The Central Board of Indirect Taxes and Customs ( CBIC ) has issued Circular No. 06/2024-Customs dated June 7, 2024, to address the issues regarding the customs duty applicable to Display Assemblies used in the manufacture of cellular mobile phones.
According to S. No. 5D of notification No. 57/2017-Customs dated June 30, 2017, a concessional basic customs duty (BCD) rate of 10% is provided for Display Assemblies used in the manufacture of cellular mobile phones. Additionally, there is a Nil BCD rate on inputs or parts used to manufacture these Display Assemblies.
Despite these clear provisions, misdeclaration issues were reported where Display Assemblies were incorrectly imported as parts. The Ministry of Electronics and Information Technology (MeitY) provided a Technical Document on September 23, 2020, outlining the components of a Display Assembly, which was distributed to field formations to aid in accurate assessment. However, mis declarations continued, leading to interventions by the Directorate of Revenue Intelligence ( DRI ) and subsequent issuance of demand notices.
The industry’s concerns led MeitY to request further clarification, resulting in Circular No. 14/2022-Customs on August 18, 2022. However, interpretational challenges persisted. MeitY noted that the concessional BCD rate of 10% was often not extended to Display Assemblies due to varying interpretations of the technical document and the 2022 circular.
On January 30, 2024, notifications Nos. 08/2024-Customs and 09/2024-Customs reduced the applicable BCD rate to 10% for “mechanics,” “die-cut parts,” and other parts of cellular mobile phones. While these notifications provided prospective clarity, issues regarding the interpretation of Display Assemblies for past periods remained unresolved.
MeitY has particularly raised issues of ambiguity in the interpretations of Circular No. 14/2022-Customs dated 18.08.2022, and requested DoR to examine the interpretation of display assembly of cellular mobile phone as per circular No. 14/2022-Customs dated 18.08.2022, by considering a revised list of items that are included/excluded from the display assembly of a cellular mobile phone. The matter was examined by a Committee constituted with officials from both CBIC and MeitY, which recommended a principle that may be used to determine the interpretation of display assembly for extending the concessional BCD rate.
Thus, in partial modification of circular No. 14/2022-Customs dated 18.08.2022, based on the request of MeitY, recommendation of the Committee for the clarifications on Interpretation of the Display Assembly of Mobile Phones and in exercise of the powers under Section 151A of the Customs Act, 1962, it is hereby clarified as under:
(i) The Display Assembly of a cellular mobile phone consists of the combination of following parts/components:
(ii) If the display assembly is imported with the following items/components which are fabricated, embedded, fitted or attached with the assembly, the whole integrated assembly should also be treated as a Display Assembly of a cellular mobile phone, attracting a BCD rate of 10%:
(iii) Display Assembly of a cellular mobile phone may be imported with or without the items listed at (a) to (c) in para 7 (ii) above. Although, these items/components have no essential function in display and only perform auxiliary function of providing strength, support, protection from dust, acting as adhesive material, protection from scratches, and structural stability, the attachment of these items on the display assembly does not alter the essential characteristic of display in any manner, and the assembly would continue to be treated as a Display Assembly of a cellular mobile phone. Further, the items listed at (d) to (g) in para 7(ii) above viz. SIM Socket, SIM Tray, Antenna Pin, Side Keys like Power Key, Slider Switch and Volume Button are not part of the Display Assembly of mobile phone. These may or may not come (fabricated, embedded, fitted or attached) with the display assembly depending upon the design of the display assembly. However, even if these items/components are imported as an integrated part (already fabricated, embedded, fitted or attached to the assembly) of the Display Assembly of a cellular mobile phone, the assembly continues to be a Display Assembly of a cellular mobile phone and a BCD rate of 10% shall be applied on the whole integrated assembly. However, if the items/components listed in (a) to (g) in para 7 (ii) above are imported individually, they will attract the BCD rate as applicable.
(iv)However, if the following items are fabricated, embedded, fitted or attached with the display assembly of a cellular mobile phone, then the benefit of BCD treatment provided to display assembly would not be available to such assembly. Then such assembly is to be treated as a general part of cellular mobile phone attracting BCD rate as applicable:following items, if embedded in the Display Assembly, disqualify it from the concessional BCD rate and instead attract the applicable general BCD rate:
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