MAIT Welcomes Clarification On IT Products

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MAIT has welcomed the clarification issued by the Ministry of Finance, clarifying two long-standing issues on classification of IT products.

MAIT, the apex body representing India's IT hardware, training and R&D services sectors, welcomed the clarification issued by the Ministry of Finance, Government of India on September 10, 2007 clarifying two long standing issues on classification of IT
products.

1. The Circular No. 32/2007 - Cus clarified that flat panel monitors e.g. CD monitors were computer monitors (IT product) and not LCD TVs. This implies that flat-panel monitors will attract nil Customs duty. The customs authorities were earlier assessing these at 10% Customs duty.

2. The Circular No. 33/2007 - Cus clarifying that digital still image cameras with facility of recording video clips for short duration would be treated as IT products with nil Customs duty. Owing to the video clip recording facility, these were being classified in the same category as 'camcorders' with 10% customs duty.

The clarification does not impact the rate of the excise duty/CVD for the above-mentioned items.

Welcoming the announcement, Vinnie Mehta, Executive Director MAIT remarked, "The two clarifications issued by the Ministry of Finance have a far reaching consequence as several developed countries including the European Union and other Asian Countries such as China have been unable to resolve the classification issue and continue to classify these items as non-IT products. India has however being very proactive and set forth an example for the rest of the world. The clarification puts to rest several disputes on interpretation of the applicable customs duty on flat-panel monitors and digital cameras."

Elucidating on the impact of the measure on the product prices, he said, "There will be no change in the prices of the flat-panel monitors or the digital cameras as a result of this measure. This is as the industry was clearing these goods under bank guarantees and that there had been no actual outflow of money on account of the customs duties."