DG Education (P) Ltd [Cus : Types of Customs Duty]

TYPES OF CUSTOMS DUTY:

BASIC CUSTOMS DUTY

1. Examine the validity of the following:

(i) Goods exempt from basis customs duty would AUTOMATICALLY be exempt from additional duty of customs.
(Nov 2007, 2 Marks)
While basic customs duty is levied under Sec 12 of Customs Act, 1962, the additional duty of customs, i.e., Countervailing duty, is
levied under Section 3(1) of Customs Tariff Act, 1975. Since both the duties are independent duties, exemption given in respect of
basic customs duty cannot be said to be having effect of exemption from payment of additional duty of customs also[EASTERN MILLS
AND INDUSTRIES LTD.- 1988- Cal HC]. Thus, the given statement is invalid.

Tutorial Note:
Exemption notification shall specifically state which type of duty it seeks to exempt. If it is not mentioning so specifically, then only BCD
shall be exempt

2. Explain briefly the difference between Basic Customs Duty and Anti-dumping Duty under the Customs Tariff Act, 1975.
(4 Marks)
Pts of Distinction Basic Customs Duty Anti-Dumping Duty
Sec 12 of Customs Act, 1962 Sec 9-A of CTA, 1975
Basic Objective This duty is a mean to raise revenue. The object of this duty is to guard against the
situation arising out of unfair trade practices.
Fundamental Root cause It is a fiscal policy component of the It is trade remedial measures.
for action government.
Nature It is general and universally applicable to all It is levied against specific exporter who is engaged
imports irrespective of the country of origin and in practice of dumping. This duty is not against
export. goods in general.

PROTECTIVE DUTY

3. Write short note on: Protective duties under Customs Tariff Act. (3 Marks)
Section 6 of the Customs Tariff Act, 1975 empowers CG to levy protective duties on importation of goods into India. This duty is
levied by the CG on the recommendation of the Tariff Commission when CG is satisfied that under the existing circumstances
immediate action is necessary for protection of the interests of any industry established in India. For imposition of this duty, a
notification is made in the Official Gazette.
Protective duty, if imposed, shall for the purposes of Customs Act, be deemed to be the Basic Customs Duty (BCD).
This duty is not compatible with WTO.

4. Briefly explain with reference to the provisions of the Customs Act, 1962 following:
(i) Protective duty and Safeguard duty
(2 marks)
Protective Duty is customs duty which is levied u/s 6 of the Customs Tariff Act, 1975. This duty is levied by the CG on the
recommendation of the Tariff Commission when CG is satisfied that under the existing circumstances immediate action is necessary
for protection of the interests of any industry established in India. For imposition of this duty, a notification is made in the Official
Gazette. This duty is not compatible with WTO.

Safeguard Duty is also a customs duty which is levied u/s 8-B of the Customs Tariff Act, 1975. This is levied by CG on its own
when after conducting enquiry it is satisfied that import of an article has been increased in quantitative terms and the increase has
taken place to such extent that it is threatening to cause or causing serious injury to domestic industry. This duty is also imposed by
notification in Official Gazette which can remain in force for maximum 10 years. This duty is compatible with WTO.

CVD (COUNTERBALANCING ED)

5. M/s, A.B.L. imported asbestos fiber from abroad. Asbestos fiber extracted from rocks When the department asked the importer to
pay the Additional Customs duty (counter-vailing duty) under Section 3(1) of the Customs Tariff Act, 1975, the importer argued that
duty is not leviable as asbestos fiber has not been obtained as a result of manufacture. Is the contention of M/s A.B.L. correct?
Discuss. (6 Marks)
 DG Education (P) Ltd [Cus : Types of Customs Duty]

As per the given facts, M/s ABL has imported asbestos sheets into India. Department has demanded CVD (the additional customs
duty leviable u/s 3(1) of CTA) upon such imported goods. On the other hand, M/S ABL is contesting the said duty demand on the
ground that the asbestos fiber which has been imported has not been manufactured or produced and, under Section 3(1) of the CTA,
1975, additional duty of customs can be levied only if the article which is imported is one which is produced, and manufactured in
India and is liable to payment of excise duty.
The issue for consideration before us is whether in the give facts and circumstances of the case even if no process of manufacture
or production has taken place the imported articles can still be subjected to the levy of additional duty (CVD).
Section 3(1) of the Customs Tariff Act, 1975 provides for levy of an additional duty (which is popularly known as CVD). This duty is an
independent duty as it is in addition to the Basic Customs Duty leviable under Section 12 of the Customs Act. CVD is leviable for
counterbalancing the excise duty which is leviable on domestic articles. While considering the same issue the Honble SC in case of
HYDERABAD INDUSTRIES LTD. -2000, hold out that as the measure for levy of CVD is the quantum of excise duty leviable on a
similar article under the Excise Act and duty under the Excise Act can be levied if the article has come into existence as a result of
production or manufacture, therefore when articles which are not produced or manufactured cannot be subjected to levy of excise
duty then on the import of like articles no additional duty (CVD) can be levied under the Customs Tariff Act. The levy of additional
duty being with a view to provide for counter balancing the excise duty leviable, additional duty can be levied only if on a like article
excise duty could be levied.
In the light of the above discussion, the contention of M/s ABL regarding non-levy of CVD on imported asbestos fiber is correct.

