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Regarding drawback on ready-made garments � Deduction from f.o.b. value
on account of imported/ indigenous hangers
Circular No. 5 dated 19th
January 2001
A representation has been received from the Apparel Export Promotion
Council that certain Customs formations are following a practice of deducting
the value of hangers from the f.o.b. value of the hanger packed garments for the
purpose of allowing drawback even though the Customs Notification No. 16/ 2000
dated 1.3.2000 (vide Serial No.115), exempts hangers imported by bonafide
exporters, from both the basic Customs duty and the countervailing duty.
2. The issue has
been examined in the Board. It is observed that vide an earlier circular No.42/
96-Cus dated 12.8.96, it was clarified that drawback could be allowed under
section 74 of the Customs Act, 1962, on the hangers imported on payment of
Customs duty when such hangers are re-exported along with ready-made garments
provided the value of the hanger is not included in the value of garments. For
such benefit, the hangers and ready-made garments are declared as two distinct
commodities on the Shipping Bill though for the sake of convenience and on the
instructions of the overseas buyers, the hangers have been packed along with the
ready-made garments.
3. It is also
clarified here while formulating the All Industry Rates of Drawback for the
ready-made garments; the duty incidence on account of hangers has not been
included. The hangers supplied along with the garments are either sourced
locally or they are imported. The local procurement in any case is against a
price while the imported hangers could have been supplied either free of charge
or against payment. In view of such different modes of procurement it is not
possible to lay down a uniform criteria to address the issue.
4. The
Board has, therefore, decided that -
(a) where the hangers are
imported duty free under notification No.16/ 2000-Cus, dated 1.3.2000, and have
been supplied free of charge, their value should not be deducted from the value
of the garments while computing the drawback amount. However, if the hangers are
imported on payment basis, their value shall have to be deducted, no matter
these were imported duty free under notification No.16/ 2000-Cus. In such cases,
a suitable declaration should be obtained from the exporters;
(b) where hangers are
locally procured, suitable deductions should be made from the total value of the
garments if the value of hangers is not declared separately and deducted by the
exporters; and
(c) where the hangers are
imported on payment of duty, drawback under section 74 can be availed separately
by the exporters in terms of Board�s earlier Circular No.42/ 96-Cus dated
12.8.96. If their value is not separately indicated in the shipping bills,
suitable amendment to the declared f.o.b. value to arrive at the net f.o.b.
value of the ready-made garments exclusive of hangers, may have to be made.
Proper verification as to the identity of the goods and duty payment thereon has
also to be done before drawback under section 74 is disbursed.
A suitable declaration regarding the value/ duty payment/ exemption/
procurement status of the hangers supplied with the ready-made garments may have
to be obtained to enable action as above.
5. All
pending claims of the parties may be decided accordingly.
6. Suitable Public
Notice for information of the trade and standing orders for guidance of the
staff may kindly be issued on the above lines.
7. Receipt
of the Circular may please be acknowledged.
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