Special additional duty of customs [Section 3(5) of the Customs Tariff Act, 1975]

Special additional duty of customs [Section 3(5) of the Customs Tariff Act, 1975] :

This duty is known as Special CVD. This duty is in addition to basic customs duty and CVD leviable under section 3(1) and 3(3) of the Customs Tariff Act, 1975.

1. Special CVD under section 3(5)
It is the duty equal to	· Sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or transportation in India. · If a like article is not so sold, purchased or transported, taxes which would be leviable on the class/description of articles to which the imported article belongs. · Where such taxes/charges are leviable at different rates, the highest such tax/charges.
Leviable on	Any imported article
Rate of duty	Rate notified by the Central Government. Rate must not exceed 4%.
Assessable value for computing special CVD under section 3(5)	Value under section 14(1) /tariff value determined section 14(2)	xxx
	Add: Basic custom duty	xxx
	Total	xxx
	Add: CVD under section 3(1) and 3(3)	xxx
	Total	xxx
	Add: Education cess [customs]	xxx
	Add: Secondary and higher education cess [customs]	xxx
	Assessable value	xxx
The provisions of the Customs Act, 1962 and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act.

Point which merit consideration:-

Following duties would not be included while computing the assessable value for computation of CVD:-

(a) Special CVD [Section 3(5)]

(b) Safeguard duty [Sections 8B and 8C]

(d) Anti-dumping duty [Section 9A]

Statutory provisions: Provisions of section 3(5) to 3(8) of the Customs Tariff Act relating to Special CVD are enumerated as follows:-

Levy of special additional duty: If the Central Government is satisfied that it is necessary in the public interest to levy on any imported article [whether on such article duty is leviable under sub-section (1) or, as the case may be, sub-section (3) or not] such additional duty as would counter-balance the sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or transportation in I ndia, it may, by notification in the Official Gazette, direct that such imported article shall, in addition, be liable to an additional duty at a rate not exceeding 4% of the value of the imported article as specified in that notification [Sub-section (5)].

Meaning of sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or transportation in India

The expression “sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or transportation in India” means the sales tax, value added tax, local tax or other charges for the time being in force, which would be leviable on a like article if sold, purchased or transported in India or, if a like article is not so sold, purchased or transported, which would be leviable on the class or description of articles to which the imported article belongs, and where such taxes, or, as the case may be, such charges are leviable at different rates, the highest such tax or, as the case may be, such charge.

Valuation for additional duty leviable under section 3(5): Sub-section (6) of section 3 provides that the value of the imported article for the purpose of levying additional duty under sub-section (5) shall notwithstanding anything contained in sub-section (2), or section 14 of the Customs Act, 1962, be the aggregate of—

(i) the value of the imported article determined under sub-section (1) of section 14 of the Customs Act, 1962 or the tariff value of such article fixed under sub-section ( 2) of that section, as the case may be; and

(ii) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962, and any sum chargeable on that article under any law for the t ime being in force as an addition to, and in the same manner as, a duty of customs, but does not include—

(a) the duty referred to in sub-section (5);

(b) the safeguard duty referred to in sections 8B and 8C;

(d) the anti-dumping duty referred to in section 9A.

Provisions of Customs Act apply to additional duty: The provisions of the Customs Act, 1962 and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act [Sub-section (8)].

The duty chargeable under this section shall be in addition to any other duty imposed under this Act or under any other law for the time being in force [Sub-section (7)].

Goods cleared from SEZ / FTWZ into DTA exempt from Special CVD

All goods produced or manufactured in a Special Economic Zone (SEZ) and brought to Domestic Tariff Area (DTA), are exempt from the special CVD.

In this regard, it has been clarified that the benefit of exemption from special CVD under aforersaid notification would NOT be available when goods cleared from the SEZ / FTWZ into the DTA on stock transfer basis. The reason for the same is that when a DTA unit imports goods and routes it through SEZ/FTWZ for self-consumption i.e. in the nature of stock transfer from SEZ/FTWZ, no sales tax/VAT is leviable on such transaction, and hence, special CVD is payable [Circular No. 44/2013 Cus dated 30.12.2013].

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