CA Final · Indirect Tax Laws

Types of Duty (Customs) for CA Final Indirect Tax Laws

Types of Duty covers the duties levied on imported and exported goods under the Customs Act, 1962 and the Customs Tariff Act, 1975. These include basic customs duty, IGST and cesses on imports, protective and trade remedy duties, and export duty. To solve a question, identify the goods, the duty type, the rate and the order of computation, then compute step by step.

What this chapter covers

This chapter answers one question: what duties can be charged when goods cross the border, and on what basis? The levy comes from the Customs Act, 1962. The rates and the tariff structure come from the Customs Tariff Act, 1975 and from notifications issued under it. You start with basic customs duty, then see what is added on top for imports: IGST and, for a few notified goods, the GST compensation cess. IGST on imports is levied under Section 3(7) of the Customs Tariff Act, 1975, read with the IGST Act, 2017. It replaced the old additional duty (CVD) under Section 3(1) and the special additional duty (SAD) under Section 3(5), which were subsumed in it. The GST compensation cess on notified goods is levied under Section 3(9) of the Customs Tariff Act, 1975, read with the GST (Compensation to States) Act, 2017. It is computed on the value for customs duty and is not part of the IGST levy. Then you study duties that exist for special purposes: safeguard duty against import surges under Section 8B, countervailing duty on subsidised imports under Section 9, and anti-dumping duty under Section 9A of the Customs Tariff Act, 1975. Do not confuse the Section 9 countervailing duty with the old Section 3 CVD. Export duty is the outbound side. The last topic is Section 19, the rule on goods imported in a container or with other articles, where the goods and the container or article can carry different rates.

The chapter connects directly to the rest of Part II of the paper. Valuation gives you the assessable value on which every ad valorem duty is charged. Import and export procedures, exemptions and the Foreign Trade Policy decide whether a duty applies at all. The IGST on imports links back to Part I on GST, because the same IGST is later available as input tax credit if the importer is eligible.

So treat this chapter as the computation backbone of customs. Most numerical questions on customs ask you to compute total duty payable. You cannot do that without knowing which duties apply, in what sequence, and on what value. Get the sequence right and the rest of the customs numericals become easier.

Customs is the smaller Part of the paper, so each chapter must earn its place, and this one does. It supports the most common customs question type: a short case about an importer or exporter where you must compute duty payable and explain the legal basis. It also feeds case-scenario MCQs, where one wrong duty or wrong sequence gives a wrong answer. The concepts are limited and repeat, so effort here pays back quickly. Your written answers also gain from being precise about which duty applies and why, since that is where marks are won or lost.

Types of Duty: topics in the order to study them

1Basic Customs Duty and Levy of Customs DutyThis is the base. You need to know what is charged, on what, and under which law before you add anything else.
2Additional Customs Duty, IGST and Cesses on ImportsThese are layered on top of basic duty, so learn them right after it. Note that IGST on imports is levied under Section 3(7) of the Customs Tariff Act, 1975, read with the IGST Act, 2017, and it subsumed the old CVD and SAD. The GST compensation cess on notified goods is levied under Section 3(9) of the same Act, read with the GST (Compensation to States) Act, 2017. It is computed on the value for customs duty, excluding IGST. It has been phased out for most goods, so apply it only where the question gives a rate. Practise the order of computation.
3Protective, Safeguard and Trade Remedy DutiesThese are special-purpose duties that apply only in defined situations, so they make sense once the normal duties are clear.
4Export Duty and Other DutiesExport duty is the outbound side and is shorter, so study it once the import structure is firm.
5Duty on Goods in Containers or with Articles (Section 19)This rule deals with goods imported in a container or with other articles. The goods are charged at their own rate. The container or article is charged at the rate applicable to it where it is separately classifiable, unless it is exempt. Read the section text for the exact conditions. It needs a clear grasp of how rates apply to goods, so it comes last and is revised with examples.

How to prepare Types of Duty

Study this chapter as a sequence of duties, not as a list of definitions. Your aim is to say, for any case, which duties apply, in what order, and why.

