F.No.209/44/99-CX.6

Subject : Central Excise - Rebate of duty paid on processed textile fabrics under section 3A where the fabric is used for the manufacture of made-ups (export goods) - Problems arising due to absence of procedures - Regarding

     I am directed to say that it has been brought to the notice of the Board that rebate claims in respect of duty paid on processed textile fabric used as material for manufacture of made-up (export goods) are being denied on the ground(s) that the claimants did not follow the prescribed  procedure for export under claim for rebate of duty on excisable materials in terms of rule 12(1)(b) read  with notification No. 42/94-CE(NT) dated 22.9.94 as amended [AR-5 procedure] - such as, in some cases no declaration was given  and no permission was obtained from the proper authorities prior to clearances for export, clearances were made on AR4, in some documents it was mentioned "without availing the facility under rule 12(1)(b)" and/or other phrase etc. The trade and industry have requested that the legitimate export benefits should not be denied only because of the procedural deviations which occurred because there was general ambiguity about the correct procedure for export of made-ups after the introductions of the new levy under Section 3A.

2. The board has examined the matter. In order to obviate the genuine difficulties of the exporters, especially in view of the fact that exporters were not aware of the exact procedure in the aforementioned situation, the Board has decided that the rebate sanctioning authority should, in exercise of the powers under second proviso to sub-rule (1) of rule 12, relax the procedural requirements (conditions) of the notification No. 42/94-CE(NT) dated 22.9.1994, as amended. Accordingly, the procedural deviations, including those relating to declaration/permissions prior to export, use of incorrect document (AR-4), use of any phrase/declaration by the exporter on export documents which was not so required etc., should be ignored., subject to the conditions that goods in question were actually exported and the duty was paid by the independent processors'  factory on materials (processed textile fabrics) supplied to the manufacturer of made-up articles. In other words, where the rebate sanctioning authority is satisfied that the goods manufactured out of the excisable material were actually exported, rebate should be allowed on the basis of the input-output norms as determined (even if determined post-facto exports) in respect of the same/similar goods, by the competent authority. Accordingly, the instructions contained in Circular No. 129/40/95-CX dated 29.5.95 may also be applied, mutatis mutandis. It should, however, be ensured that the rebate claims are otherwise admissible.

3. The Board also desires that all the pending rebate claims may be decided expeditiously. Any difficulty noticed in this regard may be brought to the knowledge of the Board immediately. In future, the exporters should be directed to follow the specified procedure.