How Can I Adjust Custom Duty on Import and Export? A Smart Guide for Traders

 

⚖️ How Can I Adjust Custom Duty on Import and Export? A Smart Guide for Traders

When you're in the import-export business, custom duties can significantly affect your pricing, profit margins, and competitiveness. If you’re wondering, “How can I adjust custom duty on import and export?”, you’re not alone. Managing and optimizing customs duties is one of the smartest strategies for long-term success in global trade. https://www.arc-worldwide.com/export/sea-freight-from-india-to-peru.html

In this blog, we’ll break down what custom duties are, how they're calculated, and what you can do to reduce, reclaim, or adjust them legally and efficiently.

🧾 What Is Custom Duty?

Custom duty is a tax imposed by the government on goods as they cross international borders. It's primarily meant to: https://www.arc-worldwide.com/export/sea-freight-from-india-to-albania.html

  • Generate revenue

  • Protect domestic industries

  • Control the flow of certain goods

There are two major types of customs duty:

  • Import Duty – Charged on goods coming into the country

  • Export Duty – Charged on certain goods leaving the country (though rare in many regions)

🔍 How Is Custom Duty Calculated?

Customs duty is usually calculated on the CIF value (Cost + Insurance + Freight) for imports. Here's the basic formula:

Custom Duty = CIF Value × Applicable Duty Rate (%)

In India, other charges like IGST, Social Welfare Surcharge, and Anti-dumping Duty may also apply.

📉 How to Adjust or Reduce Custom Duty — Legally & Effectively

Here are the top methods to optimize or adjust custom duty:

1. Use of Free Trade Agreements (FTAs)

India has FTAs with countries like ASEAN, Japan, South Korea, UAE, etc.

✅ What You Can Do:

  • Check if your product qualifies for preferential tariff

  • Use a Certificate of Origin (CoO) to claim reduced duty

2. Duty Drawback Scheme (For Exporters)

The Indian Government refunds the customs/excise duties on imported goods that are later exported as finished products.

✅ Pro Tip: Maintain proper records of imported materials and finished exports to avail this benefit.

3. Export Promotion Capital Goods (EPCG) Scheme

This scheme allows import of capital goods at zero or concessional duty rates, provided you commit to export obligations.

✅ Who Should Use This?
Manufacturers and exporters setting up new plants or upgrading existing machinery.

4. Advance Authorization Scheme

Import raw materials duty-free for manufacturing export products.

✅ Best For: Exporters dealing in high-volume raw material imports like textiles, pharmaceuticals, and food processing.

5. Correct HS Code Classification

Duty rates depend on the HS (Harmonized System) Code you declare. A wrong HS code can result in overpayment.

✅ Action Step: Double-check your product classification with a customs expert or DGFT notification.

6. Set Up in a Special Economic Zone (SEZ)

SEZ units enjoy duty-free import benefits and tax exemptions.

✅ Why It’s Attractive:

  • No import/export duty

  • Exemption from GST and other local taxes

7. Negotiate with Suppliers for Lower CIF

Since duty is calculated on CIF value, lowering insurance or freight cost can reduce your duty liability.

✅ Pro Tip: Explore FOB (Free on Board) terms instead of CIF and manage logistics independently for cost savings. https://www.arc-worldwide.com/export/sea-freight-from-india-to-malawi.html

🧠 Expert Tips to Manage Custom Duty Smoothly

  • ✅ Always stay updated with the CBIC (Central Board of Indirect Taxes & Customs) website

  • ✅ Hire a customs clearance agent for documentation and declarations

  • ✅ Avoid under-invoicing — it's illegal and can result in heavy penalties

  • ✅ Use ICEGATE to track duty payments and check past records

  • ✅ Attend DGFT webinars or trade seminars to stay informed about new schemes

💼 Example Scenario

Imagine you're importing textile machines from Germany worth ₹50,00,000.

Instead of paying full import duty:

  • You apply under EPCG Scheme

  • Duty drops from 25% to just 5%

  • You save ₹10+ lakh and meet export obligations over 6 years

Smart planning = Massive savings

📌 Conclusion

Custom duty doesn’t have to be a burden — if you understand the system, you can work with it to benefit your business. With the right certifications, smart sourcing, and government schemes, you can save lakhs every year.https://www.arc-worldwide.com/export/sea-freight-from-india-to-rwanda.html

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