CUSTOMS :
1. Full exemption from levy of Special Additional Duty of Customs has been provided to Ships; Aircrafts imported by non-scheduled operators and specified parts of personal computers viz., Microprocessor for computer, other than motherboards, Floppy disc drive, Hard disc drive, CD-ROM drive, DVD Drive/DVD Writers, Flash memory and Combo drive. The exemption on parts of personal computers is subject to actual user condition.
2. It may be recalled that excise duty of 1% was imposed on ships and other goods falling under heading 89.01 on the condition that no Cenvat credit is taken. Doubts have been raised about the applicability this levy as CVD to foreign-going vessels. It is clarified that the levy would not apply to such imports which are temporary in nature.
3. In the Budget 2011-12, concessional rate of 5% excise duty/CVD and NIL SAD had been provided for parts of inkjet printers and laser jet printers. The concessional rate is being extended to parts of all printers capable of being attached with computers, subject to actual user condition.
4. As you are aware, a definition of Completely Knocked down Unit had been prescribed in the Budget. However, considering the representations by the industry, the custom duty rate on vehicles imported in the form of completely knocked down kits having all the necessary components, parts and sub-assembly including the pre-assembled engine, gearbox and transmission mechanism of Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02) including motor cycles is being reduced from 60% to 30%. Such imports of vehicles in completely built form or in any other form including in a form where any of the three viz., engine, gear box or transmission assembly are imported fixed to a chassis will attract 60% BCD. The imports in form of CKD kits where all the parts and components including engine, gearbox and transmission assembly are present in completely knocked down condition will attract 10% BCD.
5. Doubts have been raised about the applicable CVD rate on the 130 items, on which Excise Duty @ 1% has been levied vide Notification 1/2011-CE, dated 1-3-2011, when imported. It is further learnt that manual bills of entry have been permitted at certain customs locations as 1% CVD rate was not available in the system. This concessional rate of 1%, however, is available only if the Cenvat credit on inputs and input services is not availed of; otherwise all these items attract 5% Excise duty as prescribed vide Notification 2/2011-CE, dated 1-3-2011 and Tenth Schedule to the Finance Bill. At the time of updating of ICES, the Directorate of Systems had been advised not to feed Notification 1/2011-CE, dated 1-3-2011 in the system as 1% rate will not be applicable for CVD purposes. There should have been no confusion on the subject. Since the CVD is levied to provide a level playing field for the domestic manufacturers, CVD is charged at a rate equal to excise duty rate. However, in respect of these 130 items, there are two excise duty rates. It needs to be appreciated that if CVD is levied @ 1%, the protection for the domestic manufacturer would be lost since in the country of origin, the overseas supplier enjoys input tax neutralization on goods exported to India (akin to availment of input tax credit), whereas on the other hand the domestic manufacturer suffers all the input taxes and 1% excise duty over and above that. Since 5% excise duty rate is payable when the Cenvat credit of duties and taxes paid on inputs and input services is availed of, the tax treatment becomes equitable with the goods being imported into India, the input taxes having been neutralized in the country of export. As such, the CVD of 5% will be applicable in respect of all the goods covered under Notification 1/2011-CE, dated 1-3-2011 and 1% rate will not apply.
6. Some amendments have been proposed in the provisions of the Finance bill, 2011 too. These would be communicated as and when the Bill is enacted. The changes discussed above may kindly be communicated to the field formations under your charge as well as trade. In conclusion, I would take the opportunity to once again emphasize that in the case of new levies all possible help, guidance and facilitation should be provided to the trade. Difficulties, if any, may kindly be brought to my notice immediately.
Source: LETTER D.O.F.NO. B-1/3/2011-TRU, DATED 25-3-2011
