Through Finance Bill, 2016, FM has proposed the changes in Custom law and rates of duty. The custom duty changes have been made on inputs to make manufacturing competitive for sectors such as IT, capital goods and defense. Key changes in Custom: Budget 2016:

Reduction in Custom duty on certain goods:

• Refrigerated containers from 10% to 5%;
• Mineral fuels and Mineral oils:
• Coal; briquettes, ovoids and similar solid fuels manufactured from coal from 2.5%/10% to 2.5%
• Lignite, whether or not agglomerated, excluding jet from 10% to 2.5%
• Peat (including peat litter), whether or not agglomerated from 10% to 2.5%
• Coke and semi-coke of coal, of lignite or of peat, whether or not agglomerated; retort carbon from 5%/10% to 5%
• Coal gas, water gas, producer gas and similar gases, other than petroleum gases and other gaseous hydrocarbons from 10% to 5%
• Tar distilled from coal, from lignite or from peat and other mineral tars, whether or not dehydrated or partially distilled, including reconstituted tars from 10% to 5%
• Oils and other products of the distillation of high temperature coal tar similar products in which the weight of the aromatic constituents exceeds that of the non-aromatic constituents from 2.5%/5%/10% to 2.5%
• Pitch and pitch coke, obtained from coal tar or from other mineral tars from 5%/10% to 5%

Chemicals & Petrochemicals:

• All acyclic hydrocarbons and all cyclic hydrocarbons [other than para- xylene which attracts Nil Basic Customs Duty and styrene which attracts 2% Basic Customs Duty] from 5%/2.5% to 2.5%
• Denatured ethyl alcohol (Ethanol), from 5% to 2.5%, subject to actual user condition
• Electrolysers, membranes and their parts required by caustic soda/ potash unit using membrane cell technology exempted from 2.5% to Nil

Textiles:

• Specified fibres and yarns from 5% to 2.5%
• Import of specified fabrics [for manufacture of textile garments for export] of value equivalent to 1% of FOB value of exports in the preceding financial year exempted from Applicable Rate to Nil, subject to the specified conditions
• Electronics/ Hardware:
• Polypropylene granules/resins for the manufacture of capacitor grade plastic films from 7.5% to Nil
• Parts of E-readers from Applicable Rate to 5%
• Magnetron of capacity of 1 KW to 1.5 KW for use in manufacture of domestic microwave ovens, subject to actual user condition, from 10% to Nil.
• Specified capital goods and inputs for use in manufacture of Micro fuses, Sub-miniature fuses, Resettable fuses and Thermal fuses from Applicable Rate to Nil;
• Neodymium Magnet (before Magnetization) and Magnet Resin (Strontium Ferrite compound/before formed, before magnetization) for manufacture of BLDC motors, from Applicable Rate to 2.5%, subject to actual user condition;

 

Increase in Custom Duty on certain goods:

• Natural latex rubber made balloons from 10% to 20%;
• Imitation jewellery from 10% to 15%;
• Metals:
• Primary aluminium from 5% to 7.5%
• Other aluminium products from 7.5% to 10%
• Zinc alloys from 5% to 7.5%
• Industrial solar water heater from 7.5% to 10%;
• Full exemption on solar tempered glass/solar tempered (anti-reflective coated) glass withdrawn and 5% concessional Basic Customs Duty imposed, subject to actual user conditions;
• Plans, drawings and designs from Nil to 10%;
• Electronics/Hardware:
• E-Readers from Nil to 7.5%
• Preform of silica for manufacture of telecom grade optical fibre /cables from Nil to 10%;

 

Reduction in Special Additional Duty (“SAD”) on certain goods:

• Orthoxylene, from 4% to 2%, for the manufacture of phthalic anhydride subject to actual user condition;

Exemption from SAD withdrawn fully or in some cases, imposed reduced SAD on certain goods:

• Populated PCBs for manufacture of personal computers (laptop or desktop) from Nil to 4%;
• Populated PCBs of mobile phone/tablet computer withdrawn. Concessional SAD on populated PCBs for manufacture of mobile phone/tablet computer imposed from Nil to 2%.
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