What is Custom Duty and Clearance Charges

Custom Duty/ Custom charges

Custom duty is a duty on goods “imported into India” or “Exported from India” at rate specified under the Schedule I and Schedule II of custom tariff Act, 1975.

Import Duty is the tax imposed on the import of goods as contained in Schedule I and Includes Basic Custom Duty, Protective Duty, Anti-Dumping duty, Compensation Cess;

Schedule I contains general rates and the Concessional Rates (rates for import form most favored nations subject to submission of certificate of origin to the custom department)

Export Duty is the tax imposed on the export of goods as contained in Schedule II.

Import Export Code

IEC is a 10 Digit mandatory reference number for importer or exporter for Import into or export from India. It is issued by the DGFT (Director General of Foreign Trade). 

Cases where IEC Code is not required

  • The goods exported or imported is for personal purposes 
  • Any commercial purpose 
  • Export/Import done by the Government of India Departments and Ministries and Notified Charitable institutions 

IEC Offers Certain Benefits Including

  • Globalization of business;
  • Valid till revoked;
  • Easy Processing;
  • No Periodical Compliance


Custom Authorities:  While Clearing Import shipment; 

BANK: While sending money abroad;

Calculation of Custom Duty

Custom duty = Assessable Value* x Rate of Duty**

* Sec 14(1) provides that the Transaction Value is Assessable Value if buyer and seller are not related person and price is the sole consideration

Transaction value is the price actually paid or payable under the up to the place of importation/ Exportation as the case may be. 

** Rate of Duty is provided under Schedule I for imports and Schedule II for Exports

Relevant Date for Determining the Rate of Duty is calculated under sec 15

Custom Clearance

Every Consignment which crosses the border has to provide for clearance duty before such import or export as the case may be. Customs clearance includes obtaining, preparing, and submitting the documentation required to facilitate export procedures and imports into the country, informing the client about the customs examination, evaluation, and payment of duty, and bringing the cargo into the country after it has been cleared with documentation.

Custom clearance is mandatory for all international delivery of commercial goods

Customs clearance process is required in the following cases:

  • Wherever the goods are loaded for exports.
  • Sea and Airports
  • International courier services in Airports 
  • Wherever the goods are unloaded for the imports 
  • Coastal ports
  • Land and Sea customs stations 
  • Those places which have inland import of the goods 

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