Introduction to

Customs Tariff Act 1975

18th August 2025, Chennai

National Academy of Indirect Taxes and

Customs
Zonal Training Institute, Chennai
 Introduction to Customs Tariff Act 1975

CUSTOMS TARIFF ACT 1975 can be understood in two parts

PROVISIONS CLASSIFICATION

The Customs Tariff Act, 1975 provides the legal framework

for levying and collecting customs duties on imports and
exports in India. It also lays down the system for classifying
goods.
 Objectives & Importance

• To levy duties on imports and exports

• To protect domestic industries from unfair competition
• To provide a standardized classification system
• To fulfill India’s international trade obligations
• To prevent disputes and revenue leakage
• Ensures harmonized trade practices
• Provides legal certainty for importers and exporters
• Assists in trade negotiations and WTO commitments
• Facilitates transparency and predictability in trade
 PROVISIONS OF CUSTOMS TARIFF
ACT 1975 (1/2)
• Basic Customs Duty (BCD) – Sec 2 & 4 of CTA’ 75

• Additional Customs Duty – Sec 3 of CTA’ 75

Duty levied on the import of goods which is equal to Central Excise duty leviable on like
goods produced or manufactured in India

• Integrated Goods & Service Tax (IGST) – Sec 3(7) of CTA’ 75.
Any article which is imported into India shall also be liable to IGST at such rate not
exceeding 40% as is leviable under Sec 5 of the IGST Act, 2017, on a like article on its
supply in India.

• GST Compensation Cess – Sec 3(9) of CTA’ 75

In addition to IGST, the articles imported into India shall also be liable to GST Compensation
Cess at such rate, as is leviable under Sec 8 of the GST (Compensation to States) Cess Act,
2017 on a like article on its supply in India.
 PROVISIONS OF CUSTOMS TARIFF
ACT 1975 (2/2)
• Safeguard duty – Sec 8B of CTA’ 75
Imposed generally during import surges causing serious injury to domestic
industry

• Countervailing duty – Sec 9 of CTA, 75

Imposed on those goods that has enjoyed a subsidy from the country of import

• Anti dumping Duty (ADD) - Sec 9A of CTA’ 75

On any article exported by an exporter or producer from any country or
territory to India at less than its normal value
 CLASSIFICATION

The Act consists of:

• Two schedules – Import Tariff (Schedule I) and
Export Tariff (Schedule II)
• Duties: Basic Customs Duty, Additional Duty,
Safeguard Duty, etc.
• Exemptions and rules for concessional rates
 Main Facts about HSN
• HSN stands for Harmonized System of Nomenclature.
• HS Code came into effect from Jan 1, 1988.
• Developed by the World Customs Organization (WCO)
• Used by more than 200 countries.
• Updated every 5 years, Updated in 2022 with 351 amendments
• Standardizes goods classification globally
• Adopted into the Customs Tariff Act, 1975
• Forms the basis for classification under both Customs and GST
 SCHEDULE I
• 21 Sections / Section Notes
Section is a group consisting of a number of Chapters which codify a
particular class of goods
• 98 Chapters – Customs
• Chapter 99 now meant for classification of services under GST
• Chapter: 77 reserved for future use
• Heading / Sub heading/ Sub sub heading
• Chapter Notes

LET'S UNDERSTAND WITH EXAMPLES

 SECTIONS
1. Animals & Animal Products (1 13. Articles Of Stone, Plaster,
to 5) Cement, Asbestos (68 to 70) Finished products
2. Vegetable Products (6 to 14) 14. Pearls, Precious / Semi-Precious Semi finished
3. Animal or Vegetable Fats (15) products
4. Prepared Foodstuffs (16 to 24) Stones, Metals (71)
5. Mineral Products (25 to 27) 15. Base Metals & Articles Thereof Un-work products
6. Chemical Products (28 to 38) (72 to 76, 78 to 83)
7. Plastics & Rubber (39,40) 16. Machinery & Mechanical Raw
8. Hides & Skins (41 to 43) Appliances (84,85) material/Natural
9. Wood & Wood Products(44 to 17. Transportation Equipment(86 to
46) 89) Natural Man made
10. Wood Pulp Products (47 to 49) 18. Instruments – Measuring,
11. Textile & Textile Articles (50 to Musical (90 to 92)
63) 19. Arms & Ammunitions (93)
12. Footwear, Headgear (64 to 67) 20. Miscellaneous (94 to 96)
21. Works of Art (97, 98)
10
11
85 04 40 30 in 8 digits
Chapter Level (Classify to 2 digits)
85 - Chapter Electrical machinery and
equipment and parts thereof; sound
recorders and reproducers, television image
and sound recorders and reproducers, and
parts and accessories of such articles
8504 – Heading level (Classify to 4 digits)
04 - Heading ELECTRICAL TRANSFORMERS,
STATIC CONVERTERS (FOR EXAMPLE,
RECTIFIERS) AND INDUCTORS
850440 – Sub heading level(international
level) (Classify to 6 digits)
40 - Sub-heading Static converters:
85044030 – Tariff item level (unique to
country) (Classify to 8 digits)
30 - Tariff entry Battery chargers