6. Whether excise exemption is considered while determining the applicable rate of CVD?
(Nov 2012- 3 Marks)
Yes, applicable rate of CVD shall be rate of excise duty prevailing on manufacture of like articles into India. Thus, if article x is
imported into India upon which tariff rate of duty as per CETA is 16% but excise exemption has been issued u/Sec 5A of the CEA,
1944, then applicable rate of CVD shall be Nil.
.

RECENT CASE-STUDY:
AHUJASONS SHAWL WALE (P) LTD - 2015- SC
Facts Assessee = Imported Shawls and Scarves
ED on like shawls and scarves = Fully exempted at present

Issue Whether CVD is payable?

Held CVD not payable
Purpose of additional duty under Section 3 of Customs Tariff Act, 1975 is to protect the domestic market from unhealthy
competition - Once there is no Excise duty on such goods produced domestically question of leaving the additional duty in
the form of giving such a protection does not arise at all.

7. M/s Marwar Industries imported finishing agents, dye - carriers, printing paste etc. to be used for manufacture of textile articles. The
importer claimed exemption for additional duty of customs (CVD) leviable under section 3 of the Customs Tariff Act, 1975, on the
ground that there was an exemption for excise duty in respect of said goods which were to be further used in the same factory for
manufacture of textile articles.
The Department contended that CVD is payable on the ground that the goods which were to be used must also be manufactured in
the same factory which is not so in the case of M/s. Marwar Industries. You are requested to comment upon the contention of
Department, with reference to a decided case law, if any.
As per given facts, M/ Marwar Industries is manufacturer of textile articles. It has imported certain articles for use in manufacture of
textile articles and it has claimed CVD exemption thereon on basis of excise exemption which has exempted like domestic goods
when used in same factory for manufacture of textile articles.
The issue for consideration before us is whether benefit of excise exemption which is providing exemption to like domestic goods
when used in same factory can be extended to imported article.
The identical issue arose for consideration before Honble SC in case of MALWA INDUSTRIES LTD.- 2009-SC wherein SC held that
literal meaning should be avoided if it leads to absurdity. When the goods are imported, obviously, the same would not be
manufactured in the same factory and therefore, it would become impossible to apply the provision of section 3(1) of the Customs
Tariff Act, 1975. It was observed that the object of countervailing duty (CVD) is that importer should not be placed at some more
advantageous position vis-a-vis purchaser/manufacturer of similar goods in India. Considering the purpose of exemption, it was held
that same factory means imported goods should be used in factory belonging to importer where manufacturing activity takes place.
Hence, CVD exemption will be available to imported goods.
In the light of above discussion, the contention of the Department as to denial of CVD exemption is not valid in law.
.

RECENT CASE-STUDY:
AIDEK TOURISM SERVICES PVT LTD- 2015- SC
Facts Assessee is into the business of tourism. It imported car (Honda Accord) and used as taxi to ferry passenger from one place to
another.
 DG Education (P) Ltd [Cus : Types of Customs Duty]

ED on like car = 12%

Excise Exemption (E/N 64/93): The car manufactured by assessee and used solely as taxi shall be exempt from excise duty.
Assessee claimed exemption from payment of CVD.
Department: Exemption is applicable only to manufacturer of the said car. It is only the manufacturer of the car, which is
imported and used solely as a taxi, is entitled to this exemption, as the plain reading of the exemption suggests.
Assessee: For purposes of exemption, importer is to be deemed as the manufacturer of said car.
It was further argued that if the importer is not deemed as manufacturer for the purpose of applicability of said
exemption notification, then there cannot be a situation where such benefit of this notification would be extended
to any person, in as much as, it was almost impossible to visualize a situation where a foreign manufacturer would
import the car in this country and would utilize those cars for tourist taxis.
Issue Whether assessee is entitled to exemption?
Held Yes - assessee is entitled to exemption
For the purpose of attracting CVD u/Sec 3 on the import of a manufactured or produced article the actual manufacture or
production of a like article in India is not necessary. For quantification of additional duty in such a case, it has to be imagined
that the article imported had been manufactured or produced in India and then to see what amount of excise duty was
leviable thereon."
Imagining so, benefit of exemption shall be extended to assessee importer for determination of applicable rate of CVD.
.

