Removal of Ban on export of Onion

Circular No. 43 /2011-Customs

F. No. 524/53/2011-STO(TU)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

***

 229-A,North Block,

New Delhi, the 23rd September, 2011.

To

            All Chief Commissioners of Customs/ Customs (Prev.)/ C&CE,

            All Directors General of CBEC,

            All Commissioners of Customs / Customs (Prev.) / C&CE

            All Commissioners of Customs & Central Excise (Appeals).  

            Subject:           Removal of Ban on export of Onion-    reg.

Sir / Madam,

             Attention is invited to Board’s Circular No.41/2011-customs dated 14-09-2011 which provides for monitoring of the export of Wheat, Rice and Onion.

2.         The Board had informed vide said Circular dated 14.09.2011 that export of ONION is prohibited vide Notification No.73(RE-2010)/2009-2014 dated 09-09-2011. Now DGFT vide Notification No.75(RE-2010)/2009-2014 dated 20/09/2011 amended the said notification and lifted the ban on export of Onion with immediate effect. Export of Onions is now allowed subject to Minimum Export Price of $475.00 per MTS or as notified by DGFT from time to time. The field formation may take note of this change and strictly monitor the conditions of the said Notification.

3 .        Board’s Circular no. 41/2011-Customs dated 14-09-2011 stands modified to the above extent. The reports prescribed therein shall continue to be sent till further notice.

Yours faithfully, 

(A.K.Goel),

Senior Technical Officer(Tariff Unit)

Tel:2309 5555

Fax:2309 2173

Removal of Ban on export of Onion

Adjudication of appraising related Show Cause Notices- regarding

Circular No. 44  /2011- Customs 

F. No.437/143/2009-Cus.IV

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

229 A, North Block

New Delhi, dated 23^rd September, 2011.

To

All Chief Commissioners of Customs / Customs (Prev.).

All Chief Commissioners of Customs & Central Excise.

All Commissioners of Customs / Customs (Prev.).

All Commissioners of Customs & Central Excise.

Director General of Revenue Intelligence.

Director General of Central Excise Intelligence.

All Directors General.

Subject: Adjudication of appraising related Show Cause Notices- regarding

Sir / Madam,

            Consequent to the judgement of Hon’ble Supreme Court dated 18.02.2011, in Civil Appeals Nos. 4294-4295 of 2002 and Nos. 4603-4604 of 2005 (commonly referred to as Sayed Ali case), Board issued an Instruction F.No.437/143/2009-Cus.IV(pt) dated 15.04.2011 directing the field formations to examine pending Show Cause Notices and wherever these are not hit by time limitation to get these issued afresh by the jurisdictional Commissionerates.

2.         Further, as a prospective remedial measure, in terms of Section 2(34) of the Customs Act, 1962, the Board issued Notification No.44/2011-Customs (N.T.), dated 06.07.2011.  By virtue of this Notification, officers of Directorate General of Revenue Intelligence (DRI), Commissionerates of Customs (Preventive), Directorate General of Central Excise Intelligence (DGCEI) and Central Excise Commissionerates were assigned the functions of the ‘proper officer’ for the purposes of Sections 17 and 28 of the said Act.

3.         To address the issue of validity of Show Cause Notices issued prior to 06.07.2011, which was likely to be adversely impacted by the said judgment of the Hon’ble Supreme Court, a suitable legislative change was proposed.  In this regard, the President has given assent to the Customs (Amendment and Validation) Bill, 2011 on 16.09.2011 and the corresponding Act has been published in the Gazette of India dated 20.09.2011 as Act No.14 of 2011. Thus, the amendment to Section 28 has come into force w.e.f. 16.09.2011.  The said Act amends Section 28 of the Customs Act, 1962 by inserting clause (11), which reads as follows:

“(11)      Notwithstanding anything to the contrary contained in any judgement, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of section 4 before the sixth day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section.”

4.         Accordingly, as per the amended Section 28 of the Customs Act, 1962 Show Cause Notices issued prior to 06.07.2011 by officers of Customs, which would include officers of Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence (DRI), Directorate General of Central Excise Intelligence and similarly placed officers stand validated since these officers are retrospectively recognized as ‘proper officers’ for the purpose of Sections 17 and 28 of the said Act. 

