The Central Board of Indirect Taxes and Customs (CBIC) has said that import of mobile phone display assemblies equipped with items such as speakers, SIM trays and power keys will attract a basic customs duty of 15 per cent (BCD). CBIC said that there have been cases of wrong declaration while importing display assembly of cellular mobile phones. At present, display assembly of mobile phones attracts a customs duty of 10 per cent, and import of separate inputs or parts for manufacturing of display assembly attracts zero duty.
The display assembly of a cellular mobile phone consists of a touch panel, cover glass, LED backlight, FPC (Flexible Printer Circuit), which is specifically required to render the display function and the brightness-enhancing film.
CBIC in a circular to field offices said that if the display assembly of mobile phone is imported only with back support frame of metal or plastic, it will attract 10 per cent BCD.
However, a metal/plastic back support frame, if imported separately, will attract a BCD of 15 per cent.
“If any other items such as SIM tray, antenna pin, speaker net, power key, slider switch, battery compartment, flexible printed circuits (FPCs) for volume, power, sensor, speaker, finger print etc., are fitted with the display With or without a metal/plastic back support frame, the entire assembly attracts a BCD rate of 15 per cent,” the CBIC said.
CBIC clarified that such assemblies, including display assembly and any other parts, are not eligible for the benefit of concessional rate of 10 per cent BCD.
Saurabh Agarwal, tax partner, EY India, said this clarification brings certainty of taxation for future imports to mobile phone manufacturers, who have long been at loggerheads with customs officials to determine the appropriate BCD rate of display assembly modules. are.
“There is a need to assess how this will unfold in the courts and affect the existing litigation as the additional BCD cost (if any) on past imports will not be recoverable from the customers, but will be borne by the producer importers only. Will happen”. Agarwal added.
Abhishek Jain, Partner, Indirect Taxes, KPMG in India, said: “Ensuring that customs classification is done appropriately and there is no duty evasion is critical for the successful implementation of the PMP and Make in India programme. Also, It is important to ensure that tedious investigations do not affect business operations.
“This circular should provide sufficient clarity regarding the classification of display assemblies, which has been an issue in the past for the electronics industry. The circular clearly states with a diagrammatic presentation the extent to which integration into display assemblies is to be considered. will be, and beyond what point it will be considered as part of cellular equipment.” Mobile device industry body India Cellular and Electronics Association (ICEA) said the circular will send a positive message to all investors – Indian and global.
The government had in 2016 notified a phased manufacturing program (PMP) for mobile phone manufacturing to create manufacturing capacities in the country and increase domestic value addition.
According to the PMP, the BCD on the display assembly was fitted on October 1, 2020 and parts of the display assembly were exempted.
ICEA said that the Ministry of Electronics and IT (Meity) has also submitted a document to the Department of Revenue detailing the key components of the display assembly on which the BCD will be exempted.
“However, Field Formation arrived at an interpretation that differed from the document and initiated investigations against most of the manufacturers. ICEA took up the issue with the relevant authorities. This clarification, we hope, sets all such challenges to rest. Will do,” ICEA said..
The industry body, whose members include companies such as Apple, Vivo and Lava, said Electronics and IT Minister Ashwini Vaishnav led the issue to find a solution to the challenge that has been faced by the industry due to different interpretations by different officials. The players were facing
Pankaj Mohindroo, President, ICEA said, “This circular is a major relief to the industry and will avoid unnecessary litigation. We also deeply appreciate that the Department of Revenue has accepted the views of MeitY on this important issue. “
