New Budget 2008 Changes in Customs Duty.
New Budget 2008 Changes Customs matters
Export Duty:
(Clause 72 (ii) of the Finance Bill) The rate of Export duty on chromium ores and concentrates, all sorts, has been
increased from Rs.2000 PMT to Rs.3000 PMT.
Project Imports:
Basic customs duty on project imports attracting 7.5% has been reduced to 5%. This would apply to industrial projects; power transmission, sub-transmission and distribution projects; power transmission projects of 66KV and above; as well as certain projects notified under heading no.9801 such as airport development projects, metro rail projects, port development projects, railway electrification projects, digital cinema development projects etc.
Chemicals & Petrochemicals:
Basic customs duty on crude and unrefined sulphur has been reduced from 5% to 2%.
The general effective rate of basic customs duty on phosphoric acid has been 7.5% with a concessional rate of 5% for phosphoric acid used for the manufacture of fertilizers. The rate of duty has now been unified at 5% irrespective of its use. CVD will however continue to be attracted at applicable rates.
Basic customs duty exemption presently available on naphtha for manufacture of specified polymers has been withdrawn and consequently it will attract 5% basic customs duty.
Export Promotion:
Basic customs duty has been reduced from 10% to 5% on unworked or simply prepared corals.
Basic customs duty has been reduced on rough cubic zirconia from 5% to Nil and on cubic zirconia (polished) from 10% to 5%.
Basic customs duty on tuna bait has been reduced from 30% to Nil.
Basic customs duty on specified machinery for manufacture of sports goods for export has been reduced from 7.5% to 5% subject to specified conditions.
Basic customs duty has been reduced from 10% to Nil on specified raw materials for manufacture of sports goods for exports. The exemption would be available only upto 3% of FOB value of exports made by the importer in the preceding year and would be subject to certification by the Sports Goods Export Promotion Council.
Dairy/Poultry:
Basic customs duty has been reduced from 7.5% to Nil on bactofuges and from 30% to 20% on feed additives/pre-mixes.
IT/Electronic industry:
A concessional duty of 5% (basic) is already available to certain electronic products such as MP3 and MPEG4 players. This concession has now been extended to “convergence products” i.e. MP3/ MP4 and MPEG player having audio and video reception facility.
Similarly, full exemption from basic customs duty is available to a large number of raw materials/ inputs for manufacture of specified electronic/ IT products to provide a level playing field to the domestic manufacturers of such products. This concession is now being extended to more raw materials and inputs.
Set-top boxes are fully exempt from basic customs duty. Specified parts for the manufacture of set-top boxes are also exempt from customs duty, on end-use basis. Two more items viz. SMPS power board and IR module have been added to the list of exempted parts.
Drugs and diagnostic kits:
Basic customs duty on six specified drugs/kits, and bulk drugs for their manufacture, has been reduced from 10% to 5% with Nil CVD by way of excise duty exemption. These drugs are used in the treatment of cancer/diabetes/asthma/Hepatitis B etc.
Specified raw materials and components for the manufacture of ELISA kits enjoy a concessional duty of 5% (basic). The coverage of the list has been expanded to include four more items.
Metals:
Basic customs duty on iron or steel melting scrap and aluminium scrap has been reduced from 5% to Nil. Vigil may kindly be maintained to prevent any misuse of these exemptions.
NCCD:
National Calamity Contingent duty of 1% currently leviable on Polyester filament yarn has been withdrawn.
NCCD of 1% has been imposed on mobile phones. For this purpose, the relevant Schedule of the Finance Act, 2001 has been amended. On imported mobile phones this duty shall be collected as additional duty of customs under section 3(1) of the Customs Tariff Act.
Other relief measures:
Basic customs duty on specified raw materials for tyre industry has been reduced from 10% to 5%.
Basic customs duty on helicopter simulators has been reduced from 10% to Nil.
Tobacco products: Basic customs duty on cigars, cheroots and cigarillos has been increased from 30% to 60%.
4% Additional Duty of Customs: Exemption from additional duty of customs of 4% levied under section 3(5) of Customs Tariff Act, 1975 has been withdrawn from power generation projects (other than mega power projects), transmission, sub-transmission and distribution projects, and specified goods for high voltage transmission projects.
Electricity:
Tariff rate of Rs.2000 per 1000 kWh has been prescribed on ‘electrical energy’. However, the effective rate will continue to be Nil by notification.
Miscellaneous:
Temporary imports of capital goods/ equipment for use in the execution of contracts in India can avail of concession under two different provisions- drawback under section 74 (2) of the Customs Act or exemption under notification no.27/2002-Customs dated 1.3.2002. In the first case, the importer pays normal duty at the time of import and claims drawback at the time of re-export. In the other case, he pays a concessional rate of duty at the time of import. However, the admissible period of retention of equipment and the extent of exemption under these schemes have been at variance. The two provisions have
now been aligned in the following manner:
- The period for re-export of leased equipment and machinery, imported for temporary use in contracts under notification no. 27/2002-Customs dated 1.3.2002 has been increased from 12 months to 18 months. Simultaneously, the period of retention prescribed under notification no.19/65-Customs dated 6.2.1965 has been reduced (for all goods covered by S.No.1 of the notification) from 36 months to 18 months.
- The slab rates of duty under both the provisions have now been prescribed on a quarterly basis. Earlier, the rates under notification no.27/2002 were prescribed on half-yearly basis.
- The rates have also been aligned with the rates of drawback admissible under section 74(2) of the Customs Act, 1962, depending on the period of retention of the goods in India. No drawback will be admissible when goods for which the benefit of notification no.27/2002-Customs has been claimed, are re-exported.
Concessional customs duty of 5% provided on polymer long rod insulators has been restricted to polymer long rod insulators of 765 KV rating only.
Basic customs duty and CVD on 0.177 calibre airguns have been exempted.Consequently, 4% special additional duty of customs shall also be exempted on these airguns.
Sl. No. 349 of Notification No. 21/2002-Customs dated 1.3.2002 exempts specified goods imported for the launch of satellites and payloads into outer space by the Department of Space. The description of the goods covered by the exemption has been amended to add ‘ground equipment brought for testing’. A condition has also been inserted to prescribe that such goods would be re-exported.
Sl. No. 347 of notification No. 21/2002-Customs dated 1.3.2002 provides exemption to aircrafts imported by Aero Club of India, or by a flying training institute. Inadvertently, the condition No. indicated in the notification as 103, which is also the
condition No. provided for entry No. 77A of the notification. This has now been rectified by renumbering the said condition as ‘103A’.