5.         In this regard it may also be noted that in terms of Notification No.44/2011-Customs (N.T.), dated 06.07.2011 the officers of DRI and DGCEI are ‘proper officers’ for the purposes of Section 28. However, it is hereby directed by the Board that these officers shall not exercise authority in terms of clause (8) of Section 28 of the said Act.  In other words, there shall be no change in the present practice and officers of DRI and DGCEI shall NOT adjudicate the Show Cause Notices issued under Section 28 of the said Act.

6.         Since the matter pertaining to validity of Show Cause Notice stands settled in terms of Notification No.44/2011-Customs (N.T.), dated 06.07.2011 and amended Section 28 of the Customs Act, 1962, the Instruction F.No.437/143/2009-Cus.IV(pt) dated 15.04.2011 is no longer necessary.  Hence, the said Instruction dated 15.04.2011 stands withdrawn with immediate effect.

7.         Pending Show Cause Notices and cases before adjudicating authorities and before appellate and judicial authorities may be dealt with on the basis of the legal position explained above. Difficulty faced, if any, may be immediately brought to notice of the Board.

                                                                         

Yours faithfully,

(Subodh Singh)

     OSD (Customs), Tariff Unit

Fax: 011-23092173

*****

Re-Export of goods imported under reward schemes and DEPB – Re-credit of duty–Reg.

Circular No. 45/2011-Cus.

F. No. 605/49/2009-DBK

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

New Delhi,  dated 13^th October, 2011.

To

All Chief Commissioners of Customs/ Customs (Preventive)

All Chief Commissioners of Customs & Central Excise

All Director Generals under CBEC,

All Commissioners of Customs/ Customs (Preventive),

All Commissioners of Customs & Central Excise.

Sir/Madam,

Subject : Re-Export of goods imported under reward schemes and DEPB – Re-credit of duty–Reg.

Reference is invited to Board’s Circular No. 75/2000-Cus dated 11.09.2011; No. 21/2006-Cus dated 10.08. 2006 and 25/2009-Cus dated 29.09.2009 regarding procedure to be followed for allowing of re-export of goods and re-credit of duty credit  scrip in respect of DEPB, SFIS/VKGUY, TPS / DFCE / FMS / FPS / HTPEPS/SHIS/ Agri Infrastructure Incentive scheme under VKGUY respectively.

2.         In terms of the said circulars, goods imported under DEPB or other schemes mentioned above, which have to be re-exported because such imported goods were found defective or unfit for use were allowed for re-export subject to the fulfillment of certain conditions specified therein and provided necessary permission for such re-export was given by the Commissioner of Customs concerned. 

3.         In this regard, representations have been received from the trade and industry that the extant circulars do not provide for situations, where such re-export takes place, for reasons other than the goods having been found to be defective/ unfit.  The matter has been examined.

4.         It is observed that the provision for re-export of defective/ unfit goods stipulated under para 3.11.6 of the Hand Book of Procedures Vol. I (HBP v1) has been amended by the DGFT vide Public Notice No. 22/2009-14 (RE 2010) dated 14.01.2011 wherein re-export of imported goods subject to re-assessment of debited duty and re-export on account of any other reason was allowed in addition to export of defective/ unfit goods that was already provided in the said para 3.11.6 of HBP v1.  Further, the procedure for issuance of fresh scrip by concerned Regional Authority (RA) of DGFT has also been replaced with re-credit certificate issued by the Customs.

5.         In view of the above said amendments by DGFT in the HBP v1, it is clarified that in respect of reward schemes specified under Chapter 3 of FTP and DEPB scheme, re-export of imported goods, which are found to be defective /unfit and/ or for re-export on account of any other reason, may be permitted by the Commissioner of Customs, subject to fulfillment of the following conditions:

(i)        re-export of goods shall take place from the same port from where the goods were imported;

(ii)       the goods are re-exported within 6 months from the date of import;

(iii)      the Asstt. /Dy. Commissioner of Customs is satisfied about the identity of the goods;

(iv)     The goods are not put into use after import;

(v)      At the time of allowing the re-export, Customs shall issue a re-credit Certificate containing particulars of scrip used, date of import of re-exported goods and amount debited while importing such goods. There shall be no need for issue of fresh scrip in such cases by DGFT regional offices;

(vi)     Customs shall permit use of the said re-credit amount to the extent of 98% only;

(vii)    The validity of re-credit certificate shall be for six months from the date of issuance of re-credit certificate; and

(viii)    The remittances have to be properly accounted for as per the prevalent guidelines for the import and the export of the goods.