12
13
 INSTANCES OF SECTION NOTES:
EXCLUSIONS

Section XV: Base metal and articles of base metal

Note 1: This Section does not cover:
(d) umbrella frames or other articles of heading 6603
(k) articles of Chapter 94 (for eg, furniture, mattress supports, lamps and lighting fittings,
illuminated signs, prefabricated buildings);
(l) articles of Chapter 95 (for eg, toys, games, sports requisites);
(n) articles of Chapter 97 (for example, works of art).

14
INSTANCES OF CHAPTER NOTES:
EXCLUSIONS

15
INSTANCES OF CHAPTER NOTES: INCLUSIONS & DEFINITION

16
SCHEDULE II

17
 GENERAL RULES OF
INTERPRETATION (1/8)
• There are six Rules for interpretation of the Tariff..
• Rule 1 takes precedence over all the following Rules.
• Rule 1 – classification to be determined by the terms of the Heading
and of the Section or Chapter Notes.
• Only where the terms of the headings or Section/Chapter Notes do not
otherwise require, other Rules come into play.
• Eg: Cotton handkerchiefs 62.13 ; Dentist Chair 94.02 ; Tomato 07.02
GENERAL RULES OF INTERPRETATION
(2/8)

19
 GENERAL RULES OF
INTERPRETATION (3/8)
Rule 2

Rule 2(b): Mixtures/

Rule 2(a):
Combination of materials and
incomplete/unfinished,
substances/Goods consisting
unassembled/disassembled
of two or more materials or
products and finished product;
substances. Eg. dicalcium
provided they are having the
citrate; essential character is
essential character of the
of salts of citric
finished product

Rule doesn’t apply if excluded In case a mixed product may seem

in heading/section notes to be eligible for classification under
Example: Automobile without two or more Headings. Then Rule 3
tyres / Bicycles without is applicable for finding alternate
classification.
saddle/tyres
 GENERAL RULES OF
INTERPRETATION (4/8)
Rule 3

Rule 3(b): applies to mixtures, When Rule 3(a) & 3(b) not
Rule 3(a): heading with the
composite goods and sets that applicable; heading which
most specific description.
cannot be classified by use of occurs last in numerical order
General over specific
the previous Rules; heading equally merit consideration
which gives essential character

Example: Liquor Gift Set Example: A gift set which includes socks
(Heading number 6115) and ties
Example: Mint Tea. (having Liquor & glass); Lead (Heading number 6117); Stationery sets
12.11-Mint/09.06-Tea pencil with an eraser at the (Diary with pen) Diary – 48; Pen -96
back; Pasta Mix;
 GENERAL RULES OF
INTERPRETATION (5/8)
SMART WATCH:
 GENERAL RULES OF
INTERPRETATION (6/8)
RULE 4:
Goods which cannot be classified in accordance with the above Rules shall be classified under
the heading appropriate to the goods to which they are most akin.

Example: This is a "last resort" rule, most often used with new products.

Plastic films for filtering or removing glare of sun light pasted on car glass windows, window
panes etc
CTH 3925 Builders ware of plastic not elsewhere specified or included
CTH 3925 30 00 Shutters, blinds (including venetian blinds) and similar articles and parts
thereof
 GENERAL RULES OF
INTERPRETATION (7/8)
Rule 5

Rule 5(a):deals with containers which: Rule 5(b): classified with the
Are
• shaped or fitted for the article they goods, if they are of a kind
will contain, normally used for packing such
• are suitable for long-term use, goods
• protect the article when not in use,
• are of a kind normally sold with Doesn’t apply to containers
such articles, suitable for repetitive use
• are presented with the articles they
are designed to contain.

Example: Musical instrument Example: Wine bottle/

case/ Gun case/ Necklace Styrofoam chips
case/Camera case
 GENERAL RULES OF
INTERPRETATION (8/8)
RULE 6:

For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the
terms of those subheadings and any related Subheading Notes and mutatis mutandis, to the above Rules, on the
understanding that only subheadings at the same level are comparable. For the purpose of this Rule the relative Section
and Chapter Notes also apply, unless the context otherwise requires.

Explanation: Once goods have been classified to the Heading level by the use of international Rules 1 to 5, then
classification to the Subheading level can now take place by repeating international Rules 1 to 5 and taking into account
any related Legal Notes.
Questions / Any Thoughts?
HOME WORK:
Whether ‘parts of car seats’ falls under CTI
9401 9900 (Importer) or are accessories of
motor vehicles coming under CTI 8708 9900
(Department)