Author: Rate of CVD would be only that which an Indian manufacturer would pay under Excise Act; hence, where cars manufactured in India
are eligible for excise exemption in India in hands of 'manufacturer', said exemption would extend to CVD on imported cars payable by 'importer'
and cannot be denied to 'importer' merely because 'excise exemption notification' uses word 'manufacturer'
.

Excise exemption linked to condition of non-availment of Cenvat credit whether extendable to CVD?
(Expected)
M/S ITC LTD- 2015- SC
Facts Assessee imported YARN.
ED on Yarn = 12.50%
Excise Exemption (E/N 6/2002): 2% Duty if no cenvat credit under CCR, 2004 has been taken in respect of inputs and
capital goods used in manufacture of these goods (i.e., Yarn).

Assessee: It claimed exemption from payment of CVD. As per assessee, it being importer, it has not claimed any credit in
respect of inputs and capital goods used in manufacture of imported yarn and thus, it is fulfilling the related
condition and thus, entitled to claim exemption.

Department: Dept has denied the exemption. Dept has contended that in the case of the importer, no such credit is admissible
under the CCR, 2004 (Author: Importer is not manufacturer so as to claim any cenvat credit. Further, the goods used in manufacture of such goods must have suffered foreign duties/taxes which
are in any case not eligible for credit in terms of CCR, 2004) and when the credit under the Cenvat Rules is not admissible to importer,
question of fulfilling the aforesaid condition does not arise.

Issue Whether assessee is entitled to exemption?

Held Yes - assessee is entitled to exemption
For the purpose of attracting CVD u/Sec 3 on the import of a manufactured or produced article, it has to be imagined that
importer had not imported such article into India rather he has manufactured such gods in india.

Imagining so, benefit of exemption shall be extended to assessee importer for determination of applicable rate of CVD on
the ground that the importer was not availing the credit of duty on inputs or capital goods used in manufacture of such
imported goods (Author: This is for the reason that imported goods shall be deemed to fulfill the cenvat not availed condition.)
.

SRF LTD- 2015- SC

Issue Whether benefit of Central Excise exemption Notifications, which are subject to the condition that CENVAT Credit of the
duty paid on Input is not availed, also covers imported goods
Held Yes - importer entitled to claim such excise exemption while determining applicable CVD
the CVD on the imported goods is also to be computed by extending the benefit of said Central Excise Exemption
Notifications.

Author:
1. Implication of judgment
Product Domestic Manufacturer- ED liability Imported Goods
Yarn Those availing cenvat facility: ED@12.50% CVD@1%.
Those availing without cenvat facility: ED@2% (Excise exemption given [SRF-SC: Imported goods are deemed to be
manufactured in India. They are thus deemed to fulfill
subject to condition of non-availment of credit)
. cenvat not availed condition]
[This differential duty treatment of domestic manufacturer is called differential duty regime]
 DG Education (P) Ltd [Cus : Types of Customs Duty]

"The implication of the Hon'ble SC judgment is that all such final products when imported by manufacturer importer would have
attracted concessional excise duty as CVD, while the domestic manufacturer of such final products had to forgo input tax
credit to be eligible for such concessional rate. This will put the domestic manufacturers at a disadvantage vis-a-vis imports and
will adversely impact the Make in India Policy of the Government."

Author:
Review Petition / Revisions Application has been filed against the judgment.
However, keeping in view the adverse implications of the aforesaid judgment on the domestic industry, pending the outcome of review petition/ revision
application, conditions in the relevant exemption notifications has been suitably amended to make the intention abundantly clear (that these conditions are to
be satisfied by the manufacturer of such goods and not by the buyer/ importer of such goods)

[N/N 34/2015, 35/2015 & 36/2015 has been issued amending the conditions in the notifications 30/2004, 1/2011 and 12/2012, respectively]

2. Notifications amended overcoming the impact of judgment

On 17 July, 2015, CBEC has amended original excise exemption notifications to strengthen the differential duty regime to protect
domestic manufacturing in India.
These notifications now stipulate that exemption benefit shall be available subject to fulfillment of following conditions:
o The goods are manufactured from inputs or capital goods on which appropriate duty of excise leviable under CEA, 1944
has been paid and
o No credit of such excise duty on inputs or capital goods has been taken by the manufacturer of such goods (and not the
buyer of such goods) under CCR, 2004.

Author:
In terms of newly added conditions, only manufacturers can benefit from cenvat not availed condition. Mere buyers are specifically excluded.
Further, the goods gone into manufacture of such goods must have suffered duty under CEA, 1944.
These conditions override the concept of deeming fiction which underlies the SC ruling in SRF case.

Just for knowledge:

1. The amending notifications are effective from 17th July, 2015. Therefore, the imports effected prior to the said date are eligible for exemption / concession in
payment of CVD.
.

