Mobile phone display assembly fitted with items like speakers, SIM tray to attract 15% import duty: CBIC

New Delhi: Import of mobile phone display assembly, which are fitted with items like speakers, SIM tray and power key, will attract a 15 per cent basic customs duty (BCD), the Central Board of Indirect Taxes and Customs (CBIC) has said.

The CBIC said there have been instances of mis-declaration while importing display assembly of cellular mobile phones. Currently, display assembly of mobile phones attracts 10 per cent customs duty, and nil duty on imports of inputs or parts separately for use for manufacturing of a display assembly. Display Assembly of a cellular mobile phone consists of touch panel, cover glass, LED backlight, FPC specifically needed for rendering display functions and brightness enhancement film.

In a circular to field offices, the CBIC said if a display assembly of mobile phone is imported with merely a back support frame of metal/plastic attached to it, it will attract 10 per cent BCD.

However, the back support frame of metal/plastic, if imported individually, will attract a BCD of 15 per cent. "If any other item like the sim tray, antenna pin, speaker net, power key, slider switch, battery compartment, Flexible Printed Circuits (FPCs) for volume, power, sensors, speakers, finger print etc, come fitted along with a display assembly with or without a back support frame of metal/plastic, then the whole assembly attracts a BCD rate of 15 per cent," the CBIC said.

Such assembly, consisting of display assembly and any other parts, is not eligible for the benefit of concessional rate of 10 per cent BCD, the CBIC clarified.

EY India Tax Partner Saurabh Agarwal said this clarification brings in the certainty of taxation to the mobile phone manufacturers for future imports who have been at loggerheads with customs officials since long for determining appropriate BCD rate of display assembly modules.

"What needs to be assessed is how would this unfold in the courts and impact the existing litigations as the additional BCD cost (if any) on past imports would not be recoverable from customers but would have to be borne by the manufacturer importers only , Agarwal added.

Abhishek Jain, Partner Indirect Tax at KPMG in India, said: "Ensuring that the Customs classification is done appropriately and there is no duty evasion is key for the successful implementation of the PMP and the Make In India programme. At the same time, it is important to ensure that tedious investigations don't affect business operations.

"This circular should provide ample clarity regarding the classification of display assembly, which has been an issue in the past for the electronics industry. The circular clearly lays down along with diagrammatic presentation as to upto what extent will the integration be considered at display assembly, and beyond what point will it be considered as parts of cellular devices."