6.         The above clarification will be effective from the date of issue of Public Notice No. 22/2009-14 (RE 2010) i.e. w.e.f. 14.01.2011.

7.    Suitable Public Notice for information of the trade and standing orders for guidance of the staff may kindly be issued on the above lines.

8.    Receipt of the Circular may please be acknowledged.

Yours faithfully, 

(Rajesh Kumar Agarwal)

Under Secretary (Drawback)

Exports under Duty Drawback Scheme- Reg.

Circular No. 46/2011 - Customs

F.No.603/01/2011-DBK

Government of India

Ministry of Finance

Department of Revenue

*****

New Delhi, the 20^th October, 2011

To                                                                      

All Chief Commissioners of Customs / Customs (Prev).

All Chief Commissioners of Customs & Central Excise.

All Directors General of CBEC.

All Commissioners of Customs / Customs (Prev). 

All Commissioners of Customs (Appeals). 

All Commissioners of Customs & Central Excise.

All Commissioners of Customs & Central Excise (Appeals).

DG, (CEIB)/ DG, Central Excise Intelligence.

DGRI/ DG (EP)/DGI/ DG, NACEN).

DG (Systems and Data Management).

CDR, CESTAT.

Sir/Madam,

                   Subject: Exports under Duty Drawback Scheme- Reg. 

                  

            The C&AG has recently conducted a review on the Duty Drawback scheme. The review and the recommendations contained therein are included in the Audit Report No. 15 of 2011-12 of the Comptroller & Auditor General of India (Indirect Taxes) for the year ending March, 2010. The said Report has since been presented to Parliament and is available on the websitehttp://www.cag.gov.in. The same may please be perused.

2.         The review has highlighted certain systematic and compliance related weakness in matters relating to assessment of export goods and the payment of drawback to exporters. The Board has submitted a detailed ATN (Action Taken Note) in response to the observations and recommendations of the C&AG.

3.         In the background of the recommendations/observations of the C&AG made in the said report, the following instructions are being issued for strict compliance.

3.1       Instructions relation to “identification of goods” and “determination of use” in terms of Section 74 of the Customs Act, 1962.

(a) In terms of the section 74 of the Customs Act, 1962, the export goods are to be identified to the satisfaction of the Assistant/Deputy Commissioner of Customs. This may require examination and verification of various parameters, including but not limited to physical properties, weight, marks and numbers, test reports, if any, documentary evidences vis-à-vis import documents etc., for identification of the goods. If such export goods have been ‘used after import’, the same is to be determined besides establishing the identity of the goods. It may be ensured that in all such cases where drawback under section 74 is claimed, the Assistant/Deputy Commissioner of Customs shall pass a speaking order giving detailed reasons with regard to establishing the identity or otherwise of the goods under re-export, and determination of use, if any, while sanctioning Duty Drawback or otherwise. It may further be noted that the detailed speaking orders, following the principles of natural justice, are to be issued in both cases, i.e. where drawback is proposed to be sanctioned (either in full or part) or proposed to be denied.

3.2   General Instructions with regard to expeditious processing of drawback claims under both Section 74 and Section 75 of the Customs Act, 1962.

(a)    While processing Drawback claims, whether under Section 74 or Section 75, wherever any deficiency is noticed in the claim, the same shall be communicated to the exporter in a clear unambiguous manner within a period of 10 days, from the date of filing of the claim. Further, the drawback claims shall be disbursed in accordance with the timelines as specified in the Citizen’s charter adopted by the department and the Sevottam standards prescribed in this regard. Commissioners of Customs shall undertake a periodic review and monitoring of the status of pending drawback claims.

(b)    The field formations shall ensure that periodic sample checks and verifications are carried out with respect to the export declarations including classification, descriptions, weight etc.; the value of export goods declared as per the Export Valuation Rules; availment/ reversal of CENVAT credit wherever applicable; realization of the export proceeds/ BRC; actual freight payment certificates. It shall be also ensured that the brand rate drawback claims are disposed off in a time bound manner.

(c)    The field formations shall ensure the proper data entry in BRC module of EDI system. Commissioner of Customs shall constitute a special monitoring cell in their respective formations for periodic verification and monitoring of the same. The Monitoring cell will also ensure that the necessary action is taken against the defaulter exporters.

(d)    All previous circulars and instructions issued by the Board in this regard shall be strictly followed.

4.         Suitable standing orders for guidance of staff may also be issued accordingly.

            The receipt of this circular may kindly be acknowledged.

