Customs law is a duty or tax which is levied by the Central Government on import of goods into and export of goods from India.

Quantum of Customs duty depends upon the provisions of Customs Act 1962 and Customs Tariff Act 1975 and related Customs Rules, Notifications, Circulars, case Laws and Annual Union Finance Acts. Customs Act 1962 is the main Act governing custom duty.

Customs Tariff Act 1975 contains two Schedules. Schedule 1 gives classification and rates of duties for imports of goods into India. Schedule 2 gives classification and rates of duties for export of goods from India.

Section 156 of Customs Act empowers the Central Government to make rules in this regard consistent with provisions of the Act.

Types of Custom Duties:

• Basic Custom duty
• Additional Custom duty
• Special Countervailing duty
• Safe Guard duty
• Anti Dumping Duty
• Protective Duties
• Integrated Goods and Service Tax
• Goods and Services Tax Compensation Cess
• Social Welfare Charge

Basic Custom Duty:

This is the standard rate at which the Basic Custom Duty is applicable. There are two sub-types of Basic Custom Duty. One is standard custom duty which is levied at the standard rates prescribed in the schedule. There is another rate which is called the Preferential Rate. It is leviable only for those countries which are specified in the schedule.

In order to make it comparable with the goods produced in India, another duty called Additional Customs Duty is levied. It is also called as Countervailing Duty. It is levied at the same rate on which excise duty is applicable to similar products manufactured in India. Special Countervailing duty is levied to counter balance the effect of the sales Tax, local tax, value added tax or other charges. Due to GST, Additional custom duty and special Countervailing duty is levied on few cases.

Brief History
Customs duty is on import into India and export out of India. As per ancient custom, a merchant entering a kingdom with his goods had to make a suitable gift to the King. In the course of time, this 'custom' was formalised into 'Customs Duty'. This is collected on imports (and occasionally on exports too). The word 'Customary' is derived from 'customs', which indicates that it is a very old tax. Taxes on goods were levied on various goods right from the Veda period.

Customs Duty as we understand today has its origin in British period. British established its first Board of Revenue in 1786 at Calcutta. New Board of Trade was established in 1808. A uniform Tariff Act was introduced in 1859 all over India. General rate of import duty was 10%, which was reduced to 7.5% in 1864.

Customs duty in India is linked with history of textile industry. British manufacturers wanted to export their products to India and due to their pressure, duty on coarser varieties of cotton goods was abolished in 1877. In the meanwhile, Sea Customs Act was passed in 1878. In 1882, all import duties were abolished, but re-introduced in 1894 at general rate of 5%. Indian Tariff Act was passed in 1894.

Import duty on cotton goods @ 5% was introduced in 1894. At the same time, excise duty on Indian cotton goods was imposed, which was bitterly resented in India and it was finally abolished in 1925. General rate of customs duty was later increased to 7.5%. Land Customs Act was passed in 1924.

Air Customs was covered by making some rules under Indian Aircraft Act, 1911. After independence, manufacturing industry grew and trade expanded. Customs Act, 1962 was passed to consolidate Sea Customs Act, Land Customs Act and provisions for air customs.

Recent Changes
The government has made few changes to the custom duty to meet several objectives that include promoting energy, curbing non - essential imports, raising revenue, etc.

The Budget presented proposes basic changes in custom duty to encourage domestic processing & manufacturing in the country and it includes increasing custom duties & withdrawing exemption to encourage on value addition.

A few of the items on which Custom Duty rates are revised are:

• Custom duty has been reduced from 5% to 2.5%
• Special additional excise duty has been reduced on petrol & high - speed diesel oil (branded or non - branded)
• Duty on solar inverters is increased from 5% to 20%
• Duty on solar inverters is increased from 5% to 15%
• Basic custom duty on silver & gold is reduced
• The department will rationalise the duty on textile, chemicals & other products

The revised rates will be applicable from 2nd February 2021 onwards.

