Introduction on Valuation under the Customs Act, 1962 :

The manner in which duties of customs are charged on goods imported into India (import duty) or goods exported from India (export duty) is basically either by way of –

(a) A specific duty based on the quantity of the goods like ` 1000 per metric tone of steel or

(b) Ad valorem, namely expressed as percentage of the value of the goods i.e 40% ad valorem. etc.

The disadvantage with a specific rated levy is that the revenue to the Government remains fixed, unless there is variation in the quantum of total imports and exports. The continuous upward trend in the price of goods has suggested that the Government is losing increase in its revenue by not following ad valorem basis of duties.