CIRCULAR No. 54/2001-CUS
Dated 19th October, 2001
Subject:-Problems faced by Merchant Exporters regarding availment of
drawback on garments regarding.
All categories of Ready-made woven garments (other than raincoats,
undergarments and clothing accessories) falling under Chapter 62 of
Customs & Central Excise Tariff Act are now subject to central excise levy
as a result of the changes announced in the Union Budget, 2001-2002(Finance Bill
stage and those made thereafter till the Finance Bill was enacted.) Though
normally it is the actual manufacturer who is to pay duty of excise leviable on
any commodity, considering the
peculiar and very decentralized nature of garment producing sector certain
special provisions have been made, wherein the merchants who get their
garments produced by supplying materials to producing job working units have
been recognized for registration/ duty payment etc. purposes. Vide Rule 4(3) of
Central Excise (No.2) Rules, 2001, a merchant manufacturer, i.e., a merchant,
who gets the goods manufactured from a job worker on his own account, is
required to pay duty on the
garments manufactured on his behalf on job work basis, either himself or
authorise such job worker(s) to pay duty on his behalf. When merchant
manufacturer pays duty, he is also entitled to avail of CENVAT for inputs
procured and used for garment production by job workers.
2. Since the manufacturer or merchant manufacturer whose domestic turnover
exceeds rupees one crore has to pay excise duty and can avail of Cenvat credit
in respect of inputs used in the manufacture of woven garments, separate
drawback rates have been provided with effect from 7.6.2001 for the garments
where Cenvat facility is availed or not availed. In case the Cenvat facility
is availed, the drawback rate has only Customs allocation and if such facility
is not availed, the rate includes both the Customs & Central Excise allocations.
It has been brought to the notice of the Board that the customs formations while
scrutinising Drawback claims of woven garments exporters are insisting on the
production of the certificate evidencing non-availment of Cenvat facility in
every case. This is stated to be causing undue hardship to garment
exporters-very large number of which are said to be only merchant manufacturer
who are basically export oriented and whose domestic
clearances are nil or negligible.
3. Export Organisations have, however, represented that in the present, scenario
where a merchant getting the goods manufactured from other manufacturers / job
workers is under liability to pay the Central Excise duty and especially since
such manufacturers / job workers are scattered, it is not possible to furnish
such certificate in every case. Further, it has also been represented that most
of garment exporters are merchant-manufacturers who are exempted from the levy
of Central Excise as
their domestic clearances do not exceed Rs, 1 crore. They have, therefore,
requested that instead of insisting on a Cenvat non-availment certificate
in every case, drawback at higher rate may be permitted on the basis of suitable
declaration from such exporters. The Department could check independently if
need be to check its veracity.
4. The issue and request has been examined and the production and export pattern
and system of excise control and duty payment/CENVAT in garment industry also
looked into. It is observed that in the case of the goods manufactured by
manufacturer-exporters, there shall not be any difficulty in verifying the
declaration that Cenvat facility has not been availed in as much as for dutiable
garments, if cleared for export under bond/rebate claim, movement has to be made
under ARE-1
and such exporters can evidence the same through production of an ARE-1 issued.
5. For the exports, where ARE-1 is not issued, it has been decided that they
should clearly declare on the Shipping Bills, the name(s) of the job worker(s)/
supporting manufacturing unit(s) through whom the garments covered by the
Shipping Bill have been manufactured. These exporters shall also be required to
give a declaration in the format given in the Annexure-I certifying inter alia
that they are not registered with the Central Excise and that they are not
paying any Central Excise duties and not availing of the Cenvat facility
and that they have not authorised any supporting manufacturer/job-worker to pay
excise duty and comply with the provisions of Central Excise (No.2) Rules, 2001.
6. These exporters shall also be required to furnish a
certificate-cum-declaration as given in Annexure-II, from their supporting
manufacturers/ job workers interalia clarifying that they are manufacturing and
supplying garments to this particular merchant exporter only and that they are
not registered nor availing of any Cenvat facility for any garments manufactured
by them.
