While excise duty is a tax levied on the production, sale, or consumption of goods within a country, customs duty is a tax levied on goods imported into a country from abroad.
Typically, excise duties apply to specific goods such as alcohol, tobacco, fuel, and luxury items, and are used by authorities as a means to discourage their consumption while generating revenue.
Customs duties apply to almost all goods imported into a country. Certain products such as vital medicines and food grains are exempt from import taxes.
Excise duties are collected at the point of manufacture or importation, whereas customs duties are collected at the point of entry into the country.
While both types of duties generate revenue for the exchequer, the main purpose of excise duties is to achieve certain social or economic objectives and to protect domestic industries from foreign competition in the case of customs duties.