8. An importer imported personal deodorants. Maximum Retail price of a product (being personal deodorant) under Customs Tariff
Heading No. [33 07 20 00] is Rs 1,500/- and its assessable value is Rs 1,000/- as per Sec 14(1) of the Customs Act, 1962. Personal
deodorant is assessable under Central Excise on the basis of Maximum Retail Price after allowing an abatement of 40%. Basic Excise
Duty rate is 12.5%. EC & SHEC on excisable goods 100% Exempt (w.e.f. 1st March, 2015). Basic Customs Duty (BCD) is 15%.
Calculate the CVD payable in terms of Sec 3(1) of CTA, 1975.
[ICWA Final, Dec 2002]
For computation of CVD, we need two things:
a) Applicable Rate; &
b) Assessable Value (Value of Imported Article)
So far as applicable rate is concerned, CVD is leviable at the same rate at which like domestic article are chargeable upon their
production or manufacture in India. And, accordingly applicable rate of CVD is 12.5%.
Now, comes the issue of valuation. Sec 3 of CTA, 1975 itself provides for determination of value for the purposes of
determination of CVD. It provides that when the like domestic article is chargeable to excise duty in India on basis of its MRP (i.e., u/s
4-A), then the CVD on imported article shall also be chargeable on the basis of MRP of the imported article. Accordingly, the value
shall be taken as Rs 900/- [Rs 1,500/- less 40%]
Thus, CVD payable shall be Rs 113 [Rs 900 * 12.5% = Rs 113 (rounded off to the nearest of rupee)].

9. Customs Value (Assessable Value) of imported goods is Rs 2,00,000/-. Basic Customs duty payable is 20%. If the goods were
produced in India, ED payable would have been 12.5%. EC on imported goods is 2%. SHEC on imported goods is 1%. Find the
customs duty payable. How much Cenvat can be availed by importer, if he is manufacturer?
(4 Marks)
STATEMENT SHOWING COMPUTATION OF TOTAL CUSTOMS DUTY LIABILITY
AV Rate Duty Amount (Rs)
BCD Sec 14(1) Value 20% 40,000.00
2,00,000/-
CVD Sec 14(1) Value + BCD 12.5% 30,000.00
(2,00,000 + 40,000)= 2,40,000/-
EC BCD + CVD [Sec 3(1)ED FP] 2% 1400.00
(40,000 + 30,000) = 70,000/- (*WN-3)
 DG Education (P) Ltd [Cus : Types of Customs Duty]

SHEC BCD + CVD [Sec 3(1)] 1% 700.00

(40,000 + 30,000) = 70,000/- (*WN-3)

Special CVD Sec 14(1) Value + BCD + CVD + EC + SHEC 4% 10,884.00

(*WN-2)
(2,00,000 + 40,000 + 30,000 + 1,400 + 700) = (*WN-3)

2,72,100
Total Customs Duties Payable 82,984.00
Working Notes (WN):
1. CVD [ED FP] leviable u/s 3(1) of CTA, 1975 is equal to excise duty for the time being leviable on like goods if produced or manufactured into
st
India. W.e.f. from 1 March, 2015, EC & SHEC on excisable goods manufactured in India stands exempted (E/N 14/2015 & E/N 15/2015),
which exemption extends automatically to CVD, as CVD is levied equal to excise duty. Thus, effective rate of CVD is 12.5%.
2. Special CVD is exempted for IMPORTER TRADER. But since importer is MANUFACTURER, Special CVD is payable and hence computed.
3. Customs duty has been rounded off to the nearest of rupee in terms of Sec 154-A of Customs Act, 1962. Where the fraction is consisting of
paise equal to 50 paise or more, the fraction has been increased to a rupee, otherwise the fraction has been ignored.
Admissible Amount of Cenvat Credit: Admissibility of Cenvat Credit is governed by Cenvat Credit Rules, 2004. These rules allow
credit not only in relation to domestic inputs or capital goods but also of imported inputs or capital goods. However, credit admissible
is only of duties as specifically mentioned in Rule 3(1) of the said rules. The said Rule 3(1) mentions only CVD & Special CVD as
eligible duties for the purpose of Cenvat Credit. Thus, the total amount of admissible credit for the manufacturer would be Rs 40,884
(Rs 30,000 + 10,884)

Additional Question:
What would be the change in your answer, if the import of goods is not by a manufacturer but by a service provider?
In that situation, what would be the admissible amount of Cenvat Credit?
For a service provider, Special CVD (leviable u/s 3(5) of CTA) is not eligible for the purposes of Cenvat Credit. Hence, in that situation, the only
eligible duty is CVD. Thus, to service provider the admissible amount of Cenvat Credit would be Rs 30,000/- only.

