CHANGES IN CUSTOMS
The Finance Minister introduced the Finance (No.2) Bill, 2024 in Lok Sabha today, 23rdJuly 2024. Changes in Customs, Central Excise and rates have been proposed through the Finance (No.2) Bill, 2024.
To prescribe changes in customs duty rates, the following notifications are being issued:
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Particulars |
Notification Nos. |
Dated |
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Customs (Tariff) |
23rd July 2024 |
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Customs (AIDC) |
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Customs (Health Cess) |
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Customs (Non-Tariff) |
Unless otherwise stated, all the amendments in rates of duty will take effecton midnight of 23rd/24th July, 2024. A declaration has been made under the Provisional Collection of Taxes Act, 2023 in respect of clause 107 (a) of the Finance (No.2) Bill, 2024 so that changes proposed therein take effect from23rd/24th July, 2024. The remaining legislative changes would come into effect only upon the enactment of the Bill or the date specified in the Finance (No.2) Bill, 2024.
This document summarises the changes made/proposed under the Customs and Excise - Section wise in a comparative manner for easy digest.
Highlights of Important Changes in Customs
- A comprehensive review of Customs duty rates has been made to support domestic manufacturing, enhance local value addition, promote export competitiveness, and simplify taxation, all while prioritizing the interests of the general public and consumers.
- This review of the rate structure will be held over the next six months to rationalize and simplify customs duty rates for ease of trade, elimination of duty inversion, and reduction of disputes.
- Review of Exemptions: A comprehensive review also has been undertaken for 188 conditional exemptions/concessional rates (150 entries in Notification No. 50/2017-Customs dated June 30, 2017 and 38 exemptions/concessional rates are standalone Notifications),while continuing the exemptions/concessional rates, some entries have also been reduced or modified. Please refer to Annexure A for detailed changes in the customs duty rate.
- Retrospective amendment is made in Notification No. 37/2023- Customs dated May 10, 2023to validate for the period from April 01, 2023 up to and inclusive of May 10,2023 to provide an exemption from Basic Customs Duty ("BCD") and Agricultural Industrial Development Cess ("AIDC") on imports of crude soyabean oil and crude sunflower seed oil subject to availability of unutilized quota in Tariff Rate Quota ("TRQ") authorization for FY 2022-23 allotted by DGFT and Bill of lading issued on or before March 31,2023.The person can claim refund in accordance with the provisions of sub-section (2) of Section 27 of the Customs Act, for any duty and cess collected that would not have been collected by the customs department.
- Based on the recommendations of the GST Council in its 53rd meeting, GST Compensation Cess is being exempted with effect from July 01, 2017 on imports in Special Economic Zone ("SEZ") by SEZ units or developers for authorized operations.
- For trade facilitation measures, Notification No. 45/2017-Customs dated June 30, 2017 has been amended to increase the time-period of duty free re-import of goods (other than those under export promotion schemes) exported under warranty from 3 years to 5 years, further extendable by 2 years.
- Similarly, Notification No. 153/94-Customs dated July 13, 1994 has been amended to extend the time limit for export from 6 months to 1 year, further extendable by 1 year, in the case of aircraft and vessels imported for maintenance, repair and overhauling.
- Custom tariff structure is being simplified by rationalizing tariff rates.
Important changes in respect of Customs duty rates areas detailed below:
(i) Basic Customs Duty (BCD) rates are being revised. The sector-specific applicable BCD rates are as follows:
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Sectors |
Proposed changes in BCD rates |
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Agricultural goods |
BCD on Shea nuts has been reduced from 30% to 15%. |
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Critical Minerals |
a) BCD has been reduced to Nil on critical minerals, namely, Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, Potash, REE, Rhenium, Strontium, Tantalum, Tellurium, Tin, Tungsten, Vanadium, Zirconium, Selenium, Cadmium, Silicon other than Quartz & Silicon Dioxide. b) Graphite, Silicon Quartz and Silicon Dioxide BCD have been reduced to 2.5% |
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Aquafarming and Marine Sector |
a) BCD on Prawn and Shrimps feed and fish feed has been reduced to 5%. b) BCD on Live SPF Vannamei shrimp (Litopenaeusvannamei) broodstock and Black tiger shrimp (Penaeus monodon) broodstock has been reduced to 5% c) BCD on Artemia and Artemia cysts has been reduced to Nil. d) BCD on the following ingredients/inputs for use in the manufacture of Prawn and Shrimps feed or fish feed is being reduced subject to IGCR condition.
