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CVD Exemption Unlikely, Says Adhia

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Only way to create duty differential is to impose higher customs duty in some cases: Revenue secy
India is unlikely to provide any exemption from countervailing duty to IT or telecom manufacturers such as Apple in the proposed goods and services tax (GST) regime, revenue secretary Hasmukh Adhia told ET.
Countervailing duty is levied on imports in lieu of central excise duty to provide a level playing field to domestic manufacturers vis-à-vis imports.
“How can there be exemption when there is no CVD?“ Adhia said. Under the new regime, additional customs duty, commonly known as countervailing duty (CVD), will be subsumed by GST, which will be levied on all imported goods. On giving relief through reimbursement of CVD, he said there is no plan for this.
“I don't think that the government plans to provide such a subsidy. Duty differential was created to encourage Make in India.But now the possibility of creating such a duty differential un der the GST structure does not exist,“ he said.
He said the only way to create duty differential is to impose higher customs duty in some cases.
“Only way to protect Make in India would be through higher customs duty. Department of electronics can look at their sector, need for protection and suggest to us if they want any additional customs duty,“ he said.
In the past, a number of IT and telecom equipment makers have enjoyed CVD exemption on imported components, which was given to encourage domestic manufacturing.
The view that these exemptions did not serve the objective and instead encouraged imports has been gaining ground. The government has in the last two budgets withdrawn CVD exemptions for three telecom components to make imports expensive and domestic manufacturing competitive.
Apple had sought an assurance from the government on continuing these CVD exemptions even under the GST regime for 15 years.
The department of revenue, however, is unwilling to do so.
The Economic Times New Delhi,03rd April 2017

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