Import of display assembly of cellular mobile phones along with back-support frames will attract a basic customs duty (BCD) of 10%, the Central Board of Indirect Taxes and Customs (CBIC) said. But if other items such as the antenna pin and power keys are imported along with the display assembly, the duty on the whole assembly will be 15%.
The circular comes after the Directorate of Revenue Intelligence served show-cause notices to Chinese smartphone majors Oppo and Vivo over alleged duty evasion.
While the field officials of the revenue department have been notified on the clarification, an industry executive, who wished not to be named, said companies – Oppo, Vivo and Xiaomi – which have already received notices demanding penalties would have to fight the matter in court . The show-cause notices would not be rescinded.
Revenue field officials have been investigating mobile phone manufacturers including Foxconn, Flex, Lava Mobiles,
Xiaomi, Oppo and Vivo since December 2020 over alleged customs duty evasion.
Handset manufacturers have maintained that the duty evasion charges were due to a lack of clarity on the levy of customs duty on key components in cellular phones.
As per the CBIC, display assembly comprises only the screen, and if the imported product includes any other component, it will amount to a violation of the exemption notification.
The industry has argued that all components which were attached to displaying content in a mobile phone would qualify as a display assembly, attracting the lower duty of 10%.
The circular is in line with the clarification issued by the Ministry of Electronics and Information Technology (MeitY) and provides a detailed list of display assemblies along with the pictures for ease of identification and assessment.
Experts said the circular would help in avoiding unnecessary litigation on account of any misdeclaration of products at the time of import.
“This circular is a big relief to the industry and will avoid unnecessary litigation,” said Pankaj Mohindroo, chairman of the India Cellular and Electronics Association that represents mobile phone manufacturers in the country.
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