                    Yours faithfully,

Sd/-

(ASHOK KUMAR PANDEY)

Senior Technical Officer (Drawback)

Implementation of ‘On Site Post Clearance Audit’ – Regarding.

Circular No. 47/2011-Customs.

F.No.450/1/2010-Dir(Cus)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

******

227-B, North Block,

New Delhi – 110 001.

21^st October, 2011

To

All Chief Commissioners of Customs / Customs (Pre.)

All Chief Commissioners of Customs & Central Excise

All Commissioners of Customs /Customs (Pre.)

All Commissioners of Customs (Appeals)

All Commissioners of Customs and Central Excise

All Commissioners of Customs and Central Excise (Appeals)

All Directors General under CBEC.

Sir / Madam,

Subject:   Implementation of ‘On Site Post Clearance Audit’ – Regarding.

            CBEC has introduced the scheme of ‘On Site Post Clearance Audit’ or OSPCA at premises of importers and exporters’ vide Notification No. 72/2011-Cus. (NT) dated 4.10.2011. Guidelines for the conduct of OSPCA had been earlier circulated on 13.5.2011.  This scheme complements the legislative change resulting in self-assessment of import / export duties by importers / exporters vide the Finance Act, 2011.

2.         OSPCA is a trade facilitation measure aimed at expediting clearances while safeguarding the interest of revenue. ‘Self-assessment’ reposes trust on an importer / exporter to make correct import / export declarations in terms of description of goods, value, exemption notification etc. for clearance of import / export goods.  Further, Section 17 of the Customs Act, 1962 provides that the proper officer may verify the self-assessment.  On the import side, the verification is done with help of a ‘Risk Management System’ (RMS) that validates all Bills of Entry on basis of specified risk rules and, if warranted, identifies those that require review of assessment or examination or both.  Other Bills of Entry are ‘facilitated’ and goods covered thereby are cleared without assessment and examination. Further, RMS identifies some Bills of Entry for detailed scrutiny after clearance of goods. This scrutiny is called ‘Post-Clearance Compliance Verification’ (PCCV) or is loosely referred to as Post Clearance Audit or PCA. PCCV or PCA is, however, a transaction based check and it does not provide an opportunity to verify or scrutinize the correctness of declarations, books of account and other documents over a period of time.  Moreover, some importers feel harassed when asked to submit documents to confirm assessment long after the goods have been cleared. There are also cases of delay in conducting PCCV or PCA. On account of these reasons the Department felt constrained in enhancing the facilitation level for importers to further reduce the dwell time. Therefore, a necessity was felt to introduce OSPCA. 

3.         OSPCA allows verification of self-assessment on periodic basis by scrutiny of relevant business records at the importers / exporters premise. Thus, an importer or exporter can benefit from reduced clearance time and can deal with the goods promptly, saving on insurance, warehouse and storage charges. On the other hand, the Customs can do a comprehensive company oriented check to ensure that imports or exports conform to the declarations.

4.         OSPCA is provided for vide Section 17(6) of the Customs Act, 1962, which empowers the proper officer for verification of correctness of assessment of duty on imported or export goods at the premise of importer or exporter. Further, Section 157 of the said Act empowers the Board to frame regulations on the manner of conducting audit at the premise of the importer or exporter. Accordingly the ‘On Site Post Clearance Audit at the Premises of Importer or Exporter Regulations, 2011’ has been notified w.e.f. 4.10.2011. Other recent supporting legislative changes include enhancing time limit to one year for refund of Customs duty and for demanding Customs duty under Sections 27 and 28 of the Customs Act, 1962 respectively. 

5.         When OSPCA is conducted it should cover all import / export transactions including those under the export promotion schemes. To facilitate this, the On Site Post Clearance Audit at the premises of Importer or Exporter Regulation 2011 makes it mandatory for an importer / exporter to make available in a timely manner all documents and record including electronic records relating to import and export of goods to the proper officer conducting OSPCA. An importer or exporter is also required to maintain relevant records and documents including electronic details pertaining to import or export of goods for a period of five years from the date of import or export. Further, the Regulations envisage that the auditor shall verify the correctness of declaration and may take sample of imported or export goods, if required. There is also a provision of imposing penalty on an importer / exporter in case of contravention of any provisions of the said Regulations. 

