Policy Circular No- 23/2010 dated 21/02/2011
Eligibility of tufted cotton bathmats/cotton tufted bathrugs covered under ITC
(HS) Codes 5703 or 5705 for grant of duty credit scrip under VKGUY/FPS of FTP.
Policy Circular 21/2009-14 dated 12.1.2010 clarified how the cases of exports of
cotton bathmats/rugs covered under ITC (HS) Codes 5703 or 5705 would be treated
as hand-made category for grant of benefit of duty credit scrip by obtaining a
suitable self-declaration from the exporters.
2. Trade and Industry has again represented that in respect of some export
shipments prior to 12.01.2010, the benefit is being denied because the export
product has been described on the shipping bill as “cotton powerloom-tufted
bathmats/cotton powerloom-tufted bathrugs”. The representation says that a
powerloom only weaves and cannot ‘tuft’. At the time of custom clearance they
had to declare as to whether their export product is manufactured on a handloom
or a powerloom. Since these cotton bathmats/bathrugs were not woven but tufted
by using a tufting machine similar to table-top type sewing machine, the
expression “cotton powerloom tufted” came to be used on the shipping bills. The
Trade and Industry has, therefore, requested to issue necessary clarification
that benefit of Chapter 3 of FTP may also be granted to such shipments.
3. The matter has been examined. There is merit in the contention of the Trade
and Industry. Policy Circular 21/2009-14 dated 12.1.2010 has already explained
how such products would fall in the hand-made category. The entire process
requires elaborate manual handling by a worker using a motor operated table top
type tufting machine; marking of the outlines on the base fabric as per the
design and colour combination is done manually; the base fabric/canvas is cut
manually to give it the desired shape; filling of different colours with the
needle of the sewing machine is done by moving the base fabric/canvas by hands;
after finishing the tufting, uneven threads are cut by hands with the help of a
scissor and sheering and embossing is also done by hand with the help a scissor
to produce a finished product.
4. Export shipments covered under ITC (HS) Code 5703 or 5705 are to be treated
as hand-made category even if the description of the export product entered in
the relevant shipping bills may have been “cotton powerloom tufted
bathmats/cotton powerloom tufted bath rugs”, for the reasons given in 3 above.
This is in consonance with clarification given in Policy Circular 21/2009-14
dated 12.1.2010. As these products are handmade category, they will be eligible
for grant of the benefit of duty credit scrip at the rate of 5% under the Focus
Product Scheme for exports made from 23.2.2009 onwards, and earlier under VKGUY/FPS,
at the applicable rates. However, if the export description in the relevant
shipping bill fails to mention the word ‘Handmade’, a declaration based on trust
has to be taken from the exporter. The necessary declaration, on lines of Policy
Circular 21/2009-14 dated 12.1.2010 with suitable modification, to be given by
the exporter is as under:
“It is certified that cotton bathmats/rugs, described in the Shipping Bill
No.---- dated ----(to write all Shipping Bill Nos., if more than one), as cotton
powerloom tufted bathmats/ cotton powerloom tufted bath rugs, and against which
the benefit under FPS or VKGUY (to write whichever is applicable) under ITC (HS)
Code 5703 or 5705 (to write whichever is applicable) is being claimed under the
DGFT File No.-------------- , have been tufted by a worker by using a table-top
mounted sewing machine, and it is also certified that all other processes like
cutting of the base fabric as per the design, sheering, embossing etc. have been
done manually”.
5. This self-declaration can be given for shipping bills up to 11.01.2010 so
that RA can grant of the benefit of duty credit scrip at the rate of 5% under
the Focus Product Scheme for exports made from 23.2.2009 onwards, and earlier
under VKGUY/FPS, at the applicable rates.
6. This issues with the approval of DGFT.
Sd/-
[A. K. Singh]
Joint Director General of Foreign Trade
[Issued from F.No. 01/91/180/1794/AM11/PC3]