10. Write a brief note with reference to the provisions of the Customs Act, 1962 on the assessment of Packaged Software where
affixation of Retail Sale Price (RSP) is:
(i) Mandatory and
(ii) Not required under the Legal Metrology Act, 2009.
(Marks 3)
Author:
Software = Goods, when software is put on a media like CD, DVD) -- [TCS SC]
Import of Software = Import of goods.

(i) Treatment of Packaged Software

Packaged software has been notified u/s 4-A of the CEA, 1944. In terms of this section, ED is payable on MRP declared on
the packaged software less such percentage of abatement as has been notified. The CG has notified 15% as notified
percentage. Similarly, import of such software will attract CVD in similar fashion.
As a corollary, Government has also issued an exemption notification under ST law providing for the ST exemption subject to
the condition that the manufacturer (or importer) has paid ED (or CVD) on MRP basis.

(ii) Packaged software not chargeable on basis of MRP (when MRP not mandatory on them) shall be chargeable to excise duty/CVD
only on value excluding the value representing consideration for transfer of right to use software. [the reason for exemption is that
on the value the value representing consideration for transfer of right to use software, ST shall be payable under category of IT
Service]

SAFEGUARD DUTY

11. Write a short note on: Product Specific Safeguard Duty.

(3 Marks)
Product specific safeguard duty is that duty which is imposed by CG when the CG is satisfied that any article is imported into India in
such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry. This
duty is imposed under the authority given u/s 8B of the Customs Tariff Act, 1975. This duty is imposed by notification in the Official
Gazette.
If CG feels that imports of any article have increased to such extent that it is causing or threatening to cause injury to domestic
industry, then CG may impose this duty to safeguard domestic industry. Once imposed, this duty shall be applicable on all imports of
that goods into India, irrespective of the country from which they are coming. In other words, this duty is applicable on non-
discriminatory basis (it does not differentiate imports of that goods is from which country). The only imports which will remain
protected from imposition of this safeguard duty are:
 DG Education (P) Ltd [Cus : Types of Customs Duty]

i) Import of article which has originated from a developing country and the share of import of that article does not exceed 3% of the
total import of that articles into India;
ii) Import of article which has been originated from more than one developing country(like, European Union) and the aggregate of import
from developing countries each with less than 3% import share does not exceed 9% of the total import of that articles into
India;

In relation to increased imports from China, the special provisions have been made under section 8-C for imposition of safeguard
duty.

12. Explain briefly the difference between Safeguard duty and Anti-dumping Duty under the Customs Tariff Act, 1975.
(4 Marks)
Safeguard duty is levied under Section 8-B of CTA, 1975 with an object to safeguard interest of domestic industry against injury that
domestic industry may suffer on account of increased quantities in imports. On the other hand, Anti-Dumping Duty is levied under
section 9-A of CTA, 1975 with an object to protect the domestic industry from injury that is caused or likely to be caused due to
imports at lower than normal price from exporting economy.
Following table highlights the main differences between the two levies:
Pts of Distinction SAFEGUARD DUTY ANTI-DUMPING DUTY
Sec 8-B of CTA Sec 9-A of CTA
Basic Objective Check quantity of imports in India --- i.e., Check dumping which results due to unfair price
unforeseen flood of imported goods into India discriminatory practices adopted by the exporter
[it checks unforeseen pressure developed on on his own [i.e., when the export price charged is
domestic industry due to increased imports] less than the normal value of the goods in the
exporting country or territory]
Fundamental Root cause Increased Imports Price-discrimination
for action
Designated Authority DG (Safeguards) DG (Anti-Dumping)
[*DG = Director General] [*DG = Director General]
Applicability, when This duty is goods specific. This duty is goods specific, country-specific as
imposed It is neither country-specific nor exporter- well as exporter-specific.
specific.
[meant thereby that when imposed in relation to any [meant thereby that when imposed in relation to any particular
particular goods, it shall be applicable uniformly on imports goods, it shall be applicable only when the said goods is
of that goods into India from any country into India, e.g., if imported from a particular exporter of a particular country, e.g.,
import of article X was found to be increased in India and if Exporter A of USA is found to be dumping article X into India
safeguard duty is imposed by CG, then all imports of article and CG imposed Anti-dumping Duty, then this duty shall be
X in India from any country of the world shall attract imposable only on imports of article X from USA from Exporter
safeguard duty] A]
.
Provisional Imposition Can be imposed for 200 days Can be imposed for 6 months
Retrospective Imposition Not possible Possible for 90 days
of Provisional Duty
Duration of levy
--- Initial imposition 4 Years 5 Years
--- Extension 6 years maximum No limit (however, at any time, extension shall
not exceed 5 years at a time)

