWS are given for many goods.

Key rules to remember

Anti-dumping duty trigger: Export price < Normal value + material injury + causal link; All three must exist. The duty cannot exceed the margin of dumping, which is normal value minus export price.
Countervailing duty cap (subsidised goods): CVD ≤ amount of subsidy; Needs a subsidy in the exporting country and injury to domestic industry, with a causal link.
Safeguard duty trigger: Surge in imports → serious injury or threat; No dumping or subsidy is needed. Applied generally to imports from all sources, with limited relief for small developing-country suppliers. Leviable at the rate and for the period needed to prevent or remedy serious injury and facilitate adjustment.
Duration: ADD and CVD: 5 years from imposition, unless revoked earlier or extended after sunset review. Safeguard: within 4 years, extendable, total not more than 10 years; The duty can be withdrawn earlier. A sunset review is needed to continue ADD or CVD beyond the five years.
Social Welfare Surcharge: SWS = 10% × aggregate of duties of customs (Sec 110, Finance Act 2018), excluding IGST, compensation cess, safeguard duty, ADD and CVD on subsidised goods; In the usual exam case the base is BCD. Check for exemption notifications.
IGST on imports (base): IGST = rate × (assessable value + all customs duties chargeable: BCD, SWS, ADD, CVD on subsidised goods, safeguard duty); Under Section 3(7) of the Customs Tariff Act, the base includes the value of the imported article plus duties of customs chargeable. Protective duties, if levied, increase the IGST base.

How to solve Types of Duties: Safeguard, Anti-Dumping and CVD questions

Use this order for any case or theory question on protective duties. It keeps your answer in provision, facts and conclusion form.

1Read the facts and find the trigger: low export price (dumping), foreign subsidy, or sudden rise in import volume.
2Name the duty that matches the trigger: anti-dumping, countervailing or safeguard.
3Check the injury test: material injury for ADD and CVD, serious injury for safeguard. Also check for a causal link between the imports and the injury.
4State the process: investigation by the Directorate General of Trade Remedies, recommendation, and levy by the Central Government by notification.
5State the cap: margin of dumping for ADD, subsidy amount for CVD, and for safeguard the rate and period needed to prevent or remedy serious injury and facilitate adjustment.
6State the period and the review or extension position: 5 years for ADD and CVD (sunset review for extension), within 4 years extendable to a total of 10 for safeguard.
7If numbers are given, compute in order: assessable value, BCD, SWS, protective duty, then IGST on the total base.
8Close with a one-line conclusion that applies the rule to the facts.

Quickest way: Trigger-Injury-Cap-Period check

When to use it: Use it for case-scenario MCQs and short written answers where you must pick or distinguish the duty.

Ask what is unfair: price (ADD), subsidy (CVD) or nothing, only volume (safeguard).
Ask whose goods are hit: named countries or exporters (ADD, CVD) or imports generally (safeguard).
Ask the injury word: material (ADD, CVD) or serious (safeguard).
Recall the period: 5 years from imposition for ADD and CVD unless revoked earlier or extended after sunset review; within 4 years for safeguard, extendable, total not more than 10.
For numbers, remember that SWS is not charged on ADD, CVD or safeguard duty, but IGST is charged on a base that includes them.

Common mistakes in Types of Duties: Safeguard, Anti-Dumping and CVD

Saying safeguard duty needs dumping or subsidy.
All three are called protective duties, so students merge their triggers.
Fix: Remember that safeguard is about volume of imports, not unfairness. It applies even when trade is fair.
Using 'material injury' for safeguard duty.
The word is borrowed from the ADD rule.
Fix: Safeguard needs serious injury or threat of it. ADD and CVD need material injury.
Treating CVD as the old additional duty equal to excise.
Older notes and common usage use 'CVD' for that duty.
Fix: For this topic, CVD means the duty on subsidised goods, capped by the subsidy. The old additional duty now works as IGST on imports.
Charging SWS on anti-dumping or safeguard duty.
Students apply 10% on the whole customs duty total.
Fix: SWS is 10% on the aggregate of duties of customs, which excludes IGST, compensation cess, safeguard duty, ADD and CVD on subsidised goods. In the usual case, apply it on BCD only. Check exemption notifications.
Leaving ADD and safeguard duty out of the IGST base.
Students assume protective duties are separate from the landed cost.
Fix: Add all customs duties chargeable (BCD, SWS, ADD, CVD on subsidised goods, safeguard duty) to the value before computing IGST on imports.
Writing that ADD can exceed the margin of dumping.
Confusion between a penal and a remedial duty.
Fix: ADD is remedial. It cannot exceed the margin of dumping, and CVD cannot exceed the subsidy.

