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INTRODUCTION

INTRODUCTION.

lynelle
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INTRODUCTION

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  1. INTRODUCTION 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.

  2. RECOMMENDATIONS

  3. 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 in manufacturing.

  4. 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.

  5. 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.

  6. ABATEMENT ON REPAIR AND MAINTENANCE (SERVICE TAX) • 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 balance 30%.

  7. 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.

  8. CONCLUSION 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. THANK YOU

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