The Hon’ble FM in the Union Budget 2021 announced the introduction of a New Cess for financing agricultural infrastructure and development expenditure called Agricultural Infrastructure and Development. The said Cess has been made applicable to 25 items effective from February 02, 2021.
FINANCE BILL 2021
THE IMPOSITION OF AIDC AS A CUSTOMS DUTY
The introduction of AIDC was undertaken through Clause 115 of the Finance Bill 2021, which is extracted and analysed as under:
“(1) There shall be levied and collected, in accordance with the provisions of this section, for the purposes of the Union, a duty of customs, to be called Agriculture Infrastructure and Development Cess, on the goods specified in the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as the Customs Tariff Act), being the goods imported into India, at the rate not exceeding the rate of customs duty as specified in the said Schedule, for the purposes of financing the agriculture infrastructure and other development expenditure. “
At the outset, the AIDC, though called a cess is a duty of Customs by itself.
The first schedule of the Customs Tariff Act, 1975 specifies the HS code of all the Products with the respective description and applicable Tariff rates.
Although the AIDC has been levied on 25 Items, the Basic customs duty on those items have been reduced to ensure that the imposition of AIDC and the rates of BCD are well calibrated.
“(3) Where the duty is leviable on the goods at any percentage of its value, then, for the purposes of calculating the Agriculture Infrastructure and Development Cess under this section, the value of such goods shall be calculated in the same manner as the value of goods is calculated for the purpose of customs duty under section 14 of the Customs Act, 1962.”
THE VALUE ON WHICH AIDC IS PAYABLE
Section 14 of the Customs Act, 1962 specifies the method of determining the assessable value of Import transactions on which custom duty would be levied. Therefore, AIDC would be levied as a percentage of the Transaction value as derived under the provisions of Section 14. It is relevant to mention here that the AIDC though a cess, is required to be paid on the assessable value itself.
Since AIDC is a duty of customs and levied on the value, as derived under section 14 of the Customs act, 1962, all the provisions, rules and regulations that applies to the duties of customs, would apply to the AIDC as well.
The Social Welfare Surcharge is levied on the AIDC, with the exception of Gold and Silver.
It is also pertinent to note that the AIDC being a customs duty has not been made available as a credit and therefore would have to be treated as a Tax Cost.
| Sl.No | Heading, sub-heading tariff item | Commodity | Basic customs duty | AIDC |
|---|---|---|---|---|
| 1 | 0808 10 00 | Apples | 15% / 35%* | 35% |
| 2 | 1511 10 00 | Crude Palm Oil | 15% | 17.5% |
| 3 | 1507 10 00 | Crude Soya-bean oil | 15% | 20% |
| 4 | 1512 11 10 | Crude Sunflower seed oil | 15% | 20% |
| 5 | 0713 10 | Peas(Pisum sativum) | 10% | 40% |
| 6 | 0713 20 10 | Kabuli Chana | 10% | 30% |
| 7 | 0713 20 20 | Bengal Gram (desichana) | 10% | 50% |
| 8 | 0713 20 90 | Chick Peas (garbanzos) | 10% | 50% |
| 9 | 0713 40 00 | Lentils (Mosur) | 10% / 30%* | 20% |
| 10 | 2204 | All goods (Wine) | 50% | 100% |
| 11 | 2205 | Vermouth and other wine of fresh grapes, flavoured | 50% | 100% |
| 12 | 2206 | Other fermented beverages for example, Cider, Perry, Mead, Sake, mixture of fermented beverages or fermented beverages and non-alcoholic beverages | 50% | 100% |
| 13 | 2208 | All goods (Brandy, Bourbon whiskey, Scotch etc.) | 50% | 100% |
| 14 | 2701 | Various types of coal | 1% | 1.5% |
| 15 | 2702 | Lignite, whether or not agglomerated | 1% | 1.5% |
| 16 | 2703 | Peat, whether or not agglomerated | 1% | 1.5% |
| 17 | 3102 10 00 | Urea | Nil | 5% |
| 18 | 3102 30 00 | Ammonium nitrate | 2.5% | 5% |
| 19 | 31 | Muriate of potash, for use as manure or for the production of complex fertilisers | Nil | 5% |
| 20 | 3105 30 00 | Diammonium phosphate, for use as manure or for the production of complex fertilisers | Nil | 5% |
| 21 | 5201 | Cotton (not carded or combed) | 5% | 5% |
| 22 | 7106 | Silver (including imports by eligible passengers) | 7.5% | 2.5% |
| 23 | 7106 | Silver Dore | 6.1% | 2.5% |
| 24 | 7108 | Gold (including imports by eligible passengers) | 7.5% | 2.5% |
| 25 | 7108 | Gold Dore | 6.9% | 2.5% |