Customs & Tariff Advisory in India

Customs is where India’s trade regulation bites hardest. Every import and export is classified, valued and assessed, and the duty, the documentation and the compliance position can be revisited long after goods have cleared. For businesses trading along the India–UAE corridor, getting customs right is the difference between predictable landed costs and unexpected demands, holds and penalties.

ATB Legal advises importers, exporters, manufacturers and traders on India customs compliance and on the disputes that follow – classification and valuation, faceless assessment, related-party pricing, investigations and show-cause notices, and appeals through to the Tribunal. We act both to keep clearances clean and to defend demands when they come.

1. The India Customs Framework

Imports and exports are governed by the Customs Act 1962, administered by the Central Board of Indirect Taxes and Customs (CBIC). Goods are classified under the Customs Tariff Act 1975 using the Harmonized System of Nomenclature (HSN), and a typical import attracts several levies: Basic Customs Duty (BCD), IGST under the GST law, the Social Welfare Surcharge (generally 10% of the aggregate customs duties), and, on notified goods, the Agriculture Infrastructure and Development Cess (AIDC).

The combined effect of these levies – and the classification and valuation that drive them – determines the landed cost. ATB Legal advises on the duty position for specific goods and on the compliance steps that keep clearances predictable.

2. Classification & Valuation

Two questions drive almost every customs outcome: how goods are classified under the HSN, and how they are valued. Valuation is governed by the Customs Valuation Rules 2007, with transaction value – broadly the price paid or payable, adjusted as the rules require – as the primary basis. Where the importer and the overseas supplier are related, the import is referred to the Special Valuation Branch (SVB), which examines whether the relationship has influenced the price.

Classification disputes and SVB proceedings are among the most consequential customs issues, because they affect every consignment of a product line. ATB Legal advises on classification and valuation positions, on SVB references for related-party imports, and on evidencing the position so it holds up on audit.

3. How India import duty is calculated

India import duty is built up in layers, each calculated on a different base. The order matters, because integrated GST is charged on a value that already includes the customs duties.

1. Assessable value. Customs value is the transaction value under section 14 of the Customs Act 1962 and the Customs Valuation Rules 2007, including the cost of transport and insurance to the place of importation (in effect, a CIF value converted at the customs exchange rate). Since 26 September 2017, loading, unloading and handling charges at the place of importation are no longer added [1].
2. Basic customs duty (BCD). The tariff rate for the goods’ eight-digit classification in the First Schedule to the Customs Tariff Act 1975, or a lower rate under an exemption or trade-agreement notification. After Budget 2025-26 there are eight tariff rates for industrial goods, including zero [2].
3. Social Welfare Surcharge (SWS). 10% of the aggregate customs duties levied under section 12 of the Customs Act, which in practice means 10% of BCD. Anti-dumping, countervailing and safeguard duties are excluded from its base, and IGST and the GST compensation cess are exempt from it. Some goods are exempt from SWS or pay a lower rate, and Budget 2025-26 removed SWS from 82 tariff lines that already carry a cess (for example the Agriculture Infrastructure and Development Cess), so that no line bears more than one cess or surcharge [2][3][4][5].
4. Other duties where they apply. Agriculture Infrastructure and Development Cess or Health Cess on notified goods, and anti-dumping, countervailing or safeguard duty on specified goods and origins.
5. Integrated GST (IGST). Charged under section 3(7) of the Customs Tariff Act at the rate that applies to a like domestic supply, on the assessable value plus BCD, SWS and any other customs duties (but not IGST itself or the compensation cess) [6]. A GST-registered importer can normally take input tax credit for the IGST, so it is usually a cash-flow cost rather than a final one; BCD and SWS are not creditable.

Worked example (illustrative). A machine classified in Chapter 84 is imported with an assessable value of INR 10,000,000 (about GBP 78,740). Assume BCD of 7.5%, SWS at 10% of BCD and IGST of 18%, which are typical for machinery but must be checked for the actual tariff line.

If the same machine qualified for a hypothetical 0% preferential BCD under a trade agreement, BCD and SWS would both fall to nil and IGST would be 18% × 10,000,000 = INR 1,800,000, a saving of INR 825,000 in customs duty and INR 148,500 in (usually creditable) IGST.

Claiming a preferential rate needs origin proof. A lower rate under a free trade agreement, such as the India–UAE CEPA or the UK–India CETA in force since 15 July 2026, applies only if the goods meet that agreement’s rules of origin [7]. Under section 28DA of the Customs Act and the Customs (Administration of Rules of Origin under Trade Agreements) Rules 2020 (CAROTAR, in force since 21 September 2020), the importer must declare the claim in the bill of entry, hold enough information to show how the origin criteria are met, and produce it if customs asks; a certificate or declaration of origin alone does not discharge that duty [8]. If the claim fails, the full duty is payable. For the India–UK origin rules and claim steps, see India–UK trade deal (CETA) in force: what UK businesses can use now; for the EU–India agreement, which is concluded but not yet in force, see EU–India trade deal (2026).