Major amendments made in Customs Act, 1962 are:

S. No.	Amendment
A	Improving Compliance
1	Chapter VAA as section 28DA has been inserted in the customs act to provide the enabling provision to administer the preferential tariff treatment regime under the Trade agreements. The section provides certain obligations on the importers & it prescribes verification from the exporting country in case of any doubt. In some cases, the preferential tariff may be denied without any further verification.
B	Reduction in Litigation
1	An explanation has been inserted in section 28 to explicitly clarify that any notice issued under this section (before enacting the Finance Act, 2018) is governed by section 28 as it existed before the said enactment.
C	Other Enabling Provisions
1	Section 11 (2) clause (f) empowers the Central Government to prevent the injury to the economy of the uncontrolled import or export of gold or silver in the country. The clause has been amended to include the words 'any other goods' in addition to gold & silver).
2	Section 51B is inserted to provide for an Electronic Duty Credit Ledger in the custom system. This enables the issuance of suitable regulations and inserted in section 157(2) in the Act. The provisions for the recovery of duties under section 29AAA are also expanded to include the electronic credit of duties.

Comparison with International Scenarios

The basic concept of custom duties varies from country to country as the duty imposed on the goods serve as a source of additional income to the countries. The best example of the variation between the custom duties of different countries can be represented by Palau, India and Hong Kong as the tariff rate in Palau is 34.63% , India is 4.88% and Hong Kong is 0% . Thus this leads us to a basic conclusion that the international scenario of these duties are varied a lot throughout the globe.

Suggestions:

• Online Payment of other charges through TR 6 challan

  At present any payment of miscellaneous charges such as overtime charges, provisional assessment duty etc., is paid by way of TR 6 challan to be deposited through nominated bank branches.
  
  Suggestion: As a further ease of doing business, it is suggested that the present system of online payment of customs duty may be extended to the payment of miscellaneous payment such as overtime charges, cost recovery charges
   

• Introducing option to download old bill of entry / shipping bill

  Chances of importer / exporter loosing / misplacing the bill of entry/ shipping bill copies can't be ruled out. In such a case, the importer / exporter is required to approach the port of clearance to get bill of entry / shipping bill copies. There is no system whereby the exporter / importer can download the old bills of entry / shipping bill
  
  Suggestion: It is therefore suggested that an option to download copies of bills of entry / shipping bill for old period for a limited purpose of submission to banks for payment settlement and not for any other purpose may be introduced. With online transfer of shipping bill data on to DGFT server and EDPMS running in full force, requirement of bill of entry / shipping bill for any other purpose is very rare/ minimal.
   

• Online reply for drawback queries:

  At present, whenever drawback benefit is availed and the department raises any queries /objections, the exporter is required to submit the documents by personally visiting the customs office. This adds to the transaction cost of exports.
  
  Suggestion: It is therefore suggested that the two way electronic communication through which the exporter can reply the queries / objections raised in drawback matters by customs officers.

Conclusion
At the end it can be concluded that the primary purpose of customs duty is to raise revenue, safeguard domestic business, jobs, environment and industries etc. from predatory competitors of other countries. Moreover, it helps reduce fraudulent activities and circulation of black money. Custom Duty has certain primary functions: to serve as a source of revenue, to protect domestic industries, and to remedy trade distortions (punitive function for product dumping).

The revenue function income from tariffs provides governments with a source of funding. In the past this was the main function and reason for applying tariffs, but economic development and the creation of systematic domestic for instance it only accounts for about 2% of tax revenue.

Nevertheless, revenue may still be an important tariff function in underdeveloped countries. In our time tariffs are more of a trade policy tool to protect domestic industries by altering the conditions under which goods compete. A case in point are "tariff quotas" that are used to strike a balance between market access and protecting domestic industry. Tariff quotas normally work by applying low or no duties to imports up to a certain volume and then higher rates to imports that exceed that the quota level.