Circular No. 25 dated 24^th April 2001

In terms of Chapter 4 of the Finance Bill, 2001, amongst other proposals of Central Excise Taxes, it has been proposed to subject ready-made garments and clothing accessories bearing a registered brand name or sold under a registered brand name, and falling under Central Excise Tariff Headings 62.01 and 62.02, to a CENVAT levy of 16% ad valorem with effect from 1.3.2001.

 2.     As these goods were not chargeable to any terminal excise duty in the past, the drawback rates for the same had been worked out by taking into account both the Customs and Central Excise duties on the inputs and the availment of drawback benefits was not subject to any condition of non-availment of CENVAT facility. In order to avoid any double benefits to the exporters as well as to obviate the possibility of any harassment at the field level, the admissibility of drawback to the goods covered by the entries appearing at SS No.62.01, 62.08, 62.13, 62.15, 62.16, 62.17, 62.18, 62.19 and 62.20, has been made subject to the condition �when CENVAT facility has not been availed�. However, in those cases where the exporters avail of CENVAT facility, the admissibility of Customs allocation merits to be made available. Therefore, 8 new SS Numbers viz., at SS No.62.011, 62.081, 62.151, 62.161, 62.171, 62.181, 62.191, and 62.201 have been added to the Drawback Table with drawback rates equivalent to the Customs allocations along with proportionate drawback caps. A Notification No.16/ 2001-Cus (N.T.) has been issued on 20^th April, 2001 to this effect and the same is effective for all exports effected from 1.3.2001.

3.      Board appreciates that majority of exporters of these goods may not be coming under the Central Excise net. Therefore the exporters of these goods may be allowed higher drawback in the existing entries subject to furnishing of a declaration:

(a)     that the goods do not bear any registered brand name and the exporters are not liable to pay any Central Excise duty on the goods as these are completely exempt under exemption notification 12/ 2001-CE and

(b)     that the exporters are not registered with Central Excise and are not availing any CENVAT credit facility for the inputs used in the manufacture of the goods under exports.

4.      Therefore, once a declaration as aforesaid is made and the goods are not found to be exported under AR-4 procedure of Central Excise (which is required to be followed only by excise duty paying manufacturers for goods cleared for exports), Custom Houses need not insist on any further certificate from the concerned jurisdictional officers of Central Excise about availment or otherwise of the CENVAT credit facility.

5.      Suitable Public Notice for information of the trade and standing orders for guidance of the staff may kindly be issued on the above lines.

6.      Receipt of the Circular may please be acknowledged.