Worked examples

Example 1

Alpha Ltd, an Indian maker of a chemical, finds that Country X exporters sell the chemical in India at ₹80 per kg, while the price in Country X's home market is ₹100 per kg. Alpha's sales and profits have fallen sharply because of these imports. A separate surge of imports of a steel product from many countries has also hurt Beta Ltd, but the prices are fair and there is no subsidy. Which duty can protect each company, and what limit applies?

Show the solution

Alpha: export price ₹80 is lower than normal value ₹100, so this is dumping. Margin of dumping = ₹100 − ₹80 = ₹20 per kg.
The sharp fall in sales and profit indicates material injury caused by the dumped imports. So anti-dumping duty can be levied after investigation by the Directorate General of Trade Remedies and a decision of the Central Government.
The limit for Alpha's case is the margin of dumping, that is ₹20 per kg. The duty runs for 5 years from imposition, unless revoked earlier or extended after a sunset review.
Beta: no dumping and no subsidy, only a surge of imports from many countries causing injury. So the remedy is safeguard duty, provided the injury is serious or threatened.
Safeguard duty is generally applied to imports from all sources. It is leviable at the rate and for the period needed to prevent or remedy the serious injury and facilitate adjustment. The period is within 4 years, extendable, and the total including extensions cannot exceed 10 years.

Answer: Alpha can get anti-dumping duty, capped at the margin of dumping of ₹20 per kg, for 5 years from imposition unless revoked earlier or extended after sunset review. Beta can get safeguard duty on the surge, if serious injury is shown, at the rate and for the period needed to remedy the injury, within 4 years (extendable) and at most 10 years in total.

Example 2

Gamma Ltd imports a product with assessable value ₹10,00,000. Basic customs duty is 10%. Anti-dumping duty of ₹50,000 is levied. IGST rate is 18%. Social Welfare Surcharge is 10% on the aggregate of duties of customs. Assume no exemptions. Compute total import duties payable.

Show the solution

BCD = 10% × ₹10,00,000 = ₹1,00,000.
SWS = 10% × aggregate of duties of customs. ADD is excluded from that aggregate, so the base is BCD ₹1,00,000. SWS = ₹10,000.
Anti-dumping duty = ₹50,000 (given).
IGST base = ₹10,00,000 + ₹1,00,000 + ₹10,000 + ₹50,000 = ₹11,60,000.
IGST = 18% × ₹11,60,000 = ₹2,08,800.
Total duties = ₹1,00,000 + ₹10,000 + ₹50,000 + ₹2,08,800 = ₹3,68,800.

Answer: Total import duties payable = ₹3,68,800 (BCD ₹1,00,000; SWS ₹10,000; ADD ₹50,000; IGST ₹2,08,800).

Exam tips

In theory answers, write a table-like contrast in plain lines: trigger, injury, caps, period. This is the most frequently tested difference.
In case-scenario MCQs, find the trigger word first: 'lower than home market price' is dumping, 'government grant to exporter' is a subsidy, 'sudden increase in imports' is safeguard.
In numerical questions, follow the order BCD, SWS, protective duty, IGST, and show each base separately.
Use the facts given in the question for rates and exemptions. Do not import rates from memory when the question supplies them.
Write one concluding line that links the facts to the duty, because answers are marked on provision, facts and conclusion.

Practice questions from Levy of and Exemptions from Customs Duty