Government of India
Ministry of Finance
(Department of Revenue)
Tax Research Unit
Circular No. 948/09/2011-CX
*****
New Delhi,
dated the 5th July, 2011
To,
All Chief Commissioners of Central Excise (including LTU),
All Chief Commissioners of Customs & Central Excise,
All Director Generals,
Sir/ Madam,
Subject: Applicability of Circular No. 845/03/2006-CX dated 1.02.2007 on textile
products falling under Chapter 55 - regarding.
It has been brought to the notice of the Board that doubts have arisen on
whether the benefit of proportionate Cenvat credit as clarified by
Circular
845/03/2006-CX dated 1.02.2007 would be available to textile items of heading
5508, 5509, 5510, 5511, 5512, 5513 and 5514 of the First Schedule to the Central
Excise tariff Act since a reference to these headings was omitted in
Notification No.29/2004-CE dated 9th July, 2004 vide
notification No.11/2009-CE
dated 7th July,2009.
- The matter has been examined. Prior to 7th December,2008 textile goods of
pure cotton attracted a concessional excise duty of 4% while others attracted a
concessional excise duty of 8% under
Notification no. 29/2004-CE dated 9th July,
2004. The duty rates under the said notification were reduced from 4% to Nil
and from 8% to 4% respectively vide
notification no. 58/2008-CE dated 7th
December, 2008. When the duty rates were restored from Nil to 4% and from 4% to
8% in the said notification vide notification no.11/2009-CE dated 7th July,
2009, the reference to headings 5508, 5509, 5510, 5511, 5512, 5513 and 5514 were
omitted in the said notification 29/2004-CE. This was done because items falling
under these headings already attracted 8% by tariff. Thus the effective rate of
excise duty on these textile items operated through the tariff since both the
effective as well as the tariff/statutory rate was at 8%. Subsequently in
Budget, 2010-11, when the general Cenvat rate was increased from 8% to 10%, the
tariff rates for these headings were also increased to 10%. Since both the
effective duty rate and the tariff rate are at 10% for these goods, the excise
duty rates on these goods continue to operate by tariff even though they are no
longer referred to in notification no. 29/2004-CE.
- In view of the above, the non –mention of these headings in notification
no.29/2004-CE has no bearing on the availability of Cenvat credit and
applicability of Circular no. 845/3/2006. It is hereby clarified that the
benefit of proportionate credit would continue be available to textile items
falling under the aforementioned headings.
- Trade & Industry as well as field formations may be suitably informed.
- Receipt of this circular may kindly be acknowledged.
- Hindi version will follow.
Yours Faithfully,
(Limatula Yaden)
Director (TRU)
F.No.354/97/2011 -TRU