Countervailing duty (CVD) is equal to central excise duty and is levied on imported articles produced in India. With CVD, the process of production amounts to 'manufacture' as it is defined in the Central Excise Act, 1944. CVD is based on the aggregate value of goods including landing charges and BCD. An additional CVD may be levied equivalent to sales tax or VAT, not exceeding four percent. This duty can be refunded if the importer pays all customs duties, the sales invoice indicates the credit is not allowed, and the importer pays VAT/sales tax on the sale of the good.Other CVDs may be imposed on specific imported goods to neutralize the effect of a subsidy in the country of origin. A notification issued by the central government on these specified goods is valid for five years and potentially subject to further extension not exceeding ten years. Subsidies related to research activities, assistance to disadvantaged regions in the destination country, and assistance in adapting existing facilities to new environmental requirements are exempt.

Definition: Duties that are imposed in order to counter the negative impact of import subsidies to protect domestic producers are called countervailing duties.Description: In cases foreign producers attempt to subsidize the goods being exported by them so that it causes domestic production to suffer because of a shift in domestic demand towards cheaper imported goods, the government makes mandatory the payment of a countervailing duty on the import of such goods to the domestic economy.