CVD
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Querist : Anonymous
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Anonymous
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14 July 2010
What is differance between CVD and Excise Duty?
14 July 2010
Customs Duty levied on the goods being imported and CVD is Counter Vailing Duty (Excise Duty) which imposed on the value of goods + customs duty. The rate of duty varies from product to product
Basic Excise Duty
This is the duty charged under section 3 of the Central Excises and Salt Act,1944 on all excisable goods other than salt which are produced or manufactured in India at the rates set forth in the schedule to the Central Excise tariff Act,1985.
Basic Excise Duty
This is the duty charged under section 3 of the Central Excises and Salt Act,1944 on all excisable goods other than salt which are produced or manufactured in India at the rates set forth in the schedule to the Central Excise tariff Act,1985.
14 July 2010
Basic Customs Duty - This is the duty levied under section 12 of Customs Act. Normally, it is levied as a percentage of Value as determined under section 14(1). The rates vary for different items, but general rate at present is 10%.
To protect Indian agriculture and Indian automobile sector, duties on some articles is higher
Additional Customs Duty (CVD) - This is often called ‘Countervailing Duty' (CVD). In S K Pattnaik v. State of Orissa 2000 AIR SCW 41 = AIR 2000 SC 612 = 115 ELT 9 = 2000(1) SCC 413 = 1999(7) SCALE 557 (SC 3 member bench), it was observed that 'countervailing duty' is imposed when excisable articles are imported, in order to counter balance the excise duty, which is leviable on similar goods if manufactured within the State.
Additional duty is levied under section 3(1) of Customs Tariff Act. Thus, it is not a ‘duty under the Customs Act'. - CC v. Indian Organic Chemicals 2000 AIR SCW 1633 = 2000(4) SCALE 321 = 2000(118) ELT 3 (SC). However, it is ‘duty of customs’. – CC v. Presto Industries 2001 AIR SCW 828 = 2001(2) SCALE 68 = 128 ELT 321 (SC). In this case, it was also held that ‘additional customs duty’ is not called as ‘Countervailing duty’ though it may result in serving such purpose for manufacturer of such articles in India.
This duty is equal to excise duty levied on a like product manufactured or produced in India. If like article is not produced or manufactured in India, the excise duty that would be leviable on that article had it been produced in India is the base. If the product is leviable with different rates, then highest rate among those rates is to be considered. The duty is leviable on Value of goods plus customs duty payable. Thus, assume that Customs Value of goods is Rs. 10,000, customs duty is 30%and excise duty on similar goods manufactured in India is 16%. Then, basic customs duty is Rs 3,000. Additional customs duty (CVD) is payable on value plus basic customs duty, i.e. on Rs 13,000 [Rs 10,000+3,000]. Thus, CVD payable is Rs 2,080 (16% of Rs 13,000).
In addition, SAD (Special Additional Duty) @ 4% is also payable, as explained in an earlier paragraph. SAD @ 4% on Rs 15,080 [10,000+ 3,000 + 2,080] is Rs 603.20.
Calculation of CVD – CVD is payable on Assessable Value [as determined u/s 14(1) of Customs Act or tariff value fixed u/s 14(2) of Customs Act] plus basic customs duty chargeable u/s 12 of Customs Act plus basic customs duty chargeable u/s 12 of Customs Act plus any other sum chargeable on that article under any law in addition to, and in the same manner as duty of customs (e.g. NCCD of customs). However, while calculating CVD, following duties are not to be considered - * Special Additional Duty payable u/s 3A of Customs Tariff Act * Safeguard duty u/ss 8B and 8C of Customs Tariff Act * Countervailing duty, if any, u/s 9 of Customs Tariff Act * Anti-dumping duty payable u/s 9A of Customs Tariff Act * CVD itself which is payable u/s 3(1). [section 3(2) of Customs Tariff Act]. - - In other words, CVD is payable on assessable value plus basic customs duty plus NCCD of customs. While calculating CVD, Anti Dumping Duty, SAD and safeguard duty is not required to be considered. [This amendment is with retrospective effect from 1-3-2002. It was also clarified in Explanatory Note - Customs released with Budget Papers on 28-2-2002].
