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Compounded Levy on Independent Textile Processors, the scheme of compounded levy of duty on basis of hot air stenters with an independent textile manufacturer.


Part-III
COMPOUNDED LEVY ON INDEPENDENT TEXTILE PROCESSORS

  1. Introduction

    1.1 The scheme of compounded levy of duty on basis of hot air stenters with an independent textile manufacturer has been introduced effect from 1st May, 2001 by Notifications No. 16/2001-Central Excise (N.T.) and No.21/2001- Central Excise, both dated 30.4.2001.

    1.2 The scheme of compounded levy is optional. Thus, an independent textile processor has the option of availing this scheme and paying the duty prescribed thereunder. In the alternative the processor may pay the duty at the specified rate of duty on the basis of the value of the goods produced.
  2. Rate of compounded levy

    2.1 The rate of duty under the compounded levy scheme is, as follows:
    Value of Processed Textile Fabrics Rate of compounded duty Per stenter per chamber
    Upto and including Rs. 30 per sq. meter Rs. 2.5 lakhs per month
    Over Rs. 30 per sq. meter Rs.3 lakhs per month

    2.2 The 50% of the compounded duty has to be paid by the 20th. of the month and the balance 50% by the 5th of the succeeding month.
  3. Salient features of compounded levy scheme

    3.1 The eligibility conditions for availing the scheme are:
    1. The scheme does not apply to open air stenter. It applies only to hot air stenters.
    2. The scheme can be availed only if the original value of investment on plant and machinery, duly certified by a Chartered Accountant of Cost Accountant, in the factory of the processor is not more than Rs.3 crore. For this purpose, the higher of the original value of the investment on plant and machinery that was installed as on 1.3.2001 and as installed on 1.5.2001 in the factory of processor is to be taken into account.
    3.2 An independent processor, who is eligible for availing of the scheme, has to apply for exercising the option through an application to be submitted to the jurisdictional Commissioner of Central Excise by the 20th May, 2001. However, should he commence business subsequently, he should apply before the commencement of the production.

    3.3 Once the option has been exercised for the scheme, and accepted by the Commissioner of Central Excise, it can not be withdrawn during the remaining part of the financial year.

    3.4 No abatement if available on account of any reduction in stenter or chambers or on account of closure or absence of use of the same. The duty liability would remain unchanged during the period of option of the scheme i.e. the financial year. However, should all the manufacturing operations in the factory be closed for more than 30 days abatement is permissible.

    3.5 In the event that after application and acceptance thereof any enhancement is made in the number of chambers the duty liability would get enhanced for the balance part of the financial year.

    3.6 The applicant availing the scheme has to do the stentering in his factory itself.

    3.7 Detailed instructions regarding the valuation of processed fabric and other procedure have been issued from F.No.B.4/6/2001-TRU dated 30.4.2001, which will apply, mutatis mutandis, under the Central Excise (No.2) Rules, 2001.

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