From UPSC perspective, the following things are important :
Prelims level : Custom Duty
Mains level : Customs frauds
The government has raised the thresholds for prosecutions and arrests under the Customs Act to ₹50 lakh from ₹20 lakh for smuggling and illegal imports of goods in baggage, and from ₹1 crore to ₹2 crore for cases involving commercial fraud.
What is Custom Duty?
- Customs duty refers to the tax imposed on goods when they are transported across international borders.
- In simple terms, it is the tax that is levied on import and export of goods.
- Custom duty in India is defined under the Customs Act, 1962, and all matters related to it fall under the Central Board of Excise & Customs (CBEC).
- The government uses this duty to raise its revenues, safeguard domestic industries, and regulate movement of goods.
- The rate of Customs duty varies depending on where the goods were made and what they were made of.
Types of custom duty
- Basic Customs Duty (BCD): It is the duty imposed on the value of the goods at a specific rate at a specified rate of ad-valorem basis.
- Countervailing Duty (CVD): It is imposed by the Central Government when a country is paying the subsidy to the exporters who are exporting goods to India.
- Additional Customs Duty or Special CVD: It is imposed to bring imports on an equal track with the goods produced or manufactured in India.
- Protective Duty: To protect interests of Indian industry
- Safeguard Duty: It is imposed to safeguard the interest of our local domestic industries. It is calculated on the basis of loss suffered by our local industries.
- Anti-dumping Duty: Manufacturers from abroad may export goods at very low prices compared to prices in the domestic market. In order to avoid such dumping, ADD is levied.