BUDGETARY CHANGES IN CUSTOMS TARIFF

[Mr. M. GOVINDARAJAN]

In the budget as far as the customs is concerned the increase in petroleum products will cause the sufferings of the common people. The Hon'ble Finance Minister justified the increase. He indicated that in the wake of spiraling petroleum prices, Government provided full exemption from basic customs duty to crude petroleum and proportionately reduced the basic duty on refined petroleum products in June, 2008. Compared to the international price of the Indian crude basket of US $ 112 per barrel at that time, the prices are much softer at present.   In view of the pressing need to back to a fiscal consolidation, path he proposed to restore the basic duty on crude petroleum. The following are the proposal of customs duties in respect to petroleum:

* Customs duty on crude petroleum is being increased from NIL to 5%;

* Customs duty on Motor Spirit (Petrol) and HSD (diesel) is being increased from 2.5% to 7.5%;

* Customs duty on some other specified petroleum products is being increased from 5% to 10%.

The Finance Minister proposed to address a few key areas that call for focused attention for the development of agriculture, which are as follows:

* A strong supply chain for perishable farm produce to reach consumption and proceedings centers promptly;

* Infrastructure and technology to convert such produce into value added products; and

* Infusion of technology to augment agricultural production.

To achieve the above said objectives the Finance Minister proposed to provide project import status with a concessional basic duty at 5% to the following:

* Installation f mechanized handling systems and pallet racking systems, in mandis or warehouse for food and sugar (also exempted from additional duty of customs and special additional duty of customs);

* Setting up or substantial expansion of a cold storage, cold room (including farm pre-coolers) for preservation of storage or an industrial unit for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic & marine produce and meat;

and also allow the concessions to the following:

* Full exemption from customs duty to refrigeration units required for the manufacture of refrigerated vans or trucks;

* Concessional customs duty of 5% to specified agricultural machinery not manufactured in India;

In pursuance of Government's resolve to implement the National Solar Mission, the Finance Minister proposed to provide a concessional customs duty of 5% to machinery, instruments, equipment and appliances etc., required for the initial setting up of photovoltaic and solar thermal power generation units.

* It was also proposed to exempt some critical parts or sub assemblies of electric cars and vehicles that offer an eco-friendly alternative to petrol or diesel vehicles from basic customs duty and special additional duty subject to actual user conditions. These parts would also enjoy a concessional CVD of 4%.

The Finance Minister considers the mobile phone industry into consideration. The subscriber base is growing at 14 million per month. India is one of the fastest growing markets for mobile phone connections in the world. Domestic production of mobile phone is now picking up in view of exemption from basic, CVD and special additional duties granted to their parts, components and accessories. To encourage the domestic manufacture of accessories, the Finance Minister extended the exemptions to parts of battery chargers and hands-free headphones. He further announced that the validity of exemption from special additional duty is being extended up to March 31, 2011.

The Finance Minister also exempts the import of compostable polymer from basic customs duty to encourage the use of bio-degradable materials.

For the health section the Finance Minister put forth the following proposals:

* All medical equipments, with some exceptions, will attract 5% basic customs duty, 4% CVD and NIL special additional duty of customs;

* Parts required for the manufacture and accessories of medical equipment will also attract 5% concessional basic customs duty will NIL special CVD;

* Concessional customs duty is available to spares for the maintenance of medial equipment. Now this is withdrawn except in specified cases;

* Full exemption from basic customs duty and CVD/excise duty is being retained for specified medical devices (exempt by description) as well as for assistive devices, rehabilitation aids and other goods for disabled;

* Cobalt-chrome, special grade stainless steel, etc., for the manufacture of orthopedic implants are being exempted from basic customs duty subject to actual user condition.

The other proposals offered in the budget in respect of customs duty are as follows:

* Films for exhibition are imported on cinematographic films or digital media. Digital masters/stampers of films are also imported for duplication and distribution of CD/DCDs. It is being proposed that customs duty would not be charged only on the value of the carrier medium and the customs duty on the balance value will be exempt. The said tax treatment is also extended to music and gaming software for retail sale imported on digital media for duplication;

* Promotional material like trailers, making of films etc., imported free of cost in the form of electronic promotion kits are being fully exempted from basic customs duty and CVD;

* Project import status is being accorded to 'Setting up of Digital Head End' with 5% concessional basic customs duty and Nil special additional duty of customs;

* The customs duty on gold and platinum is increased from Rs.200 peer 10 grams to Rs.300 per 10 grams;

* The customs duty on silver is increased from Rs.1,000 per kg. to Rs.1,500 per kg;

* Customs duty is reduced to 2% from 10% for Rhodium, a metal used for polishing jewellery;

* It was proposed to reduce the basic customs duty on gold and concentrates from 2% ad valorem to a specific duty of Rs.140/- per 10 grams of gold content with full exemption from special additional duty;

* Full exemption from import duty is available to specified inputs or raw materials required for the manufacture of sports goods which are assuming importance as an item of export;

* The basic customs duty on magnetrons, a key component for the production of microwave ovens, is reduced from 10% to 5%;

* The ceiling of Rs.1lakh is increased to Rs.3 lakhs per annum for the duty free import of commercial samples as personal baggage;

* It was proposed to provide an outright exemption from special additional duty to goods imported in a pre-packaged form for retail sale which would also cover mobile phones, watches and ready-made garments even when they are not imported in pre-packaged form;

* Basic customs duty is reduced from 70% to 30% on long pepper;

* Basic customs duty is reduced from 30 % to 20% on asafetida;