In the wake of blatant abuse of the scheme, The Central Board of Indirect Taxes and Customs (CBIC) has removed the concessions under the bonded warehouse scheme, it had granted allowing solar developers to defer payment of the steep import duties on solar cells and modules that took effect on 1 April.
It had been reported on 4 June that certain developers were declaring entire solar plants as a “customs bonded warehouse” to avoid the payment of basic customs duty (BCD) of 25% on solar cells and 40% on modules. According to the CBIC, “Manufacture and other operations in a bonded warehouse is a duty deferment scheme. Thus, both BCD and IGST on imports stand deferred. In the case of goods other than capital goods, the import duties (both BCD and IGST) stand deferred till they are cleared from the warehouse for home consumption, and no interest is payable on duty. In case the finished goods are exported, the duty on the imported inputs (both BCD and IGST) stands remitted i.e., they will not be payable. The duty deferment is without any time limitation.”