6.         To begin with, Board has operationalized OSPCA w.e.f. 1.10.2011 only for importers registered under the Accredited Client Programme (ACP). It has also been decided that ACP importers shall be subjected to OSPCA on annual basis i.e. once during each financial year. However, during the transitional phase of the current financial year, the records for previous months beginning from 1.4.2011 may be taken up for audit. Coverage of OSPCA shall be increased in subsequent phases and the periodicity of audit in respect of other entities prescribed at that stage.

7.         For a coordinated and effective OSPCA, the ACP importers have been segregated as under:  

(i)     Those that are registered with LTU Commissionerates – to be audited by the audit wing of LTU concerned;

(ii)    Multi Location Units – to be audited by the Central Excise Commissionerates with the nodal Commissionerate being the one having jurisdiction over the registered / head office of the ACP importer; and

(iii)   Others ACP importers – to be audited by the Central Excise Commissionerate having jurisdiction over the head office / registered office of the ACP importer.

8.         As aforestated, OSPCA is viewed as a trade facilitation measure and one way to do away with avoidable interface with the Department. ACP importers with manufacturing facilities and / or those registered as service providers / recipients with the department would already be undergoing Central Excise and / or Service Tax audit. Therefore, in order to avoid duplication of exercise and reduce interface, OSPCA shall be done simultaneously with Central Excise and Service Tax.

9.         Further, in respect of ACP importers to be audited under the scheme within a period of one year, Board has decided that carrying out PCCV or PCA at the respective Customs House shall be a duplication of effort for both Department and ACP importers. Therefore, Board desires that in respect of ACP importers PCCV or PCA at the Customs Houses shall be dispensed with henceforth.

10.      Suitable instructions may be issued and wide publicity be given for guidance of trade and industry. 

11.      Difficulty faced may be brought to the notice of the Board immediately.

Yours faithfully,

(R P Singh)

Director (Customs)

All Industry Rates of Duty Drawback, 2011-12 - Reg.

F.No. 609/82/2011-DBK

Government of India

Ministry of Finance

(Department of Revenue)

Central Board of Excise & Customs

Circular No. -  48/2011-Customs

New Delhi, dated 31^st October, 2011

To

All Chief Commissioners of Customs / Customs (Preventive).

All Chief Commissioners of Customs & Central Excise / Central Excise / Authorized Representative.

All Director Generals under CBEC.

All Commissioners of Customs / Customs (Preventive). 

All Commissioners of Customs & Central Excise / Central Excise /

Authorized Representative.

Subject:  All Industry Rates of Duty Drawback, 2011-12 - Reg.

Sir/ Madam,

             As you are aware, the All Industry Rates (AIR) of Duty Drawback 2011-12 were notified vide Notification No. 68/2011-Cus. (N.T.) dated 22.09.2011. These rates have come into effect on 01.10.2011. Subsequently, the Ministry has received representations on the Drawback Schedule 2011-12 from Export Promotion Councils, Trade associations and individual segments of industry. The representations broadly relate to doubts on classification of items (mainly erstwhile DEPB items) in the Schedule, duty drawback rates, value caps and other miscellaneous matters.

2.         The representations have been duly examined and certain amendments / changes, wherever required, have since been carried out vide Notification No.  75 / 2011-Cus. (N.T.), dated 28.10.2011. The Notification may please be downloaded from CBEC website www.cbec.gov.in and perused for details.

3.         Some of the major changes / amendments carried out in the above mentioned notification are discussed below.

4.         Parts and components made of iron, steel or aluminium through casting or forging process which were earlier covered under various serial numbers of product group 61 (Engineering) of DEPB scheme were incorporated in Chapter 73 or 76, as the case may be, in the Drawback Schedule. Many representations were received stating that these goods merit classification more appropriately under different headings of Chapter 84 or 85 or 87, for which no specific tariff entry has been provided. To resolve this problem, the said entries have been appropriately replicated under headings 8487, 8548 and 8708 to enable exporters to claim drawback on such parts or components, irrespective of classification of such goods at any other four digit level in the Chapter 84 or 85 or 87 of the Schedule. In this regard a new note (3A) has been inserted in the Notes and Conditions of the Notification No. 68/2011-Cus. (N.T.) dated 22.09.2011.