CVD is not Customs Duty - CVD is leviable under section 3(1) Customs Tariff Act, while customs duty is levied u/s 12 of Customs Act. Thus, these are two separate independent duties. under different statutes. However, u/s 3(6) of Customs Tariff Act, the provisions of Customs Act regarding recovery, payment, drawbacks, exemption, refunds, appeals etc. are applicable to Additional Customs Duty.
CVD is not excise duty – Though excise duty rate is considered for measurement or quantifying CVD payable, it is not excise duty. – Mohd. Zackria v. State of Tamilnadu (1999) 115 STC 697 (TNTST).
CVD Payable at effective rate of Excise duty - Additional duty (CVD) is payable at effective rate of duty i.e. any concession granted by a notification should be considered e.g. if Excise Tariff Rate is 25%, but by an unconditional exemption notification, excise duty is reduced to 15%. In such case, additional duty is payable @ 15% and not @ 25%.
CVD payable if cess or AED is payable on goods manufactured in India – If cess or Additional Excise Duty (AED) is payable on goods manufactured in India, CVD equal to cess or AED leviable on goods manufactured in India is payable. – CC v. Birla Jute Industries 1992(61) ELT 554 (CEGAT) * Vareli Textile Industries v. UOI 1997(91) ELT 279 (Guj) * Vikrant Tyres v. CC 2002(144) ELT 554 (CEGAT).
CVD payable even if similar goods not produced in India - Additional duty is leviable even if like goods are not produced in India.
Additional duty if conditional excise exemption notification - As per case law discussed below, the legal position that emerges is that if conditional exemption is such that it is impossible to be fulfilled, the exemption notification cannot be considered, i.e. duty is payable at tariff rate. However, if the requirement is only procedural requirement, exemption notification can be held as applicable, i.e. duty will be payable at effective rate after considering exemption notification.
Valuation for CVD when goods are under MRP provisions – In respect of some consumer goods, excise duty is payable on basis of MRP (Maximum Retail Price) printed on the carton as per section 4A of Central Excise Act. If such goods are imported, duty will be payable on basis of MRP printed on the packing, i.e. at MRP specified on the packing carton less abatement as permissible u/s 4A of Central Excise Act. [proviso to section 3(2)(ii) of Customs Tariff Act].
However, it has been clarified by DGFT vide policy circular No. 38(RE-2000) / 1997-2002 dated 22.1.2001 that labelling requirements for pre-packed commodities are applicable only when they are intended for retail sale. These are not applicable to raw materials, components, bulk imports etc. which will undergo further processing or assembly before they are sold to consumers.
To protect Indian agriculture and Indian automobile sector, duties on some articles is higher
Additional Customs Duty (CVD) - This is often called ‘Countervailing Duty' (CVD). In S K Pattnaik v. State of Orissa 2000 AIR SCW 41 = AIR 2000 SC 612 = 115 ELT 9 = 2000(1) SCC 413 = 1999(7) SCALE 557 (SC 3 member bench), it was observed that 'countervailing duty' is imposed when excisable articles are imported, in order to counter balance the excise duty, which is leviable on similar goods if manufactured within the State.
Additional duty is levied under section 3(1) of Customs Tariff Act. Thus, it is not a ‘duty under the Customs Act'. - CC v. Indian Organic Chemicals 2000 AIR SCW 1633 = 2000(4) SCALE 321 = 2000(118) ELT 3 (SC). However, it is ‘duty of customs’. – CC v. Presto Industries 2001 AIR SCW 828 = 2001(2) SCALE 68 = 128 ELT 321 (SC). In this case, it was also held that ‘additional customs duty’ is not called as ‘Countervailing duty’ though it may result in serving such purpose for manufacturer of such articles in India.
This duty is equal to excise duty levied on a like product manufactured or produced in India. If like article is not produced or manufactured in India, the excise duty that would be leviable on that article had it been produced in India is the base. If the product is leviable with different rates, then highest rate among those rates is to be considered. The duty is leviable on Value of goods plus customs duty payable. Thus, assume that Customs Value of goods is Rs. 10,000, customs duty is 30%and excise duty on similar goods manufactured in India is 16%. Then, basic customs duty is Rs 3,000. Additional customs duty (CVD) is payable on value plus basic customs duty, i.e. on Rs 13,000 [Rs 10,000+3,000]. Thus, CVD payable is Rs 2,080 (16% of Rs 13,000).
