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Clarifications regarding Woven Fabrics of Cotton Subjected to the Process
of Open
Circular
No. 649 dated 25th July 2002
I
am directed to state that representations have been received from the trade and
industry seeking clarification on the computation of the exemption limit
available to a textile processor undertaking stentering of cotton fabrics with
the aid of an open-air stenter and the definition of an open-air stenter. The
matter has been examined carefully and the clarification is as given below.
2.
Woven fabrics of cotton subjected to open-air stentering by a textile
processor, on job-work basis, in a factory, which does not have the facilities
for carrying out bleaching, dyeing or printing or any one or more of these
processes with the aid of power or steam, is exempted from excise duty, vide
Notification No. 33/ 2002-CE, dated 18-6-2002. However, the exemption is
available only upto that much quantity of cotton fabrics in respect of
which the aggregate amount of job-charges for such stentering does not exceed
Rs. 15 lakhs in a financial year. Moreover, if the textile processor does not
undertake any job-work and subjects the cotton fabrics to open-air stentering on
his own behalf, then also the above exemption is available upto that much
quantity of the said fabrics in respect of which the job-charges for such
stentering does not exceed the aforesaid limit. Therefore, in the latter
situation, the job-charges have been deemed to be the difference between the
value of the stentered fabrics and the value (cost) of grey fabrics.
3.
If the textile processor subjects the cotton fabrics to open-air
stentering on his own behalf and also subjects the said fabrics to other
exempted processes (viz, bleaching, dyeing or printing, without the aid of power
or steam), then the cost of such other exempted processes would not be required
to be taken into account for computing the aforesaid ceiling limit of Rs. 15
lakhs. This is for the reason that the aforesaid ceiling limit is in respect
of job-charges for open-air stentering, as laid down in condition No. 6 to the
notification No. 14/2002-CE, dated 1-3-2002, as amended by notification No.
33/2002-CE.
4.
As regards the issue of the definition of an open-air stenter, it may be
mentioned that as per the definition of the same given in Notification No. 14/
2002-CE, dated 1-3-2002, as amended by Notification No. 26/ 2002-CE, dated
27-4-2002, an open-air stenter means stenters commonly known as such and
includes a stenter with a simple outer cover to prevent loss of heat but does
not include any stenter which runs on steam or a hot-air stenter. Therefore,
whether a particular kind of stenter is an open - air stenter or not is a
question of fact to be determined by the Commissioner concerned, taking into
account the following factors also: -
(i) An open-air stenter, as opposed
to a hot-air stenter, is a simple machine having no chambers; and
(ii)
While in a hot-air stenter, heat is applied to the fabric indirectly by
circulation of hot thermic oil through the pipelines fitted in the radiators in
each chamber, in an open-air stenter, heat is applied directly to the fabric.
5.
Trade and field formations may please be informed suitably.
6.
Receipt of the same may be acknowledged.
7.
Hindi version will follow.
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