It has been represented to the Board by the Cotton Textile Export Promotion Council that merchant exporters of cotton made ups are facing difficulties in getting the rebate of duty paid at the inputs stage. It has been further stated that the merchant exporters were being allowed to export the goods directly from the factory of the manufacturer of export goods working under Rule 191A/ 12 (1) (b) on AR-4/ AR-5 from used for export bearing the name of such merchant exporters in addition to the manufacturer of the said export goods.

2.     In this regard attention has been invited to para 2.3 of the Board Circular No. 129/40/95-CX dated 29.5.95 according to which benefit of input stage rebate can be claimed by a manufacturer of finished goods only if the export is in his own name. It has been further stated that benefit of the input stage rebate shall not be extended where the export are through merchant exporters. Thus the grant of input duty which was earlier available under sub-rule 17 of Rule 191A, was denied by these instructions.

3.     The issue been re-examined by the Board. It is observed that Rule 12 and the Notification No. 42/94-CE (NT), do not restrict the benefit or rebate of inputs only to duty paid on the inputs to the merchant exporters in aforesaid type of cases where the export goods are directly cleared from the factory and the name of the merchant exporter also appears on AR-5 subject to fulfillment of other conditions prescribed in this behalf. The Board's earlier Circular No. 129/40/95-CX dated 29.5.95 is modified to this effect.