CBIC Clarifies On Concessional BCD Rate On Import Of Parts Used In Manufacturing LCD/LED TV Panels

S. Nos. 515A and 515B of notification No. 50/2017-Customs dated June 30, 2017 provides for a concessional BCD rate of 5% for specified parts and subparts of LCD and LED TV panels.

According to representations received by the Board, the terms in the entries provide a 5% concessional BCD rate on the import of open cells (15.6′′ and above) for use in the manufacture of LCD and LED TV panels, as well as specified parts for the manufacture of open cells for use in the manufacture of LCD and LED TV panels.The exemption entries do not refer to the proper tariff classification in view of the newly introduced heading 8524 for "Flat Panel Display Modules" in the Customs Tariff Act, as amended with effect from January 1, 2022. It may be noted that the issue has arisen in view of the new HSN 2022 introduced by the World Customs Organisation (WCO) to replace the HSN 2017 nomenclature for classification.

The Board examined the matter. The entry S. No. 515A of notification No. 50/2017-Customs referred to the heading 8529 and provided a concessional BCD rate for open cells used in the manufacture of TV panels. While the exemption entry S. No. 515B of notification No. 50/2017-Customs referred to the heading 8529 and provided a concessional BCD rate for specific parts used in the manufacture of open cells for use in the manufacture of LCD and LED TV panels, subject to conditions.

Till December 31, 2021, the open cells of LCD and LED TV panels were classified under heading 8529 in HSN 2017, while the transposition from HSN 2017 to HSN 2022 came into effect on January 1, 2022. As per the explanatory notes to the heading 8524 published in HSN 2022 by WCO, the heading 8524, inter alia, includes Flat panel display modules without drivers or control circuits, which are generally referred to as 'cells'.

Accordingly, the Open Cells would be classified under the heading 8524 in this version of HSN made effective January 1, 2022. However, the parts of open cells are still classified under the heading 8529, which covers "parts suitable for use solely or principally with the apparatus of headings 8524 to 8528." Provided that such parts are not specifically excluded from the heading 8529 based on the General Rules of Interpretation.

Notification No. 39/2022-Customs dated July 12, 2022 has been issued to amend the entry under S. No. 515A of notification No. 50/2017-Customs in order to align the HSN codes provided therein with the explanatory notes to the heading 8524 as published by the WCO in HSN 2022.

The Board clarified that the change is only technical in nature. The applicable BCD rate of 5% for open cell (15.6′′ and above) for use in the manufacture of LCD and LED TV panels under heading 8524 remains unchanged.

"The benefit of the concessional BCD rate available under the exemption entry S. No. 515A of the notification No. 50/2017-Customs should not be denied for the period from January 01, 2022 till the date of amendment of the said entry, on the mere ground that the classification used by the importer for the goods imported was 8529, provided that the goods imported conform to the description provided in the said exemption entry (i.e., Open Cells for use in the manufacture of LCD and LED TV Panels), which is verifiable as the said exemption is subject to the condition that the importer follows the procedure set forth in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017," THE CBIC said.

The instructions would apply only with respect to the imports made under S. No. 515A of the notification No. 50/2017-Customs dated June 30, 2017 for the period of January 1, 2022, till July 12, 2022.

Instruction No. 15/2022-Customs

Dated: 20.07.2022

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