7. Such merchant-manufacturer exporters can be allowed higher drawback on the
basis of these declarations.
8. The Custom Houses shall get the veracity of the declaration given by the
exporters and their supporting manufacturers/job workers, verified at random by
the jurisdictional Deputy / Assistant Commissioner of Central Excise on
quarterly basis. The criteria for random selection of such declarations to be
verified by the Excise authorities, may be formulated by the Commissioner of
Customs. If on verification any misdeclaration is discovered, the higher
drawback granted by the Customs would be recovered and only lower benefits
admitted for future shipments to such exporters.
9. All Chief Commissioners of Central Excise are requested to cause preparation
of a list of all duty paying manufacturing and merchant manufacturing
units of woven garments, who are availing Cenvat facility. These lists may be
circulated to all the major Custom Houses / Air Cargo Complexes/Inland Container
Depots from where the exports of garments are effected.
10. Suitable public notices for the trade and standing orders for the staff
concerned may be issued at your end.
11. Working of this system will be reviewed by the Board after getting feedback
from the field formations. A report on its working may, therefore, be submitted
to the Board by 31st March, 2002. Feedback on its working, including instances
of misuse / attempted misuse may also be reported to the Board in the meantime.
In case it is felt that procedure as above is causing undue and avoidable
hassles to the exporters in effecting exports or in sanction and disbursement of
drawback due to
them or interest of revenue is being jeoparadised, the same may be reported at
once to the Board, with suggested course of action, for necessary remedial
measures.
Sd/-
(S.S.Renjhen)
Joint Secretary to the Government of India
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ANNEXURE-I
Exporters' Declaration required for Exports of Woven Garments for
availing
higher All Industry Rate of Drawback.
(Circular No.54/2001-Cus, dated 19th October, 2001).
1. Description of the Goods:
2. Invoice No. and Date:
3. Name and address of the Exporter alongwith
the name of the jurisdictional Central Excise
Commissionerate/Division/Range:
4. Name of the Supporting Manufacturer (s)/
Job worker (s) alongwith the name of the
Jurisdictional Central Excise Commissionerate/
Division/ Range:
5. Address of the Manufacturing Unit(s)/
Job Work Premises:
We, M/S. ____________________, the Exporters of the above mentioned goods,
hereby declare
that -
(a) we are not registered with Central Excise authorities,
(b) we have not paid any Central Excise duty on these goods, and
(c) we have not availed of the Cenvat facility under the CENVAT Credit Rules,
2001 or any
notification issued thereunder, and
(d) we have not authorized any supporting manufacturer/job-worker to pay excise
duty and
discharge the liabilities and comply with the provisions of Central Excise
(No.2) Rules,
2001, under the proviso to Rule 4(3) of the said Rules.
We also undertake that in case it is discovered that the Cenvat facility has
been availed by us
or by our supporting manufacturers in respect of these export goods, we shall
return the
excess drawback paid to us on the basis of above declaration.
Exporters' Signature & Seal
ANNEXURE-II
Supporting Manufacturers'/Job Workers' Declaration required for
Exports of Woven Garments for availing higher All Industry Rate of
Drawback.
(Circular No.54/2001-Cus, dated 19th October, 2001).
1. Description of the Goods:
2. Invoice No. and Date:
3. Name and address of the Exporter alongwith
the name of the jurisdictional Central Excise
Commissionerate/Division/Range:
4. Name of the Supporting Manufacturer (s)/
Job worker (s) alongwith the name of the
Jurisdictional Central Excise Commissionerate/
Division/ Range:
5. Address of the Manufacturing Unit(s)/
Job Work Premises:
We, M/S. ____________________, the supporting manufacturers/job workers declare
that we
(a) are not registered with Central Excise authorities,
(b) have not paid any Central Excise duty on these goods, and
(c) have not availed of the Cenvat facility under the CENVAT Credit Rules, 2001
or any
notification issued thereunder, and
We also declare that we are manufacturing and supplying garments to the above
merchant
exporters only.
Supporting Manufacturers'/Job Workers' Signature & Seal