Smartphone Display Assembly With Matching Parts To Attract 15% Import Duty, Says CBIC

Importation of mobile phone display assemblies, which are equipped with items such as speakers, SIM tray and power key, will incur a Basic Customs Duty (BCD) of 15%, said the Central Board of Excise and Customs (CBIC). The CBIC said there have been instances of misrepresentation when importing cellular mobile phone display assemblies. Currently, the assembly of mobile phone screens is subject to a 10% customs duty and zero duty on imports of inputs or parts separately intended for use in the manufacture of a display assembly .

The display assembly of a cellular mobile phone consists of a touch screen, protective glass, LED backlight, FPC (flexible printer circuit) specifically needed to make the functions display and brightness enhancement film.

In a circular to field offices, the CBIC said that if a cell phone display assembly is imported with just a metal or plastic back support frame attached, it will attract 10% BCD.

However, the metal/plastic rear support frame, if imported individually, will attract a 15% BCD.

“If anything else like the SIM tray, antenna pin, speaker net, power key, slider switch, battery compartment, flexible printed circuits (FPC) for volume , power, sensors, speakers, fingerprints, etc., come equipped with a display assembly with or without a metal/plastic back support frame, then the whole assembly attracts a rate of BCD by 15%,” the CBIC said.

Such an assembly, consisting of a display assembly and any other parts, is not eligible for the 10% BCD preferential rate, the CBIC said.

EY India tax partner Saurabh Agarwal said this clarification brings certainty of taxation to mobile phone manufacturers for future imports who have long been at odds with customs officers over determining the appropriate BCD rate of the modules. display assembly.

“What needs to be assessed is how this would play out in court and impact existing litigation, as the additional cost of BCD (if any) on past imports would not be recoverable from customers but should be borne only by importing manufacturers,” Agarwal added.

Abhishek Jain, Partner Indirect Tax at KPMG in India, said, “Ensuring that customs classification is done appropriately and that there is no customs evasion is critical for the successful implementation of the PMP. and the Make In India program. is important to ensure that time-consuming investigations do not affect business operations.

“This circular should provide great clarity regarding the classification of display assembly, which has been an issue in the past for the electronics industry. The circular clearly establishes, with a schematic presentation, the extent to which integration will be considered when assembling the display, and beyond that will they be considered part of cellular devices.” Mobile device industry body India Cellular & Electronics Association (ICEA) said the circular will send a positive message to all investors – Indian and global.

The government had notified a Staged Manufacturing Program (SMP) in 2016 for the manufacture of mobile phones to build the manufacturing capacity and increase domestic value addition in the country.

In accordance with the PMP, the BCD on display assembly was imposed on October 1, 2020 and display assembly parts remained exempt.

The ICEA said the Department of Electronics and Computers (Meity) has also submitted a document to the Department of Revenue that details the major components of the display assembly on which BCD will be exempt.

“However, the field formations arrived at an interpretation that differed from the document and initiated investigations against most of the manufacturers. The ICEA has taken up this matter with the competent authorities. to all these challenges,” the ICEA said. .

The industry body, whose members include the likes of Apple, Vivo and Lava, said Electronics and IT Minister Ashwini Vaishnaw led the issue to find the solution to the challenge facing industry players were faced with due to different interpretations by various authorities.

“This circular is a great relief to the industry and will avoid unnecessary litigation. We also remain deeply grateful that the Department of Revenue has acknowledged MeitY’s perspective on this critical issue,” said ICEA Chairman, Pankaj Mohindroo.


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