An Understanding Of Excise, Custom And Countervailing Duty:
It is a type of tax that is levied on products for their creation, issuance, and sale. Excise duty is an indirect tax on manufacturers of commodities that is paid to the government. It is the reverse of customs duty in that it is imposed on domestically produced items while customs is charged on imports.
• Previously, excise duty at the central level was assessed as Central Excise Duty, Additional Excise Duty, etc. However, several other excise duty types were absorbed by the Goods and Services Tax (GST), which was implemented in July 2017. Today, only alcohol and petroleum are subject to excise duty. While GST is placed on the supply of goods and services, excise duty was imposed on produced items and collected at the time of removal.
• Alcohol is not a prohibited item under the GST, as required by constitutional law. States tax alcohol in the same way they used to before the introduction of the GST.
• Excise duty was replaced by central GST when GST was implemented since it was assessed by the central government. The central government receives revenue from the CGST.
• Excise duty revenue for the government was estimated in the budget at Rs. 2,67,000 billion year 2020–21. Excise duty actuals for the 2018–19 Budget were Rs 2,30,992 crore, compared to revised projections of Rs 2,48,000 crore for the 2019–20 Budget.
Types of excise duty:
India had three different types of excise taxes prior to the implementation of the GST:
1. Basic Excise Duty
Basic excise duty is also referred to as Central VAT (CENVAT). The Central Excise Tariff Act of 1985's first schedule of commodities was subject to this category of excise duty. According to Section 3 (1) (a) of the Central Excise Act of 1944, this tax was imposed. Except for salt, all goods were subject to this tax.
2. Additional Excise Tax
The Additional Excise under Additional Duties of Excise (Items of Special Priority) Act of 1957 imposed additional excise duty on goods of high importance. This tax was imposed on a certain class of commodities.
3. Special Excise Duty
Special items listed in the Central Excise Tariff Act of 1985's Second Schedule were subject to this kind of excise duty.
The charge levied on products as they are carried across international boundaries is referred to as a customs duty. It is, in the simplest words, the tax imposed on commodities that are imported and exported. This obligation is used by the government to increase income, protect domestic industries, and control the flow of commodities.
The place of manufacture and the material used to make the goods affect the customs duty rate.
The Customs Act of 1962 defines custom duty in India, and the Central Board of Excise & Customs oversees all aspects pertaining to it (CBEC). The government's estimated customs income for the fiscal years 2020–21 was Rs 1,38,000 crore. Customs actuals for the 2018-19 Budget were Rs 1,17,812.85 crore, while the revised estimates for the 2019–20 Budget came in at Rs 1,25,000 crore.
Various customs duties includes:
• Basic Customs Duty (BCD)
• Countervailing Duty (CVD)
• Additional Customs Duty or Special CVD
• Antidumping and Protective Duty
Changes in Customs Duty
The government announced a spate of customs duty reforms in Budget 2019 to achieve a number of goals, including promoting sustainable energy, reducing non-essential imports, enhancing domestic industry, and increasing income.
Customs fees were reduced on a number of inputs to encourage domestic manufacture and raised on completed goods to generate more money. The government had previously stated that it anticipated a 19% increase in customs revenue to Rs 1.5 trillion for 2019–20.
The government sets a special type of charge known as a countervailing duty (CVD) to safeguard domestic manufacturers by offsetting the detrimental effects of import subsidies. Therefore, CVD is an import tax levied by the importing nation on imported goods.
• Foreign governments may give subsidies to their producers in order to lower the cost of their goods and increase demand for them in other nations. The government of the importing country imposes countervailing duty, which levies a set amount on the import of such items, in order to prevent the market of the importing country from being overrun by these products.
• When an imported good receives subsidies or is free from domestic taxes in the nation where it is produced, the duty cancels out and negates the price advantage (low price) the product has.
• The import product's price is increased by the duty, bringing it closer to the genuine market price. The government is able to offer local products an equal playing field in this way.
• The World Trade Organization (WTO) allows its member nations to impose countervailing duties. When imported goods receive a tax break in their nation of origin, India imposes the CVD as an additional duty in addition to customs.
• Anti-dumping taxes are applied to specific exporters and nations. It covers imports exclusively from the nation for which dumping has been alleged, a complaint has been made, and a duty has been recommended. Imports from foreign nations for which the domestic industry has not claimed dumping are exempt from this duty.
Which authority imposes countervailing measures?
The Directorate General of Anti-dumping and Allied Duties (DGAD) in the department of commerce of the commerce and industry ministry is responsible for managing the countervailing measures in India.
The department of revenue in the finance ministry implements anti-dumping duties within three months of the department of commerce's recommendation, whether it be a provisional or final duty.