taxes
This query is : Resolved
25 January 2011
hi
Refered to Bill of entry there are some taxes like Custom Duty,CVD & Add duty.
Which tax is
Addition duty on import
is it releated to Excise tax OR custom Tax
Refered to Bill of entry there are some taxes like Custom Duty,CVD & Add duty.
Which tax is
Addition duty on import
is it releated to Excise tax OR custom Tax
26 January 2011
Both CVD and Addl Duty are additional duties levied under Customs Tariff act.
CVD is levied towards excise duty paid if the goods have been manufactured in India
AID is levied towards Sales tax
But both CVD and AID can be availed as Cenvat input credit unless restricted otherwise.
Both CVD and Addl Duty are additional duties levied under Customs Tariff act.
CVD is levied towards excise duty paid if the goods have been manufactured in India
AID is levied towards Sales tax
But both CVD and AID can be availed as Cenvat input credit unless restricted otherwise.
27 January 2011
Sir,
A Prop. has purchases CNC Machine Paid custom Duty,CVD & Addition Duty on Import.
Please Say can he take setoff of CVD,Additional Duty & Custom Duty against his service tax liability.
OR All should be capitalized with CNC Machine.Please Guide Me.The Prop has taken Registration of VAt,Service tax.
What are the concept or understanding , limit or slab to get Excise registration
A Prop. has purchases CNC Machine Paid custom Duty,CVD & Addition Duty on Import.
Please Say can he take setoff of CVD,Additional Duty & Custom Duty against his service tax liability.
OR All should be capitalized with CNC Machine.Please Guide Me.The Prop has taken Registration of VAt,Service tax.
What are the concept or understanding , limit or slab to get Excise registration
02 February 2011
AID is levied towards Sales tax (is any setoff availablie in Vat for AID)
But both CVD and AID can be availed as Cenvat input credit unless restricted otherwise. (What Does this sentence means)
AID is levied towards Sales tax (is any setoff availablie in Vat for AID)
But both CVD and AID can be availed as Cenvat input credit unless restricted otherwise. (What Does this sentence means)
26 July 2025
Your question touches on **import duties and tax credits** under Indian indirect tax laws, especially as they applied **prior to the implementation of GST (i.e., pre-2017 regime)**.
Here’s a breakdown for **better understanding**, along with your specific queries:
---
### 📌 **Types of Import Duties on Bill of Entry**
When goods are imported into India, the following duties may be levied under the **Customs Tariff Act, 1975**:
1. **Basic Customs Duty (BCD)** – under section 12 of the Customs Act.
2. **Countervailing Duty (CVD)** – equivalent to Central Excise Duty (replaced now by GST).
3. **Special Additional Duty (SAD or AID)** – meant to offset Sales Tax/VAT.
4. Other possible duties: anti-dumping duty, safeguard duty, IGST (post-GST), etc.
---
### ✅ **Clarification on Your Queries**
#### 🔹1. **Is Additional Duty (AID/SAD) related to Excise or Customs?**
* **SAD (Special Additional Duty)** is levied **under the Customs Tariff Act**.
* But **in concept**, it's to **counterbalance the VAT/Sales Tax** that a local buyer would pay.
* **Rate**: Usually 4% (pre-GST).
* So while it’s levied under **customs**, it **mirrors domestic VAT**.
---
#### 🔹2. **What is CVD (Countervailing Duty)?**
* CVD is levied to **equalize the Excise Duty** a manufacturer in India would pay.
* Example: If an item is dutiable at 12% Excise in India, the same rate applies as CVD on the import.
---
#### 🔹3. **Can a Proprietor (Importer) Claim Set-off of These Duties Against Service Tax Liability?**
**Before GST**:
* Yes, but **only for CVD and SAD (AID)** — **not for Basic Customs Duty (BCD)**.
* This credit was available as **CENVAT Credit**, provided:
* The importer is **registered under Central Excise or Service Tax**.
* The goods are **used for providing taxable output services** or manufacturing.
> ❌ **BCD is never eligible for credit.**
> ✅ **CVD and SAD were eligible for CENVAT credit**, if conditions were met.
---
#### 🔹4. **Should All Duties Be Capitalized or Claimed as Credit?**
* **If CENVAT credit is availed** → **Do not capitalize the CVD and SAD**.
* **If credit not availed** (due to ineligibility or non-registration) → **Then capitalize all duties including CVD and SAD** into the cost of the CNC machine.
---
#### 🔹5. **Excise Registration – When is it Required?**
* **Mandatory** if:
* Your **annual turnover exceeds ₹1.5 crores** (pre-GST).
* You **manufacture excisable goods**.