13. When shall the safeguard duty under section 8B of the Customs Tariff Act, 1975, not be imposed? Discuss briefly.
(Nov 2013- 3 Marks)
The safeguard duty under section 8B of the Customs Tariff Act, 1975 is not imposed on the import of the following types of articles
a) Articles originating from a developing country, so long as the share of imports of that article from that country does not
exceed 3% of the total imports of that article into India;
b) Articles originating from more than one developing country, so long as the aggregate of imports from developing countries
each with less than 3% import share taken together does not exceed 9% of the total imports of that article into India;
c) Articles imported by a 100% EOU or Special Economic zone except under following 2 cases:
i) Notification specifically made imposition of safeguard duty applicable to EoU Unit / SEZ Unit; or
ii) The article imported by such unit is cleared as such into DTA or used in manufacture of any goods that are cleared into
DTA.
 DG Education (P) Ltd [Cus : Types of Customs Duty]

ANTI-DUMPING DUTY [When seller exporting goods at less than normal value]

14. Briefly examine the nature and significance of the levy of Anti-Dumping Duty, under the Customs Tariff Act, 1975.
(6 Marks)
Nature of Anti-Dumping Duty (ADD): Generally, a product is said to have been dumped if it is introduced into the commerce of
another country at less than the normal value of the product and it causes material injury to the domestic industry of that country. In
order to offset or prevent dumping, Sec 9-A of Customs Tariff Act, 1975 provides that the importing country may levy Anti-Dumping
Duty (ADD) on any product not greater than the margin of dumping.
To illustrate, if a camera is exported from US to India, whose export price is US $ 100/- and the domestic selling price of the camera
within US is US $ 125/-, then the export price being less than the domestic selling price, it is said that US is dumping the camera into
India with dumping margin of US $ 25/- and under Section 9A of the CTA, anti-dumping duty to the extent of US $ 25 can be levied.
The principle behind anti-dumping laws is to protect the domestic industry from being adversely affected by import of goods at export
prices which are below the normal value of the goods in the domestic market of the exporter. It shall be noted that rationale behind
levy of ADD is not to raise revenue but to ensure protection to domestic industry against price-discriminatory practices of exporters.

Significance of levy of Anti-Dumping Duty (ADD): The purpose behind the imposition of ADD is to curb unfair trade practices
resorted to by exporters of a particular country of flooding the domestic markets with goods at rates which are lower than the rate at
which the exporters normally sell the same or like goods in their own countries so as to cause or be likely to cause injury to the
domestic market. The levy of dumping duty is a method recognized by WTO (World Trade Organization) which seeks to remedy the
injury.

Tutorial Note: Anti-dumping Duty is not a tax as is ordinarily understood for the purpose of raising public revenue in generality, but it certainly
falls in the category of tax to regulate import of certain articles by subjecting it to an additional duty on finding existence of certain facts in order
to protect the domestic industry from injury caused on account of unfair trade pursuits by the exporters of the goods from foreign country or
territory to India. The imposition is not complete merely by enacting Section 9A authorizing imposition of Anti-Dumping Duty on certain
conditions found to exist. Charge to tax really comes into existence on Notification issued by the Central Government as authorized
under Section 9A of CTA, 1975.

15. With reference to the Customs Tariff Act, 1975, discuss the validity of the imposition of customs duties in the following cases:-
(a) Both countervailing duty (on subsidized article) and anti-dumping duty have been imposed on an article to compensate for the
same situation of dumping.
(b) Anti-dumping duty has been levied on an article for the reason that the same is exempt from duty borne by a like article when
meant for consumption in the country of origin.
(c) Definitive anti-dumping duty has been levied on articles imported from a member country of World Trade Organization as a
determination has been made in the prescribed manner that import of such article into India threatens material injury to the
indigenous industry.
[ICAI RTP- NOV 2014]
(a) Not valid. As per Sec 9-B of the Customs Tariff Act, 1975, no article shall be subjected to both countervailing duty (on subsidized
article) and anti-dumping duties to compensate for the same situation of dumping or export subsidization.
(b) Not valid. As per Sec 9-B of the Customs Tariff Act, 1975, countervailing duty (on subsidized article) or anti-dumping duties
cannot be levied for the reason that the same is exempt from duty borne by a like article when meant for consumption in the
country of origin.
(c) Valid. As per Sec 9-B of the Customs Tariff Act, 1975 Customs Tariff Act, 1975, no definitive countervailing duty or anti-
dumping duty shall be levied on the import into India of any article from a member country of the World Trade Organization or
from a country with whom Government of India has a most favoured nation agreement, unless a determination has been made in
the prescribed manner that import of such article into India causes or threatens material injury to any established industry in India
or materially retards the establishment of any industry in India.

