Gist of main amendments in Custom Duty – Budget 2015

Gist of main amendments in Custom Duty – Budget 2015

Honourable Finance Minister Arun Jaitley has kept in mind lots of areas that require changes as well as those require improvement. He have analysed Indian economy from almost every dimension. One of the areas where changes were required is made through budget 2015 and the same is levy of custom duty. Let us go through the amendments made in the levy of custom duty.

Custom Duty reduced as a measure of addressing the problem of Duty inversion on various inputs:

  • Duty to be reduced on “Metal Parts” used in the manufacture of electrical insulators.
  • Inputs such as Ethylene-Propylene-non-conjugated-Diene Rubber (EPDM), Water blocking tape and Mica glass tape used in the manufacture of insulated wires and cables will be charged with low custom duty.
  • Reduced custom duty will be levied on Magnetron upto 1 kw in the manufacture of microwave ovens.
  • Manufacturing of Refrigerator Compressors requires inputs like C- Block for Compressor, Over Load Protector (OLP) & Positive thermal co-efficient and Crank Shaft for compressor. These inputs will now be available with low custom duty.
  • Reduced custom duty will be levied on inputs used in manufacturing of washcoats, which are further used in manufacturing of catalyctic converters. The inputs that qualify for such reduced custom duty are Zeolite, ceria zirconia compounds and cerium compounds.
  • Anthraquinone used in manufacture of hydrogen peroxide will attract reduced custom duty.
  • Manufacturing of various fertilizers require sulphuric acid as input. It has been proposed to reduce custom duty on sulphuric acid used in manufacture of fertilizers.
  • Duty will also be reduced on parts and components of Digital Still Image Video Camera. Eligibility condition for such camera is that it should be capable of recording video with minimum resolution of 800×600 pixels at minimum 23 frames per second that too for at least 30 minutes in a single go using both internal as well as expandable storage.

Basic Custom Duty reduced as a measure of reducing cost of Raw Material:

  • A reduction of 0.5% in Basic Custom Duty (BCD) on Ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) will be applicable and the prevailing rate will be 2% as compared to 2.5%.
  • Isoprene and Liquefied butanes will be levied with a custom duty of 2.5% as compared to 5%.
  • BCD of 5% will be levied on Butyl Acrylate as compared to the previous rate of 7.5%.
  • Ulexite Ore will not be charged with Basic Custom Duty anymore which was charged at 2.5%.
  • Antimony metal, antimony waste and scrap will be charged at reduced rate of @ 2.5 % which was previously chargeable at 5% BCD.
  • 5% reduction in BCD applicable to specified components for use in manufacturing of specified CNC lathe machines and machining centres. The applicable rate will be 2.5% as compared to 7.5%.
  • 50% reduction in BCD on certain specified inputs used in the manufacture of flexible medical video endoscopes. BCD will be charged @ 2.5% from now on which was charged @ 5%.
  • Telecommunication grade optical fibre cables will be less costly as BCD will e charged at NIL rate on HDPE used in its manufacture which was charged @ 7.5% previously.
  • No BCD will be levied on Black Light Unit Module that will be used in the manufacture of LCD / LED TV panels.
  • Nil BCD on Organic LED (OLED) TV panels. It was charged @ 10%.
  • Inputs used in manufacturing of pacemakers such as battery, titanium, palladium wire, eutectic wire, silicone resins and rubbers, solder paste, reed switch, diodes, transistors, capacitors, controllers, coils (steel) and tubing (silicone) will be fully exempt from the levy of CVD and SAD.
  • Nil rate of BCD proposed on Evacuated Tubes with three layers of solar selective coating for use in the manufacture of solar water heater and system.
  • 5% BCD will be charged on Active Energy Controller (AEC) used in manufacture of Renewable Power System (RPS) Inverters to 5% provided that certification of MNRE is received.
  • Neither of the duty viz. BCD, CVD and SAD will be levied on Parts, components and accessories (falling under any Chapter) used as an input in the manufacturing of tablet computers and their sub-parts for use in manufacture of parts, components and accessories.


Reduction in SAD as a measure of addressing the problem of CENVAT Credit accumulation:

  • Nil rate of SAD will be applicable as compared to the rate of 4%, on all goods except populated PCBs used in manufacture of ITA bound goods falling under any chapter of the Customs Tariff.
  • SAD @ 2% will be applicable on Naphtha, ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) used in the manufacture of excisable goods which was previously charged @ 4%.
  • 2% SAD proposed on Metal Scrap of iron and steel, copper, brass and aluminium as compared to 4% SAD.
  • NIL rate of SAD to be levied on inputs used in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps. It was chargeable @ 4%.

Increase in Basic Customs Duty as a measure to maintain revenue:

  • BCD to be increased from 2.5% to 5% on Metallurgical coke.
  • 15% Basic Customs Duty to be levied on iron & steel and articles of iron or steel, falling under Chapters 72 and 73 of the Customs Tariff. The rate was 10% previously. Remember that the changes are not applicable in the existing effective rates.
  • Commercial Vehicles to be charged @ 40% tariff rate as compared to 10% and 20% effective rate @ 20% as compared to the previous rate of 10%. It was also proposed that commercial vehicles in Completely Knocked Down (CKD) kits and electrically operated vehicles including those in CKD condition will be attracting Basic Custom Duty @ 10%.

Amendments as a measure of Improving the quality of life and public health through Swachh Bharat Initiatives:

  • Coal, Lignite and Peat will be attracting Clean Energy Cess at Rs. 300 per Tonne and Rs. 200 per Tonne at scheduled rate and effective rate respectively. Both the rates were Rs. 100 previously.
  • Extension is proposed on availability of Concessional customs and excise duty rates on specified parts of Electrically Operated Vehicles and Hybrid Vehicles from 31.03.2015 to 31.03.2016.


Amendment as a part of relief measure:

  • It is proposed to exempt artificial heart (left ventricular assist device) from levy of 5% Basic Customs Duty as well as CVD.

Amendments as a measure of allocating additional resources for infrastructure:

  • Increase is proposed on Additional Duty of Customs / Excise and the same will be Rs. 8 per litre as compared to Rs. 2 per litre as scheduled rates and Rs. 6 per litre as compared to Rs. 2 per litre as effective rates.
  • Reduction is made in Basic Excise Duty Rates on Petrol and High Speed Diesel Oil (both branded and unbranded) by Rs. 4 per Litre. However it has been decided to keep the total incidence of excise duty on petrol and diesel unchanged as Basic Excise Duty Rates are increased simultaneously to include Education Cess and Secondary and Higher Education Cess.

Miscellaneous Amendments:

  • Reduction in export duty from 5% to 2.5% on upgraded ilmenite is proposed in the budget.
  • A change has been made in Excise duty structure for mobiles handsets including cellular phones. Previously it was 1% without CENVAT credit or 6% with CENVAT credit while the amended rate will be 1% without CENVAT credit or 12.5% with CENVAT credit.
  • Tablet computers will be in the ambit of excise structure that is 2% without CENVAT credit or 12.5% with CENVAT credit.

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