Review of telecom, EV custom duty exemptions in July: CBIC Chairman

In customs, it is difficult to say if there is inversion because every input may be a final product for some and intermediate for sub assembly lines.

The government will review the various custom duty exemptions for telecom, EV, electronic, oil exploration and renewable energy sectors during the July Budget exercise, Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal said.

“There are conditional notifications. So, unless it is extended, the notification will lapse because the idea is to reduce the number of notifications. But that exercise has not been carried out now because it was an interim Budget. But this exercise will be carried out for the full Budget in July. The conditional notifications will be reviewed to see whether they need to be continued,” Agarwal told Moneycontrol in an interview.

The custom duty exemption notifications which were expiring on March 31, 2024, have thus been extended to September 30, 2024. These include exemption to the telecom sector to vessels engaged in laying submarine cables and the renewable energy sector. In the renewable energy sector the customs duty was exempted for solar tempered glass and goods for EVA (Ethylene Vinyl Acetate) sheets. The CBIC will also review custom duty exemption on cold rolled grain oriented steel, raw materials for the manufacture of goods related to offshore oil exploration and lithium-Ion cells.

“The custom duties will be calibrated as per the need. From time to time duty rates are decreased like that on edible oils or on food items. The calibration is done to ensure that enough availability is there in the country. If there is lesser production the duty rate may be decreased, so that there is more import,” he said.

The government will separately examine any proposals from line ministries for correction in customs duty.

Customs duty on gold

Customs duty on gold was increased to cut imports of the yellow metal and tide over the current account deficit situation.

“That was the underlying reason for the increase in customs duty on gold. I cannot comment if we can look at reducing it,” Agarwal said.

Inversion in customs duty

In customs, it is difficult to say if there is inversion because every input may be a final product for some and intermediate for sub assembly lines.

“The government is focussing to boost phased manufacturing programmes for mobile phones, EV vehicles, wearable devices, etc. In accordance to the study made, a graded duty structure was made and the lowest rate of duty was provided for the inputs which are at the lowest end. It was planned that on the sub assemblies subsequently the rate of duty would be increased so that people would start manufacturing it in the country. So, those will be phased out in a different timeframe in the phased manufacturing programme,” he said.