Consumer Durables manufacturing sector plays an important role
in the economy of the Nation. It contributes more than 5.5% to
the Index of Industrial Production. It is an employment
intensive sector. For every one direct job that is created in this
space, about three indirect jobs are created.
This sector has been the engine of economic growth for Japan
post Second World War, then Korea in 1980s, 1990s and now
China & South-East Asian Countries in the 21st Century.
Considering the low penetration level of the Consumer
Electronics and Home Appliances in the country, this sector has
immense growth potential.
CUSTOMS DUTY ON DVD WRITERS & PARTS
(HSN : 84717090 & 84733099)
DVD Writers are exempted from Customs and Excise
Duty but its parts attract Duty.
This is an incidence of Inverted Duty Structure.
We recommend that the parts of DVD Writer should
also be exempt from Customs Duty.
This will remove the duty disparity and non-viability
SPECIAL ADDITIONAL DUTY ON IMPORTS (SAD)
Manufacturers who are selling items after imports have to
submit a refund application complying with all rules specified
under 102/2007 for claiming refund which is cumbersome and
lengthy and takes a year.
SAD is exempted on goods which are imported for retail sale.
And for manufacturers CENVAT credit is available.
Manufacturer is also paying Sales Tax on end products and on
the other side there is huge accumulation of CENVAT credit.
We recommend that SAD should be abolished as it is not
generating any revenue for the Govt. This will reduce
transaction cost for manufacturers.
CUSTOMS DUTY ON GSM PARTS
(HSN : 85177090)
GSM parts are exempt from Customs Duty under
23/2010 and 20/2006 under IGCR conditions for
manufacturers of GSM phones.
We recommend that the IGCR condition applicable on
GSM parts should be removed to encourage
competitive manufacturing. This will improve
manufacturing viability. Import dependency will
reduce thereby inviting more manufacturing facilities.
ABATEMENT ON REPAIR AND MAINTENANCE
Abatement is not available on Management of Repair &
Maintenance Services (U/s 65(105)(zzg) of Finance Act) for
use of parts / components for composite contract in case of
Repair & Management Service.
Consequently, Service Tax is charged on the whole contract
value which includes both parts and labor.
Based on historical evidence, 30% of a typical Annual
Maintenance Contract (AMC) is attributable to material and the
balance 70% to labor.
We recommend that Service Tax should be collected on 70% of
the AMC Value, and applicable VAT should be charged on the
IMPORT DUTY ON SET TOP BOX
(HSN : 852871)
Currently, of the 10 Million Set Top Box (STB) market, about
80% is being met through imports.
Domestic manufacturing units like Videocon, Dixon & Kortek
have come up in the country supplying about 2.40 million
STBs per annum.
We recommend that the Customs Duty on Set Top Box should
be increased from the current 5% to 10%. This will give a
boost to domestic manufacturing which has been struggling
against cheap imports.
If our recommendations are accepted, it will
result in growth of demand in our sector.
Manufacturing will get a boost and will
generate more revenue for both Union as well
as State Governments.