Regarding CTA 3(1) additional custom duty
We are sole importers of a ophthalmic product which is an orbital implant exclusively manufactured by a company in USA. There are no similar articles produced or manufactured in India or anywhere else in the world. Our query is as follows: We are currently classified under chapter 9021 (3900) our custom duty structure is as follows: Basic Custom Duty 7.5% SHE Cess 2%, 1% Add. Duty 4% With refer to Custom Tariff Act 1975 3(1) since no similar article is prod or manf in India, then why add duty?
At the time of import as you have rightly noted customs duty is levied in the form of BCD (which varies from product to product), Education cess 3% (Secondary + higher). Thereafter, there are two more kinds of additional duty:
1. CVD: Additional duty equivalent of excise duty (Commonly known as CVD) this is the duty which may be imposed if imported goods are manufactured in India. Your point that the imported goods are not manufactured in India thus no CVD should be imposed is not a valid argument as Section 3(1) of Customs Tariff Act says “like goods if manufactured in India”. Thus even if imported goods are not currently manufactured in India CVD will be applicable.
2. SAD: Then there is Special Additional Duty (Commonly known as SAD) this is the duty which is imposed to counter CST. This duty is generally 4% subject to exemptions. The logic behind this levy is similar to that of CVD, i.e. “like goods if manufactured in India” what will be the tax liability.
Note as per you the classification of the imported product is 9021 3900. There are certain an exemptions for products falling under Chapter 90 of classification (Schedule I) as per notification no. 12/2012-Cus. Similarly there are certain exemptions from CVD as well for goods falling under Chapter 90 of Schedule I. The exact classification can be determined only after checking the documents describing the imported goods. The classification taken by USA can be different from India as USA follows 6-digit classification and India follows 8-digit classification. From the description you have given about the imported product, the probable classification appears to be 9021 2100 or 9021 39 00. But the same can be confirmed only after reading the description of the imported goods.
Advocate Deepak ThackurBeriwalah Bagh, Delhi
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