Sources for this section

1. CBIC Notification No. 91/2017-Customs (N.T.), 26 September 2017, amending rule 10(2) of the Customs Valuation Rules 2007, as explained in Jawaharlal Nehru Custom House Public Notice No. 132/2017 (12 October 2017) — https://www.jawaharcustoms.gov.in/pdf/PN-2017/PN_132.pdf
2. PIB, “Union Budget 2025-26 proposes to remove seven customs tariff rates for industrial goods” (1 February 2025: eight tariff rates including zero; not more than one cess or surcharge; SWS exempted on 82 tariff lines subject to a cess) — https://www.pib.gov.in/PressReleasePage.aspx?PRID=2098364&reg=48&lang=2
3. Finance Act 2018, section 110 (Social Welfare Surcharge at 10% of the aggregate of duties, taxes and cesses levied under section 12 of the Customs Act, excluding safeguard, countervailing and anti-dumping duty) — https://incometaxindia.gov.in/Acts/Finance%20Acts/2018/102120000000072059.htm
4. Notification No. 13/2018-Customs, 2 February 2018 (SWS exemption on IGST under s.3(7) and GST compensation cess under s.3(9) of the Customs Tariff Act) — https://indiabudget.gov.in/budget2018-2019/ub2018-19/cen/cus1318.pdf ; Notifications 11/2018 and 12/2018-Customs (full and partial SWS exemptions for specified goods)
5. Bengaluru City Customs, Public Notice No. 03/2026-Customs (4 February 2026), on Budget 2026-27 notifications 01–03/2026-Customs (changes to SWS/AIDC lists limited to specified goods; no change to the general structure) — https://bangalorecustoms.gov.in/wp-content/uploads/2026/02/bcc_pn_03_2026.pdf
6. Taxation Laws (Amendment) Act 2017 (No. 18 of 2017), inserting section 3(7) and 3(8) into the Customs Tariff Act 1975 (IGST on imports; value = section 14 value plus customs duties, excluding IGST and compensation cess) — https://prsindia.org/files/bills_acts/bills_parliament/2017/Taxation%20Laws%20(Amendment)%20Act,%202017.pdf
7. CBIC Notification No. 62/2026-Customs (N.T.), 3 July 2026: Customs Tariff (Determination of Origin of Goods under the India–UK CETA) Rules 2026, in force 15 July 2026
8. CBIC Notification No. 81/2020-Customs (N.T.), 21 August 2020 (CAROTAR 2020, in force 21 September 2020), as explained in Jawaharlal Nehru Custom House Public Notice No. 114/2020 — https://www.jawaharcustoms.gov.in/pdf/PN-2020/PN-114-2020.pdf

4. Clearance, Faceless Assessment & Post-Clearance Audit

India assesses most imports through faceless, anonymised assessment – consignments are routed by the Risk Management System to remotely located officers rather than the port of entry. Clearance is not final: post-clearance audit allows customs to scrutinise classification, valuation and origin after goods are released, and to raise demands for any shortfall.

ATB Legal advises on clearance and documentation, on responding to faceless-assessment queries, and on post-clearance audits – including the recurring exposures that a single classification or valuation view can create across past imports.

4. Import/Export Compliance & Restricted Goods

Not all goods move freely. Under the ITC(HS) schedule, goods are Free, Restricted, Prohibited or channelled through State Trading Enterprises, and restricted items need a DGFT authorisation before import. Export controls, licensing and the Importer-Exporter Code sit with the DGFT regime, addressed on our DGFT and SCOMET page, and preferential duty under the India–UAE CEPA is addressed on our India–UAE CEPA page.

ATB Legal advises on whether goods are freely importable or restricted, on the authorisations required, and on the interface between customs clearance and the other approvals – product standards, licences and origin – that a consignment may need.

5. DRI Investigations & Show-Cause Notices

Customs enforcement in India is led, for significant matters, by the Directorate of Revenue Intelligence (DRI), which investigates suspected duty evasion and misdeclaration and issues show-cause notices under Section 28 of the Customs Act. Following a Supreme Court ruling in late 2024 restoring DRI officers’ authority to issue such notices, a large volume of demands has been revived – making a considered response to a DRI notice more important than ever.

ATB Legal advises on responding to DRI investigations and show-cause notices – the factual and legal reply, the classification or valuation defence, and the conduct of the adjudication – with the aim of resolving exposure at the earliest effective stage.

6. Duty Demands, Penalties & Disputes

A customs dispute typically crystallises in a demand: differential duty on a reclassification or revaluation, often with interest, penalty and, in some cases, confiscation or a redemption fine. These can arise at assessment, on audit, or from an investigation, and they frequently reach back across earlier consignments.

ATB Legal assesses the merits of a demand, frames the response, and pursues the available remedies – and, where the position is sound, defends it through to the Tribunal rather than conceding avoidable liability.

7. Appeals & Advance Rulings

Customs decisions can be challenged through a defined route: from the adjudicating officer to the Commissioner (Appeals), then to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), with further appeal to the High Court or Supreme Court on questions of law. For certainty before importing, the Customs Authority for Advance Rulings (CAAR) can rule on classification, valuation or origin questions in advance, with appeals from CAAR going to the High Court.

ATB Legal advises on the appeal strategy and represents importers through the objection, appeal and advance-ruling processes – choosing, where it helps, to fix the position prospectively through an advance ruling rather than litigate each consignment.

8. Our Process

A typical engagement runs in four steps: a review of the goods, the classification and valuation, and the trade flow; advice on the compliance position before goods move, including SVB and any authorisations; support at clearance and on faceless-assessment and audit queries; and representation in investigations, demands and appeals when they arise. Corridor matters are coordinated with our UAE customs team. Remote handling is available throughout.

Frequently asked questions