CBIC Issues Clarification on Constitution of Camera Module in Mobile Phone for Calculating BCD Rate [Read Circular]

The Central Board of Indirect Taxes and Customs (CBIC) has issued a clarification regarding the scope and classification of camera modules used in cellular mobile phones for the purpose of calculating Basic Customs Duty (BCD).

The directive, issued on March 24, 2025, was necessitated by concerns raised by the Directorate of Revenue Intelligence (DRI) regarding the import structure of camera modules. The lack of specific definitions for camera modules and their components under Notification No. 57/2017-Customs, which grants a concessional BCD rate of 10% on camera modules used in mobile phone manufacturing led the CBIC to take this step.

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The DRI’s investigation revealed that certain camera modules were being imported in a metal chassis bracket - which, if imported separately, would have attracted a 15% duty prior to January 30, 2024. The probe found that these camera modules often included additional components such as flexible printed circuit board with connectors, plastic covers, metal chassis with cavities for other phone components, cover plates.

This led to uncertainty whether integrated assemblies of cameras still deserved to enjoy the concessional 10% duty rate or be taxed at higher rates applicable to individual components.

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The CBIC, based on inputs from the Ministry of Electronics and Information Technology (MeitY), has clarified the classification of camera modules as follows:

1. A camera module consists of lens, sensor, FPCB assembly, bracket/holder, connectors, and mechanical parts. Its primary function must be that of a camera, and it should be classified as a camera module under Rule 3(b) of the General Rules of Interpretation (GRI) of the Harmonized System.

2. If an assembly includes multiple cameras and additional structural components, it will still be classified as a camera module as long as its functionality remains limited to imaging and does not serve any additional purpose.

3. Structural elements such as brackets, covers, and metal chassis that do not independently serve a function outside of camera integration shall still be considered part of the camera module when imported as a complete unit.

4. When camera modules are imported as integrated assemblies, they will continue to attract the concessional 10% BCD rate under Notification No. 57/2017-Customs. However, if the components are imported separately, they will be taxed at their applicable individual rates.

The clarification is poised to benefit mobile phone manufacturers and importers, ensuring consistent tax treatment of camera modules and their related components and shall help prevent disputes over tax classification and customs duty concessions.

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The Circular also maintains that the technological advancements in the mobile phone sector has developed at great speed, hence the macro and micro components may be modified periodically, undergoing amalgamation, amelioration or replacement - and hence the “essential character” criteria should be followed to allow for periodic modifications of the classification of the camera module.

To Read the full text of the Circular CLICK HERE

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