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Embroidered Fabrics, Introduction, Duty Payable under Special Procedure, Conditions, Application Special Procedure, Transitional Provision.

Duty payable under special procedure
Application to avail of special procedure
Opting out of the special procedure
Transitional provision
Discharge of liability for duty on payment of certain sum
Default in payment of duty
Manufacturer’s accounts
Returns and intimations
Exemption from certain provisions
Power to condone failure to apply for special procedure
Confiscation and penalty

Embroidered Fabrics

  1. Introduction

    1.1 The Central Government has specified under rule 15 of the Central Excise (No. 2) Rules, 2001 (hereinafter referred to as the ‘said Rules’) rate of duty and special procedure for embroidery in the piece, in strips or in motifs on cotton fabrics, man made fabrics, silk fabrics or woollen fabrics by notification No. 33/2001-(Central Excise) dated 28th June, 2001. This notification is effective from 1st July, 2001.
  2. Duty payable under special procedure

    2.1 An assessee shall have the option to pay the duty of excise on the basis of meter length of the machine per shift and fixes a rate of duty of Rs. 45 per meter length of the machine (i.e. the distance between the points provided for the first needle and the last needle of only one roller of the machine) per shift (i.e. a period not exceeding eight hours working in a day, exclusive of rest interval, provided the work of the same kind is carried out by the same set of workers), for embroidery machines utilised for manufacture of the said goods subject to certain conditions.
  3. Conditions

    3.1 The conditions to be complied with for availing the special procedure are, as follows:
    1. No credit of duty paid on inputs used in the manufacture of the embroidery and capital goods used within the factory of manufacture of such embroidery shall be taken under the CENVAT Credit Rules, 2001, and
    2. The procedure mentioned in the notification is followed.
  4. Application to avail of special procedure

    4.1 A manufacturer of embroidery in the piece, in strips or in motifs (hereinafter referred to as "the embroidery") shall make an application in the form specified in Annexure 30 to the said notification to the Superintendent of Central Excise in this behalf.

    4.2 The application shall be made so as to cover a period of not less than six consecutive calendar months, but may be granted for a shorter period, for reasons to be recorded in writing by the Assistant Commissioner or the Deputy Commissioner, as the case may be.

    4.3 If the manufacturer desires to avail himself of the special procedures contained herein on the expiry of the period for which his application was granted, he shall, not later than a week before such expiry, make an application to the Deputy/Assistant Commissioner of Central Excise; and on his failure to do so, he shall, except as provided herein, be precluded from availing himself of such procedures for a period of six months from the date of such expiry.
  5. Opting out of the special procedure

    5.1 If, at any time during the period of availment of the special procedure, the manufacturer desires to opt out, he shall give a notice in writing to the Deputy/Assistant Commissioner of Central Excise in charge of the factory of his intention at least one week in advance. Once the manufacturer has ceased to avail himself of such special provisions, from any date, he shall be precluded from availing himself of such procedure for a period of six months from that date.
  6. Transitional provision

    6.1 Notwithstanding anything contained in sub-paragraph (1), an application made by a manufacturer before the commencement of this notification under erstwhile sub-rule (1) of rule 96ZH of the Central Excise Rules, 1944, shall be deemed to be an application made under sub-paragraph (1) and the same shall be deemed to have been granted under sub-paragraph (1) and where such application has not been granted, the Assistant Commissioner or the Deputy Commissioner shall dispose of the same as if it is an application under sub-paragraph (1).
  7. Discharge of liability for duty on payment of certain sum

    7.1 If a manufacturer whose application has been granted pays before the commencement of any shift a sum calculated according to such rate, in the manner and subject to the conditions herein laid down, such payment shall be in full discharge of his liability for the duty leviable on his production of the embroidery during the said shift.

    7.2 If there is revision in the rate of duty, the sum payable shall be recalculated on the basis of the revised rates from the date of revision and liability for duty leviable on the production of the embroidery from that date shall not be discharged unless the differential duty is paid, and in case the amount of duty so recalculated is less than the sum paid, the balance shall be refunded to the manufacturer:

    7.3 The sum payable shall be calculated by application of the appropriate rate to the meter length of each of the machines intended to be employed by the manufacturer during the shift.

    7.4 The sum shall be paid by such manufacturer by debit in the account-current maintained under these provisions before commencement of the shift.
  8. Default in payment of duty

    8.1 If the payment of duty is not made in the prescribed manner and within the specified time-limit, the manufacturer shall, unless otherwise directed by the Deputy/Assistant Commissioner of Central Excise, and in exceptional circumstances, be liable to pay duty on his entire production of the embroidery during the shift or shifts, in respect of which the payment was to be made, at the rate specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986). However, where the period of delay is upto five days, the decision will be taken by the Superintendent of Central Excise.
  9. Manufacturer’s accounts

    9.1 The manufacturer shall keep account-current with the Commissioner, of the sums payable by him under the special procedure. Such account-current shall be maintained in triplicate by using indelible pencil and double sided carbon and the assessee shall periodically make credit in such account-current by cash payment into the treasury so as to keep sufficient balance in such account-current to cover the sums payable.

    9.2 The manufacturer shall maintain a Daily Stock Account in the form specified in Appendix II to the said notification.
  10. Returns and intimations

    10.1 The manufacturer shall file a monthly return in proper form prescribed under rule 12 of the said Rules appending therewith two carbon copies of the Daily Stock Account duly signed.

    10.2 The manufacturer shall intimate the Superintendent of Central Excise in writing of any change in the number, meter length and speed of the machines installed by him; and
  11. Exemption from certain provisions

    11.1 During the period in respect of which a manufacturer has been permitted to avail himself of the special procedure under the said notification, he shall be exempt from the operation of the provisions of rule 8 of the said Rules.

    11.2 Except in accordance with such terms, conditions and limitations as the Central Government may by notification specify in this behalf, no rebate of excise duty shall be paid under rule 18 of the said Rules, in respect of any embroidery exported out of India out of the stock produced by such manufacturer during such period.
  12. Power to condone failure to apply for special procedure

    12.1 Notwithstanding anything contained in the aforesaid notification, the Additional/Joint Commissioner of Central Excise may, at his discretion and subject to such conditions as he may deem fit, apply the provisions contained in the said notification to a manufacturer who has failed to avail himself of the special procedure, or to comply with any condition, laid down in the said notification.
  13. Confiscation and penalty

    13.1 If any manufacturer contravenes any provision of the said notification in respect of any excisable goods, then all such goods shall be liable to confiscation, and the manufacturer shall be liable to penalty under rule 25 of the said Rules.


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