5.         Further, representations have also been received from the trade that certain items merit classification more appropriately under different chapter / heading, instead of the classification as has been provided in the Drawback Schedule. All such representations have been examined and wherever there was merit in the representation, it has been decided to replicate the existing entry/entries appropriately under the tariff heading as has been sought by exporters. However, while replicating these entry/entries, the existing entry/entries in the Schedule have been retained so as to avoid any disputes. Further, in all such cases where existing entries have been replicated, due care has been taken to ensure that the rates of duty drawback / value caps (wherever assigned) are the same for both the existing entries as well as the replicated entries.

6.         It may be noted that the replication of entries as discussed in para 4 and 5 above and the insertion of Note 3(A) as discussed in the preceding para 4  above, is a purely transitory arrangement and with a view to resolving classification disputes.

7.         In some cases, representations have been received for creating new entries as well as for making changes in drawback rates, value caps and in the description of the goods in the Drawback Schedule. All such representations have been examined and wherever the representation was found to have merit, the same has been considered and necessary changes have been carried out as reflected in the amending notification. Thus, for example, composite rate of duty drawback has been provided for all goods falling under headings 7318 and 7418; a single entry under heading 6117 and 6214 has been created for Shawls, Scarves, Stoles, Mufflers, Mantillas & Veils and appropriate value caps provided on per piece basis; Duty drawback rate has also been provided for knitted fabric having a blend of Cotton and MMF (Man Made Fibre).

8.         Certain doubts have been expressed about classification of few erstwhile DEPB items in the drawback schedule wherein it has been pointed out that the classification under drawback schedule does not match with the classification as provided in the Customs Tariff. In this regard attention is invited to the para (1) of the notes and conditions of the notification No. 68/2011-Cus. (N.T.) dated 22.09.2011. It is hereby reiterated that the tariff items and descriptions of goods in the drawback schedule are aligned with the tariff items and descriptions of goods in the Customs Tariff only upto four-digit level. Hence, so long as the alignment is there at the four digit level, there should not be any difficulty for exporters to claim drawback as per the rate specified in the Drawback Schedule, notwithstanding the fact that there may be difference in the classification of the said item at six or more digit level.

9.            Doubts have been expressed regarding simultaneous availment of benefits under Advance License / Advance Authorization Scheme along with All Industry Rates of duty drawback. In this regard attention is invited to the sub para (b) of para (8) of the notes and conditions of the notification No. 68/2011-Cus. (N.T.) dated 22.09.2011. It stipulates that the All Industry Rate of drawback is not available if the goods are exported in discharge of export obligation against Advance Licence except under certain conditions. It is clarified that in general, the benefits of All Industry Rates of duty drawback and Advance Licence Scheme are not available simultaneously. However, in such cases the exporter can always avail the brand rate of duty drawback under rule 6 or rule 7 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, as the case may be and subject to the conditions stipulated therein, for the duty paid inputs used in the manufacture of export goods.

10.        Representations have also been received seeking clarification on the admissibility of duty drawback on Multi Utility Vehicle (MUV) / Sport Utility Vehicle (SUV). It is clarified that MUV / SUV would, for the purpose of drawback, be classifiable under tariff item 870302 as motor cars.

11.        Field formations have expressed some difficulties on the classification of Leather Garments exported under Chapter 42 of drawback schedule. The dispute is over mixed leather and fabric garments which has less than 40% of their surface area made of fabric, and whether they are classifiable under 420301, as “Articles of apparel, made of leather” or under 420302 as “ Articles of apparel, made of leather in combination with other materials”. In this regard attention is invited to the para (17) of the notes and conditions of the notification No. 68/2011-Cus. (N.T.) dated 22.09.2011, which defines the article of leather as any article wherein 60% or more of the outer visible surface area is of leather. It is therefore clarified that the leather garment is classifiable under tariff item 420301 as “Articles of apparel, made of leather”, if 60% or more of the outer visible surface area is of leather and under tariff item 420302 as “Articles of apparel, made of leather in combination with other materials” if the area of leather is less than 60% of the outer visible surface area.

12.        It may please be noted that all changes / amendments as have been carried out through the amending notification No. 75 / 2011-Cus. (N.T.), dated 28.10.2011, come into effect retrospectively from October 1, 2011. In all such cases, wherever it is required, the exporters shall be allowed to file supplementary drawback claims and these claims shall be processed accordingly.

13.        Public Notices and Standing Orders for guidance of the trade and staff may be issued. Difficulties faced, if any, in implementation of the changes may be brought to the notice of the Board immediately. 

   Kindly acknowledge receipt of this Circular.

(Najib Shah)

Joint Secretary (Drawback)

*****