16. Discuss in brief the following:

(i) For what period, Anti-dumping duty can be imposed?
(ii) Whether affected party can request for withdrawal or variation of anti-dumping duty during the initial imposition period?
(iii) Whether extension of original imposition period is also possible? If yes, under what circumstances?
(2*3 = 6 Marks)
(i) Anti-Dumping duty once imposed shall be valid for a period of 5 years, unless it is revoked earlier.
(ii) Yes, affected party can make a request for that purpose. Designated Authority on basis of such request may carry out review of
ADD.
(iii) Original imposition period can be extended from time to time. Any extension shall fulfill following conditions:
 DG Education (P) Ltd [Cus : Types of Customs Duty]

a. Extension shall be done only after carrying out a review (generally referred as sunset review) where the outcome of review
indicates that discontinuation of ADD is likely to lead to continuation or recurrence of dumping and injury;
b. Extension at one time can only be for a maximum period of 5 years.
c. Extension shall be applicable from the date of order of extension only.

*SUNSET REVIEW: Review done to decide continuation or otherwise of the ADD beyond the stipulated period of 5 years.
The purpose of a Sunset review is to investigate whether the cessation of anti-dumping duty is like to lead to continuation or
recurrence of dumping and injury.

Time limit within which investigation shall be initiated and shall be concluded has been specified in the Rules [Rule 17 of Anti-
Dumping Duty Rules]

Extension of time-period
(A) Extension is possible only upon sun-set review.

(B) Sun-set review must be initiated beyond period of original imposition of 5 years. In the absence of any initiation of a sunset
review, the anti-dumping duty lapses at the expiry of 5 years from the date of its initial imposition.
CBEC Circular 05/2015- Cus (dated 28th Jan, 2015)
ADD imposed is effective for a period of 5 years except in cases where Director General (Anti-Dumping) [DG(AD)] initiates a
review before expiry of 5 years period. [Author: ADD will lapse after period of 5 years unless DGAD initiates reviews and
notification extending period is issued by CG refer discussion below KUMHO PETROCHEMICALS CO LTD- 2014- DELHI HC]
In cases, where DG(AD) has not initiated any sunset review before the expiry of aforesaid 5 years, no anti-dumping duty can be
collected beyond the period of 5 years from the date of its imposition.
Review: Initiation vs Conclusion [Initiation before expiry of original validity period is must, review can gets concluded later]
1. Review initiated within original validity period of 5 years and also concluded within that period.
Extension order shall be passed on date of expiry of original period.
Extension will take effect with passing of extension order.
2. Review initiated within original validity period of 5 years and not concluded within that period.
Pending such review, ADD can be continued for a period of 1 year.
Extension order shall still be passed on date of expiry of original validity period of 5 years.

KUMHO PETROCHEMICALS CO LTD- 2014- DELHI HC
Continuity of ADD pending outcome of sunset review- Continuity is not automatic, it requires notification in
OZ
It cannot be said that the continuation of ADD during pendency of sunset review is automatic.
It is more so as in first instance, original levy has a life of only 5 years. If DG (Anti-Dumping) wants to continue levy
for a period beyond that during pendency of sunset review, which might not be concluded by the time first period
expires, they have to issue a notification, before expiry of that period.

If extension order is not passed with the expiry of period of original levy, then such extension order can be passed post-
facto. In that case, extension shall have effect from date of passing of such extension order.

HYUNDAI MOTORS INDIA LTD- 2015- MAD HC / FLOAT GLASS CENTRE 2015- MAD HC [Writ Petition]
Sun-set review initiated before expiry of 5 years but not concluded by end of 5 years period. With expiry of 5 years
period, the original notification cease to have effect.
Extension can be granted after the expiry of the original period.
Only point is that if an order of extension is passed after sunset review, the extended period will commence only from
the date of the order of extension.
.
(Expected)
17. What will be the dates of commencement of the definitive anti-dumping duty in the following cases under section 9A of the
Customs Tariff Act, 1975 and the Rules made thereunder:
(i) Where no provisional duty is imposed
(ii) Where provisional duty is imposed
(iii) Where anti-dumping duty is imposed retrospectively from a date prior to the date of it of provisional duty.
(2*3 = 6 Marks)
The date from which imposition of definitive (finalized) anti-dumping duty shall take effect under different situations have been
discussed below:
(i) When no provisional duty is imposed: ADD (Anti-Dumping Duty) is imposed by CG by notification in Official Gazette. The duty
so imposed shall take effect from the date of notification itself.
(ii) When provisional duty is imposed: ADD (Anti-Dumping Duty) can be imposed provisionally pending the determination of
margin of dumping. The provisional imposition will take effect from the date of notification imposing provisional duty. Provisional
 DG Education (P) Ltd [Cus : Types of Customs Duty]

imposition can be for a maximum And as and when margin of dumping is determined, notification imposing final ADD shall be
issued. The notification of finalization of anti-dumping duty would take effect from the date on which provisional duty was
notified [NITCO TILES TLD. 2006- TRIBUNAL].

