Problems faced by Merchant Exporters regarding availment of drawback on garments

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CUSTOMS CIRCULAR NO. 43/2002 dated 19.7.2002
Problems faced by Merchant Exporters regarding availment of drawback on garments – regarding.

Attention is invited to Ministry’s Circular No. 54/2001-Cus. dated 19.10.2001 and 64/2001- Cus dated 19.11.2001, issued to address the specific problems of merchant-manufacturer exporters of garments in claiming duty drawback.

2. In the Union Budget, 2001 – 2002, duty of Central Excise was imposed on readymade woven garments. Therefore, entries were created in the Drawback Table, 2001-2002, with higher drawback rates for those cases where CENVAT facility was not availed. It was, however, represented by the Garment industry that majority of the garment exporters cleared the goods for export purposes and they were not paying any duty. Accordingly, garment exporters were given the facility of filing only declarations in terms of the above referred Circulars instead of furnishing CENVAT non-availment certificates, for claiming higher drawback. No such procedure was considered necessary for knitted garments as they were exempt from Central Excise levy.

3. This year, knitted garments too have been subjected to Central Excise duty. Therefore, as in case of woven garments, separate entries have been created in the Drawback Table, 2002-2003, for the cases where CENVAT facility is availed and those cases where no such facility is availed. Certain trade bodies have brought it to the notice of the Board that the exporters of knitted garments are facing difficulties as the Customs officers in the field formations have been insisting on the production of a certificate regarding non-availment of CENVAT facility. The trade has represented that the position of knitted garments is not different from the one obtaining in respect of woven garments as majority of knitted garments produced are cleared for exports. Hence, the question of availment of CENVAT facility in respect of exports does not arise. They have requested that for this reason these exports should be given the same facility as is available to the woven garments.

4. The issue has been examined in the Ministry. In view of the position explained by the trade, it is felt that the knitted garments sector deserves the same treatment as given to the woven garment sector. Hence, it is clarified that the provisions of Circulars No. 54/2001-Cus and 64/2001-Cus would also be applicable to the knitted garments. These exporters may be granted higher drawback on production of the declarations as provided in Annexure-I and Annexure-II to this Circular.

5. Since, the Central Excise levy on knitted garments has come into effect from 1.3.2002, all the exports effected on or after this date shall be eligible for this facility, Therefore, all the pending cases may be settled accordingly.

6. Commissioner of Customs shall get the veracity of these declarations verified by following the same procedure as is detailed in paragraph 8 of the earlier Circular No.54/2001-Cus dated 19.10.2001.

7. Suitable public notices for the trade and standing orders for the staff concerned may be issued at your end.

Sd/-
(S.S. Renjhen)
Joint Secretary to the Government of India

F.No. 609/107/2001-DBK
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)

ANNEXURE-I

Exporters’ Declaration required for Exports of Woven/Knitted Garments for availing higher All Industry Rate of Drawback.

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/Knitted Garments for availing higher All Industry Rate of Drawback.

We also declare that we have manufactured and supplied these garments to the above mentioned exporters.

Supporting Manufacturers’/Job Workers’ Signature & Seal

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