> Under GST (from 1st July 2017), excise is subsumed, and registration is under GST laws.
---
#### 🔹6. **Can VAT Set-off Be Taken for SAD (AID)?**
* **Yes**, in many states, SAD paid on imports was **eligible as VAT input credit**.
* But you had to show proper documentation (Bill of Entry, VAT returns, etc.).
* This varied **state-wise** and **not always automatic**.
---
### ✅ Summary Table:
| Duty Type | Related to | Set-off Possible? | Capitalize? |
| ------------------------ | ---------- | ------------------ | ---------------------- |
| Basic Customs Duty (BCD) | Customs | ❌ No | ✅ Yes |
| CVD | Excise | ✅ Yes (CENVAT) | ❌ No (if credit taken) |
| SAD / AID | VAT | ✅ Yes (CENVAT/VAT) | ❌ No (if credit taken) |
---
### 📌 Post-GST Note:
All these have now been replaced by **IGST on imports**, and you can claim **Input Tax Credit (ITC)** under GST if used for taxable supplies.
---
If you’re dealing with a **pre-GST import case**, let me know the **year** and I can help with accurate treatment or format for accounting.
Here’s a breakdown for **better understanding**, along with your specific queries:
---
### 📌 **Types of Import Duties on Bill of Entry**
When goods are imported into India, the following duties may be levied under the **Customs Tariff Act, 1975**:
1. **Basic Customs Duty (BCD)** – under section 12 of the Customs Act.
2. **Countervailing Duty (CVD)** – equivalent to Central Excise Duty (replaced now by GST).
3. **Special Additional Duty (SAD or AID)** – meant to offset Sales Tax/VAT.
4. Other possible duties: anti-dumping duty, safeguard duty, IGST (post-GST), etc.
---
### ✅ **Clarification on Your Queries**
#### 🔹1. **Is Additional Duty (AID/SAD) related to Excise or Customs?**
* **SAD (Special Additional Duty)** is levied **under the Customs Tariff Act**.
* But **in concept**, it's to **counterbalance the VAT/Sales Tax** that a local buyer would pay.
* **Rate**: Usually 4% (pre-GST).
* So while it’s levied under **customs**, it **mirrors domestic VAT**.
---
#### 🔹2. **What is CVD (Countervailing Duty)?**
* CVD is levied to **equalize the Excise Duty** a manufacturer in India would pay.
* Example: If an item is dutiable at 12% Excise in India, the same rate applies as CVD on the import.
---
#### 🔹3. **Can a Proprietor (Importer) Claim Set-off of These Duties Against Service Tax Liability?**
**Before GST**:
* Yes, but **only for CVD and SAD (AID)** — **not for Basic Customs Duty (BCD)**.
* This credit was available as **CENVAT Credit**, provided:
* The importer is **registered under Central Excise or Service Tax**.
* The goods are **used for providing taxable output services** or manufacturing.
> ❌ **BCD is never eligible for credit.**
> ✅ **CVD and SAD were eligible for CENVAT credit**, if conditions were met.
---
#### 🔹4. **Should All Duties Be Capitalized or Claimed as Credit?**
* **If CENVAT credit is availed** → **Do not capitalize the CVD and SAD**.
* **If credit not availed** (due to ineligibility or non-registration) → **Then capitalize all duties including CVD and SAD** into the cost of the CNC machine.
---
#### 🔹5. **Excise Registration – When is it Required?**
* **Mandatory** if:
* Your **annual turnover exceeds ₹1.5 crores** (pre-GST).
* You **manufacture excisable goods**.
> Under GST (from 1st July 2017), excise is subsumed, and registration is under GST laws.
---
#### 🔹6. **Can VAT Set-off Be Taken for SAD (AID)?**
* **Yes**, in many states, SAD paid on imports was **eligible as VAT input credit**.
* But you had to show proper documentation (Bill of Entry, VAT returns, etc.).
* This varied **state-wise** and **not always automatic**.
---
### ✅ Summary Table:
| Duty Type | Related to | Set-off Possible? | Capitalize? |
| ------------------------ | ---------- | ------------------ | ---------------------- |
| Basic Customs Duty (BCD) | Customs | ❌ No | ✅ Yes |
| CVD | Excise | ✅ Yes (CENVAT) | ❌ No (if credit taken) |
| SAD / AID | VAT | ✅ Yes (CENVAT/VAT) | ❌ No (if credit taken) |
---
### 📌 Post-GST Note:
All these have now been replaced by **IGST on imports**, and you can claim **Input Tax Credit (ITC)** under GST if used for taxable supplies.
---
If you’re dealing with a **pre-GST import case**, let me know the **year** and I can help with accurate treatment or format for accounting.
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