e) BCD has been reduced to 5% on Insect Meal for use in R&D for aquatic feed manufacturing. f) BCD has been reduced to 5% on Single Cell Protein from Natural Gas for use in R&D for aquatic feed manufacturing. g) BCD has been reduced SPF Polychaete worms 30% to 5%. h) BCD has been reduced to Nilonpre-dust breaded powder for use in processing of sea-food. |
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Chemicals and petrochemicals |
a) The BCD on Ammonium Nitrate has been increased from 7.5% to 10%. b) The tariff rate of CTH 3920 and 3921 has been increased to 15%. Consequently, from 24.7.2024 , PVC Flex Films/Flex Banners will attract 25% by virtue of declaration under Provisional Collection of Taxes Act 2023. However, Notification No 50/2017- Customs has been amended to maintain the existing rate of 10% on items other than PVC FlexFilms/FlexBanners. |
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Drugs |
The BCD has been fully exempted on the following Cancer Drugs: a) Trastuzumab Deruxtecan b) Osimertinib c) Durvalumab |
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Textile and Leather Sector |
a) BCD has been reduced from 7.5% to 5% on MDI for the manufacture of spandex yarn to rectify duty inversion. This is subject to IGCR conditions. b) BCD has been reduced from 30% to 10% on Real Down Filling material from duck or goose for use in the manufacture of textile or leather garments for export. c) Exemption has been extended to Wet white leather, Crust and finished leather for manufacture of textile or leather garments, leather /synthetic footwear or other leather products for export. d) Exemption has been extended to certain additional accessories and embellishments for the manufacture of textile or leather garments, leather/synthetic footwear or other leather products forexport. |
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Electronics goods and equipment
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a) BCD on cellular mobile phone has been reduced from 20% to 15%. b) BCD on PCBA of cellular mobile phone has been reduced from 20% to 15%. c) BCD on charger/adapter of cellular mobile phone has been reduced from 20% to 15%. d) BCD on Oxygen Free Copper (OFC) Strip has been reduced from 5% to Nil for use in manufacture of resistors subject to IGCR condition. e) Exemption entries providing concessional BCD rate to mechanics and die-cut parts of chapters 39 and 73 has been expanded to include chapter 40, 70 and 76. f) Exemption entry covering input items/raw material for use in manufacture of connectors has been expanded to add more input items/raw material. g) BCD rate on PCBA of specified telecom equipment has been increased from 10% to 15%. |
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Precious Metals
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a) The duty rates on precious metals have been revised as under:
b) As a consequential change, the BCD has been reduced from 7.5% to 5% on: a. Platinum and Palladium used in the manufacture of noble metal solutions,noble metal compounds and catalytic converters b. Bushings made of platinum and rhodium alloy when imported inexchangeof worn out or damaged bushings exported out of India |
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Other Metals
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a) BCD reduced on Ferro-Nickel from 2.5% to Nil. b) BCD reduced on Blister Copper from 5% to Nil. c) Exemption on Ferrous Scrap has been continued up to March 31, 2026. d) The concessional BCD rate of 2.5% on Copper scrap has been continued. e) The exemption on specified raw material for the manufacture of CRGO steel has been continued upto March 31, 2026. Further, the exemption has also been extended to such specified raw materials for the manufacture of CRGO Steel falling under tariff item 7226 11 00. |
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Capital Goods
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a) Certain specified capital goods have been added to the list of exempted goods for use in the manufacture of solar cells and modules. b) Certain specified goods have been added in the exemption entry (S.No 404 of Notification No. 50/2017-Customs dated June 30, 2017) for use in petroleum exploration operations |
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Others |
a) BCD on Garden umbrella has been revised from '20%' to '20% or Rs. 60 per piece, whichever is higher'. b) BCD rate on Lab chemicals classified under HS 9802 00 00 has been increased from 10% to 150 c) The tariff rate on areca nuts and prepared/ preserved areca nuts is being enhanced to 150%w.e.f Ocyober1, 2024. However, there is no change in the effective BCD rate which continues at 30%. |
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(ii) Legislative changes in the Customs Act, Customs Tarff Act and Rules made thereunder:
a. The procedure regarding the claim of a preferential rate of duty is being amended to enable the acceptance of different types of proof of origin provided in trade agreements in order to align the said section with new trade agreements which provide for self-certification.
b. To empower the Central Government a new proviso is inserted to specify certain manufacturing and other operations in relation to a class of goods that shall not be permitted in a warehouse.
c. Amended is being made to substitute the expression "a class of importers or exporters" with "a class of importers or exporters or any other persons" to facilitate the trade.
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