Circular No. 7/2011-Customs dated 18.1.2011
Subject: - Export of handicraft and artware items under Drawback Scheme – reg.
I am directed to invite your attention to the Board
circular No.03/2010-Cus dated 12.02.2010 regarding classification of handicraft
and artware items in the Drawback Schedule. The circular clarified that the
assessing authorities should normally accept certificates issued by the
Development Commissioner (Handicrafts) / EPCH certifying the goods as artware/
handicrafts. A decision to reject a certificate issued by the Development
Commissioner (Handicrafts)/ EPCH should be taken only with approval of the
Commissioner of Customs / Central Excise and after discussions with the
certificate issuing authority. Exports should not, in the mean time, be held up.
The circular also clarified that consignments of artware and handicrafts should
be classified in the Drawback Schedule in accordance with condition (3) of the
Drawback Schedule which provides that all artware or handicraft items shall be
classified under the heading of artware or handicrafts (of constituent material)
as mentioned in the relevant chapters of the Drawback Schedule irrespective of
their classification under the HSN.
2. It has been reported by Moradabad Handicrafts
Exporters Association and Export Promotion Council for handicrafts (EPCH) that
following issue of this circular, certificate from EPCH / Development
Commissioner (Handicrafts) is being asked for each and every consignment of
artware and handicrafts. Consignments not having such certificates are
necessarily examined. Further, at some field formations certification by EPCH /
Development Commissioner (Handicrafts) on invoices is not accepted.
Certification only on the body of the shipping bill is insisted citing the Board
circular No. 56/99-Cus dated 26.08.1999.
3. It has also been represented that lamps/lanterns
predominantly made of glass are not considered as handicrafts and exporters are
not allowed to use the word ‘handicraft’ in the description while filing
shipping bills for these items even when certificates of Development
Commissioner (Handicrafts) certifying these goods as handicraft are submitted.
As a result, exporters are deprived of the benefit of FPS which is available
only on artware/handicrafts. Further, at some field formations, in case of
artware or handicraft item made of more than one constituent material, drawback
is either allowed on constituent materials separately or is allowed only on one
of the constituent materials.
4. The matter has been examined. It is hereby clarified
that certificate from EPCH/ Development Commissioner (Handicrafts) should not be
asked for all consignments of Handicrafts/artware as a routine but only in cases
of doubt. Certification of EPCH/ Development Commissioner (Handicrafts) on
invoices may be accepted notwithstanding anything contained in the Board
circular No. 56/99-Cus dated 26.08.1999. Certification on photographs may also
be accepted and the exporter, if required, may use the certified photograph for
subsequent export consignments of that product. Further, every consignment which
does not have Development Commissioner (Handicrafts)/EPCH certificate, need not
be examined. The Board’s circular No.6/2002-Cus dated 23.01.2002 which
prescribes examination norms for exports under drawback and other EP schemes
should be applied to artware/handicraft consignments also. Normally,
packages/shipments selected by the EDI system for examination only should be
examined unless there is some intelligence suggesting fraud/misuse. If there is
a doubt on such examination about the goods being artware/handicraft,
certificate from Development Commissioner (Handicrafts)/ EPCH may be asked for.
As clarified by the Board vide circular No. 3/2010-Cus dated 12.02.2010,
certificates issued by EPCH/Development Commissioner (Handicrafts) should
normally be accepted and a decision to reject them should be taken only with
approval of the Commissioner and after discussions with the certificate issuing
authority. Exports should not, in the mean time, be held up.
5. It is also advised that as clarified by the Board
vide Circular No.3/2010-Cus and as provided in condition (3) of the Drawback
Schedule Notification No.84/2010-Cus (N.T.) dated 17.09.2010, alignment of
Drawback Schedule with the customs tariff is not applicable to artware /
handicraft items. If the export items such as lamps/lanterns are artware/
handicraft items, they should be classified as artware/ handicrafts in the
specific headings provided for artware/handicraft items of iron, glass, brass,
iron and steel etc. in various chapters of the Drawback Schedule irrespective of
their classification in the Customs Tariff / HSN and irrespective of whether
there are other headings, covering those products more specifically, in the
Drawback Schedule elsewhere. Further, as clarified by the Board vide circular
No. 3/2010-Cus dated 12.02.2010, artware or handicraft article made of more than
one constituent material should be classified as if it is made of that
constituent material which predominates in it by weight. Once classification of
such article in a heading/sub- heading of the drawback schedule has been
determined, then the drawback rate and cap prescribed against that
heading/sub-heading should be applied to the whole article irrespective of the
value or weight of different constituents.
6. A suitable public notice for information of the Trade
and Standing Order for guidance of the assessing officers and for strict
adherence may be issued. Difficulties faced, if any, in implementation of the
circular may please be brought to the notice of the Board at an early date.
Kindly acknowledge receipt of this circular.
Yours faithfully,
(PRAMOD KUMAR)
(TECHNICAL OFFICER)
F.No. 609/119/2010-DBK
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