This duty, commonly referred to as countervailing duty (CVD), is levied on imported goods in terms of section 3 of the Customs Tariff Act, 1975 and is equal to the Central Excise duty leviable on the like goods if produced or manufactured in India. In cases where like article is not so produced or manufactured in India, this duty will be at such rate which is leviable on the class or description of articles to which the imported article belongs. If there is more than one rate of excise duty, then the rate to be applied will be the highest. This duty is calculated on a value base of aggregate of value of the goods including landing charges and basic customs duty. Other duties such as anti-dumping duty, safeguard duty, additional customs duty of 4% etc. are not taken into account.
In the case of goods covered by provisions of the Standards of Weights and Measures Act, 1976, the value base would be the retail sale price declared on the package of the goods less the rebate as notified under section 4A of the Central Excise Act, 1944 for such goods. From 01.03.2001, packaged consumer goods are being charged to this duty on the basis of their Maximum Retail Price (MRP) in India and are also required to conform to Bureau of Indian Standards (BIS) quality standards and MRP labeling. In the case of alcoholic liquors, the additional duty at present is chargeable at a uniform rate as specified by the Central Government irrespective of varying rates in force in the States.