Provisional Imposition can be for 6 months only

Sec 9-A provides that provisional imposition can be for a maximum period of 6 months.
Thus, definitive ADD imposition shall take place within this period only.
If definitive ADD is not imposed within 6 months, then upon expiry of 6 months, provisional levy will lapse.
Subsequently, when definitive/final ADD is imposed, it cannot cover the gap period (refer case law below)
.

Note: The gap period begins the day after the end of the 6-month period, and ends the day before the final determination (notification) is
published.
.

M/s G M EXPORTS AND OTHERS- 2015- SC:

No "gap" or intervening period occurs between the expiry of the provisional duty and the imposition of the final duty, inasmuch
(DG proposal to the CG)
as a proposal to levy final duty has to be submitted before the expiry of a provisional duty.
In case there is gap or intervening period, then there can be no levy of anti-dumping duty in the "gap" or interregnum period
between the lapse of the provisional duty and the imposition of the final duty.
Any duty levied by a final duty notification during the interregnum period would necessarily amount to a retrospective levy of
duty for the reason that such period is not covered by the provisional duty notification, being beyond 6 months. This would be
ultra vires to Section 9A.

(iii) When provisional duty is imposed with retrospective effect: ADD (Anti-Dumping Duty) can be imposed provisionally even with
retrospective effect pending the determination of margin of dumping. The provisional imposition will take effect from the date
from which retrospective effect is stated to be given. And as and when margin of dumping is determined, notification imposing
final ADD shall be issued. Period of duration of 5 years would commence from the retrospective date from which the dumping
duty is imposed [NITCO TILES TLD. 2006- TRIBUNAL].

18. Whether order made determining margin of dumping is appealable under Customs Appeal provision or under WTO appellate
forumn?
The order passed determining margin of dumping is appealable to CESTAT. Sec 9-C of CTA, 1975 provides for direct appeal to
CESTAT. Against order passed by Tribunal in such appeal, further appeal will lie either to HC or to SC.
Author
In terms of Sec 129-A, adjudication order passed by Principal CC / CC and appeal order passed by CC (Appeals) u/Sec 128-A are only
appealable to CESTAT.
In terms of Sec 129-A, order passed by Designated Authority in relation to antidumping matter is non-appealable to CESTAT.
However, Sec 9-C (specific section) made these orders appealable to CESTAT.
CESTAT order shall further be challengeable before HC (u/Sec 130), or SC (u/Sec 130-E), as the case may be.

RISHIROOP POLYMERS (P) LTD- 2014- BOMBAY HC: [Writ Petition]

CESTAT order passed u/Sec 9-C is further appealable to HC / SC [Statutory Remedy]
Such orders cannot be challenged in writ petition [Constitutional Remedy]

19. Miss Priya imported certain goods weighing 1,000 kgs with CIF value US $ 40,000. Exchange rate was 1 US $ = Rs 45 on the date of
presentation of bill of entry. Basic customs duty is chargeable @ 10% and education cess as applicable. There is no excise duty
payable on these goods, if manufactured in India.
As per Notification issued by the Government of India, anti-dumping duty has been imposed on these goods. The anti-dumping
duty will be equal to difference between amount calculated @ US $ 60 per kg and 'LANDED VALUE' of goods. You are required to
compute custom duty and anti-dumping duty payable by Miss Priya.
(May 2010 5 Marks)
Tutorial Note: Students shall note down the following important points:
(1) Imposition of Anti-Dumping Duty is governed by Sec 9-A and the notification issued thereunder.
(2) EC & SHEC are not leviable on Anti-Dumping duty.
(3) Special CVD has been presumed to be NIL.
STATEMENT SHOWING COMPUTATION OF ASSESSABLE VALUE
Particulars Dollars Amount (Rs)
CIF Value 40,000 (40,000 *45)= 18,00,000
Add : Landing Charges @ 1% of CIF 18,000
Assessable Value 18,18,000
 DG Education (P) Ltd [Cus : Types of Customs Duty]

Computations of Normal Duties:

i) BCD= 18,18,000 * 10% = 1,81,800/-
ii) CVD = Not payable [as no excise duty is payable on domestic goods]
iii) EC = 1,81,800* 2% = 3,636
iv) SHEC = = 1,81,800 * 1% = 1,818
v) Spl CVD = Not payable [presumed]
Computations of Anti-dumping duty (as per terms stated in notification):
Anti-dumping duty =
a) Cost of Commodity calculated @ US $ 60 per kg [(1,000 kg * 60 per kg) $ * Rs 45] = 27,00,000.00
[this is basically Fair Reasonable Price as per Director General (Anti-dumping)]
b) Landed Value of the Commodity Imported
[Sec 14(1) Value + BCD + EC + SHEC] = (20,05,254.00)
Anti-Dumping Duty on the consignment = 6,94,746.00