In addition, SAD (Special Additional Duty) @ 4% is also payable, as explained in an earlier paragraph. SAD @ 4% on Rs 15,080 [10,000+ 3,000 + 2,080] is Rs 603.20.
Calculation of CVD – CVD is payable on Assessable Value [as determined u/s 14(1) of Customs Act or tariff value fixed u/s 14(2) of Customs Act] plus basic customs duty chargeable u/s 12 of Customs Act plus basic customs duty chargeable u/s 12 of Customs Act plus any other sum chargeable on that article under any law in addition to, and in the same manner as duty of customs (e.g. NCCD of customs). However, while calculating CVD, following duties are not to be considered - * Special Additional Duty payable u/s 3A of Customs Tariff Act * Safeguard duty u/ss 8B and 8C of Customs Tariff Act * Countervailing duty, if any, u/s 9 of Customs Tariff Act * Anti-dumping duty payable u/s 9A of Customs Tariff Act * CVD itself which is payable u/s 3(1). [section 3(2) of Customs Tariff Act]. - - In other words, CVD is payable on assessable value plus basic customs duty plus NCCD of customs. While calculating CVD, Anti Dumping Duty, SAD and safeguard duty is not required to be considered. [This amendment is with retrospective effect from 1-3-2002. It was also clarified in Explanatory Note - Customs released with Budget Papers on 28-2-2002].
CVD is not Customs Duty - CVD is leviable under section 3(1) Customs Tariff Act, while customs duty is levied u/s 12 of Customs Act. Thus, these are two separate independent duties. under different statutes. However, u/s 3(6) of Customs Tariff Act, the provisions of Customs Act regarding recovery, payment, drawbacks, exemption, refunds, appeals etc. are applicable to Additional Customs Duty.
CVD is not excise duty – Though excise duty rate is considered for measurement or quantifying CVD payable, it is not excise duty. – Mohd. Zackria v. State of Tamilnadu (1999) 115 STC 697 (TNTST).
CVD Payable at effective rate of Excise duty - Additional duty (CVD) is payable at effective rate of duty i.e. any concession granted by a notification should be considered e.g. if Excise Tariff Rate is 25%, but by an unconditional exemption notification, excise duty is reduced to 15%. In such case, additional duty is payable @ 15% and not @ 25%.
CVD payable if cess or AED is payable on goods manufactured in India – If cess or Additional Excise Duty (AED) is payable on goods manufactured in India, CVD equal to cess or AED leviable on goods manufactured in India is payable. – CC v. Birla Jute Industries 1992(61) ELT 554 (CEGAT) * Vareli Textile Industries v. UOI 1997(91) ELT 279 (Guj) * Vikrant Tyres v. CC 2002(144) ELT 554 (CEGAT).
CVD payable even if similar goods not produced in India - Additional duty is leviable even if like goods are not produced in India.
Additional duty if conditional excise exemption notification - As per case law discussed below, the legal position that emerges is that if conditional exemption is such that it is impossible to be fulfilled, the exemption notification cannot be considered, i.e. duty is payable at tariff rate. However, if the requirement is only procedural requirement, exemption notification can be held as applicable, i.e. duty will be payable at effective rate after considering exemption notification.
Valuation for CVD when goods are under MRP provisions – In respect of some consumer goods, excise duty is payable on basis of MRP (Maximum Retail Price) printed on the carton as per section 4A of Central Excise Act. If such goods are imported, duty will be payable on basis of MRP printed on the packing, i.e. at MRP specified on the packing carton less abatement as permissible u/s 4A of Central Excise Act. [proviso to section 3(2)(ii) of Customs Tariff Act].
However, it has been clarified by DGFT vide policy circular No. 38(RE-2000) / 1997-2002 dated 22.1.2001 that labelling requirements for pre-packed commodities are applicable only when they are intended for retail sale. These are not applicable to raw materials, components, bulk imports etc. which will undergo further processing or assembly before they are sold to consumers.
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