Read the levy provisions first and note in your own words what triggers customs duty on imports and on exports.
Build a one-page chart of every duty in the chapter: its name, its legal source, when it applies and what it is charged on.
Practise the import computation order: assessable value, then basic customs duty, then social welfare surcharge and other duties such as safeguard or anti-dumping duty where they apply. IGST is charged on assessable value plus these duties, and IGST is not part of its own base. The GST compensation cess on imports has been phased out for most goods, so compute it only where the question gives a cess rate. Where it applies, it is a separate levy computed on the same value as IGST (assessable value + duties), excluding IGST. Check the rates from the question or the current official text before you rely on them.
Solve short case scenarios where you must pick the right duty from the facts, such as a surge in imports or sale below normal value from a foreign supplier.
Learn the Section 19 rule through two or three examples of goods imported with containers or other articles, so you can charge the goods at their own rate and check how the container or article is charged.
Write answers in a fixed form: provision, facts, conclusion. Then attempt past-style MCQs without negative marking worry, and review every error.

Common mistakes in Types of Duty

Computing IGST on assessable value alone.
Fix: Build the IGST base as assessable value + basic customs duty + social welfare surcharge + other duties such as safeguard or anti-dumping duty, where applicable. Do not put IGST or the compensation cess into that base. The compensation cess (Section 3(9) of the Customs Tariff Act, read with the GST (Compensation to States) Act, 2017) has been phased out for most goods, so compute it only if the question gives a cess rate. Compute it on the value for customs duty (assessable value + duties), excluding IGST. Show each line explicitly in your working.
Mixing up anti-dumping, countervailing and safeguard duty.
Fix: Tie each to its trigger and section: unfair low pricing (Section 9A), foreign subsidy (Section 9), or a sudden surge of imports (Section 8B). Write the trigger first in every answer.
Applying a duty without checking whether an exemption exists.
Fix: Make a quick check for exemption or concession in the facts before you start the working.
Assuming export duty applies to all exports.
Fix: Remember that export duty applies only to specified goods, and the question will say so or give a rate.
Learning Section 19 as a definition only, or charging the container and the goods at one rate without checking.
Fix: Remember that it deals with goods imported in a container or with other articles. Charge the goods at their own rate, check whether the container or article is separately classifiable and charged at its own rate, and check for exemption. Work through examples and state the rule applied, the facts and the conclusion.

Last-day revision: Types of Duty

Customs duty is levied under the Customs Act, 1962 at rates fixed by the Customs Tariff Act, 1975 and notifications.
Basic customs duty is the starting point for import duty computation.
IGST on imports is levied under Section 3(7) of the Customs Tariff Act, 1975, read with the IGST Act, 2017. It subsumed the old CVD (Section 3(1)) and SAD (Section 3(5)). It is charged on assessable value + basic customs duty + social welfare surcharge + other duties such as safeguard or anti-dumping duty, where applicable. IGST itself is not in its own base. The GST compensation cess on notified goods is levied under Section 3(9) of the Customs Tariff Act, read with the GST (Compensation to States) Act, 2017. It has been phased out for most goods, so apply it only where the question gives a rate. It is computed on the value for customs duty (assessable value + duties), excluding IGST.
Always compute step by step and show each duty on a separate line.
Safeguard duty (Section 8B of the Customs Tariff Act, 1975) protects domestic industry from a surge in imports.
Anti-dumping duty (Section 9A) targets imports priced below normal value; countervailing duty (Section 9) targets subsidised imports. Neither is the old Section 3 CVD.
Trade remedy duties apply only after the required inquiry and findings.
Export duty applies only to goods notified for it, and many exports bear none.
Section 19 deals with goods imported in a container or with other articles. The goods are charged at their own rate. The container or article is charged at the rate applicable to it where it is separately classifiable, unless it is exempt.
Check whether an exemption notification applies before computing any duty.
Write the provision, apply it to the facts, then state the conclusion.

Types of Duty practice questions

Types of Duty in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Types of Duty: frequently asked questions

Is Types of Duty a numerical or theory chapter?

It is both. The theory tells you which duties apply, and the numerical tests whether you can compute them in the correct order. Prepare both together.

Do I need to remember exact duty rates?

Rates change often, so do not rely on memory. In the exam, use the rates given in the question, and focus on the method and the order of computation.

How is IGST on imports connected to GST in Part I?

IGST on imports is levied under Section 3(7) of the Customs Tariff Act, 1975, at the rate fixed under Section 5 of the IGST Act, and is collected along with customs duty. The importer may claim it as input tax credit if the GST conditions are met, which links the two parts of the paper.

How much time should I give this chapter?

Give it enough time to practise at least a few full computations and case scenarios. The concepts are few, so the time goes mostly into practice and revision.