Editor’s Note
This article clarifies the rationale behind recent customs duty concessions, as explained by CBIC Chairman Vivek Chaturvedi. His remarks underscore that the policy adjustments are driven by domestic sectoral priorities and a balanced fiscal strategy.
CBIC Chief Defends Reforms
Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Chaturvedi has defended the government’s customs duty concessions in the budget, stating they are the result of a very balanced and nuanced approach, and stem from sector-specific priorities rather than any external pressure. He clarified this in a post-budget conversation with Monica Yadav and Asit Ranjan Mishra.
Reasoning Behind Customs Changes
“We have adopted a very balanced and nuanced approach regarding customs duty concessions. Priority sectors have been identified. For energy security, concessions have been given on items needed for setting up nuclear power plants. For capital goods for battery energy storage systems for manufacturing lithium-ion cells, for monazite for magnets used in electric vehicles, and for sodium antimonate for solar glass panels, no megawatt limit has been imposed. All measures have been decided keeping in mind the needs of the industry to avoid cheap imports and to allow duty-free raw materials to make the industry more competitive and stronger.”
On Alignment with US Stance
When asked if the removal of duties on key capital goods and strategic raw materials aligns with the US stance and is related to tariffs imposed by Trump, Chaturvedi responded:
“The reasoning behind this is a nuanced logic prepared keeping the specific sector in mind. There may be some connection, but it is not the sole factor.”
Sunset Clause for Concessions
“We have conducted a comprehensive review of about 124 conditional exemption notifications. In 102 of these cases, the exemption has been continued and extended until March 2028, as they are reviewed periodically. 22 entries are expiring this March.”
Rationale for SEZ Domestic Sales
On the rationale behind allowing Special Economic Zone (SEZ) units to sell in the domestic tariff area, he explained:
“SEZs are primarily created for exports. Due to global challenges, exports are not happening and capacities are lying idle. There is a commercial perspective to utilize them, and there is a market need for the manufactured goods. Therefore, the idea is to provide SEZ units access to the market in the domestic tariff area. At the same time, we must ensure that equal opportunities are available for domestic manufacturers who have made capital investments.”
Changes in Duty Structure
“We have eight different slabs. We have not made any changes to these. On the duty side, we have taken some notable steps. The first is tariffization, i.e., a customs duty schedule where rates are fixed to provide predictability and clarity to trade. Second, about 140 new tariff lines have been created to resolve classification disputes. Third, a review of exemption notifications that were not in use has been allowed to lapse, while others have been made subject to annual review.”
Scope for Rationalizing Slab Structure
When asked if there is scope to further rationalize the eight-slab structure, he stated:
“We reviewed it only last year. It is a work in progress and we need to be cautious. Since it was changed only last year, there is no immediate change.”
Addressing Difficulties in Authorized Economic Operator Certification
On how CBIC is addressing difficulties businesses face in obtaining Authorized Economic Operator (AEO) certification while involved in litigation, he said:
“The certification process is extensive because the government places significant trust on AEO entities in terms of their credibility and compliance. Going forward, we are expanding the benefits.”
