Rules 1 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Countervailing duty (CVD) is the Indian response to subsidised imports that injure domestic producers. Rules 1 to 5 set the vocabulary and the people involved: the title and start date, the definitions of domestic industry, interested party, like article and specified country, the appointment and five duties of the designated authority, and a rule that treats goods routed through an intermediate country as coming from the country of origin.
This article reads the rules as amended up to Notification No. 51/2024-Customs (N.T.) dated 23 July 2024 (rule 23A, in force 24 July 2024). Later notifications should be checked before you rely on the current text.
The rules came into force on 1 January 1995. Rule 2 defines domestic industry, interested party, like article, period of investigation and specified country. Rule 3 lets the Central Government appoint a designated authority not below Joint Secretary rank. Rule 4 gives it five duties, from investigating subsidy to reviewing continuance. Rule 5 says imports through an intermediate country are treated as made between the country of origin and India.
Rule 1: title and start date
Rule 1(1) gives the title: Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Rules, 1995. Rule 1(2): they came into force on the 1st day of January, 1995. The rules are made under section 9(7) and section 9B(2) of the Customs Tariff Act, 1975, and supersede the 1985 rules on bounty-fed articles, except for things done before that supersession. The Act's own text is outside this article. For a general introduction to how these duties sit beside safeguard and anti-dumping duties, see our explainer on safeguard and countervailing duty.
Rule 2: definitions
| Clause | Term | Meaning as printed |
|---|---|---|
| (a) | Act | The Customs Tariff Act, 1975 (51 of 1975) |
| (b) | Domestic industry | Domestic producers as a whole engaged in making the like article, or those whose collective output is a major proportion of total domestic production, except when related to exporters or importers of the alleged subsidised article, or of the like article from other countries, or importers themselves, in which case it may be read as the rest of the producers |
| (c) | Interested party | Exporters, foreign producers and importers of the article, trade or business associations whose majority members are such persons, and producers of the like article in India or their majority-member associations |
| (ca) | Like article | Identical or alike in all respects to the article under investigation, or, if none, one with characteristics closely resembling it |
| (cb) | Period of investigation | The period during which the existence of subsidisation is examined |
| (d) | Provisional duty | Countervailing duty imposed under section 9(2) of the Act |
| (e) | Specified country | A country or territory that is a WTO member, including one with which India has an agreement for most favoured nation treatment |
| (f) | Other words | Carry the meaning given in the Act |
Domestic industry and related producers
The proviso to clause (b) refers to the exceptional circumstances in rule 13(3): the domestic industry may be taken to comprise two or more competitive markets, each a separate industry, if producers in a market sell all or almost all of their output there and demand in that market is not to any substantial degree met by producers elsewhere in the territory. The Explanation says producers are related to exporters or importers only if one controls the other, both are controlled by a third person, or together they control a third person, in the last case only where the relationship is likely to make them behave differently from unrelated producers. The Note says a producer controls another when it is legally or operationally in a position to exercise restraint or direction over it.
The footnotes show that clause (b), the Explanation and clauses (ca) and (cb) came in through Notification No. 10/2020-Cus. (N.T.) dated 2-2-2020, and the words on the rest of the producers through Notification No. 11/2021-Cus. (N.T.) dated 1-2-2021.
A difference from the anti-dumping rules
The CVD definition of interested party does not list the government of the exporting country, while the anti-dumping definition does; instead, the CVD rules deal with the government of the exporting country through consultation in rule 6A and through notifications at initiation. See our article on Rules 1 to 4 of the anti-dumping rules for the other side of the comparison.
Rule 3: the designated authority
Rule 3(1): the Central Government, by notification in the Official Gazette, appoints as designated authority a person not below the rank of a Joint Secretary to the Government of India, or such other person as that Government may think fit. Rule 3(2): it may provide the services of other persons and such facilities as it deems fit.
Rule 4: the five duties
It is the duty of the designated authority, in accordance with the rules:
- (a) to investigate the existence, degree and effect of any subsidy in relation to the import of an article;
- (b) to identify the article liable for countervailing duty;
- (c) to submit findings, provisional or otherwise, to the Central Government as to (i) the nature and amount of subsidy for the article under investigation and (ii) the injury or threat of injury to an industry established in India, or material retardation to the establishment of an industry in India, consequent upon imports from specified countries;
- (d) to recommend the amount of countervailing duty which, if levied, would be adequate to remove the injury to the domestic industry, and the date of commencement; and
- (e) to review the need for continuance of countervailing duty.
As with anti-dumping, the authority investigates and recommends; the levy is for the Central Government. The "nature and amount" of subsidy are dealt with in rules 11 and 12 and their annexures, covered in our article on countervailable subsidies and their amount.
Rule 5: country of origin
Where articles are not imported directly from the country of origin but from an intermediate country, the rules are fully applicable and the transaction is regarded, for the purposes of the rules, as having taken place between the country of origin and the country of importation. In practice, this means that routing goods through a third country does not take them outside an investigation into the origin country's subsidy.
An example: Janus Textiles imports fabric made in Country A but shipped via a trading hub in Country B. If Country A's producers are under a CVD investigation, rule 5 treats the purchase as a transaction between Country A and India, so the rules apply fully to that import.
What this means for you
| Reader | Practical point |
|---|---|
| Domestic producers | Read rule 2(b) and the related-producer Explanation before filing; support levels matter in rule 6 |
| Importers | You are an interested party under rule 2(c) and should watch for notices |
| Exporters and foreign producers | Rule 5 means routing through another country does not change the origin treatment |
| Consultants | The five rule 4 duties map the stages of any case |
Initiation is covered in Rules 6 to 10. If you are facing or considering a CVD case, our legal consultation team can help you map the steps.
Need help with a countervailing duty matter?
Whether you are a producer weighing an application or an importer whose supplier is named in a CVD notice, early advice helps. Our legal consultation team can explain how the definitions and rule 5 apply to your supply chain.
Key takeaways
- The CVD rules came into force on 1 January 1995 and replaced the 1985 bounty-fed rules.
- Domestic industry can exclude producers related to exporters or importers, or who import the article.
- Interested party covers exporters, foreign producers, importers, and Indian producers of the like article, with their associations.
- The designated authority must be at least Joint Secretary rank unless the Government decides otherwise.
- Its five duties run from investigating subsidy to reviewing continuance.
- Imports through an intermediate country are treated as coming from the country of origin.
Read next
- Rules 6-10: initiation, consultation and investigation principles
- Anti-dumping rules 1-4: definitions and the designated authority
- Safeguard and countervailing duty explained
- Types of customs duty: BCD, IGST, safeguard, anti-dumping
Disclaimer: Based on the Customs Tariff Act rules named above as published on the CBIC Tax Information Portal or in the Gazette, with the 2024 amendment to the countervailing duty rules read through a TaxClue consolidated reading text (no official consolidated text exists), as consulted on 3 October 2026. Later notifications, duty notifications and the Customs Tariff Act, 1975 should be checked. This article is general information, not legal advice; check the official text before acting.