CUS CIR NO. 23/2005 DATE 12/05/2005

Duty free import of lining and interlining materials under Sr.Nos.167 and 168 read with condition No.21 of notification No.21/2002-Cus. dated 1.3.2002 for garment industry-regarding.
Kind attention is invited to Sr.Nos.167, 168 and condition No.21 of the subject customs notification in terms of which duty free import of lining and interlining materials required by garment exporters for use in the export product is permitted upto 2% of the FOB value of exports of garments made during the preceding financial year. However, an inadvertent error had ocucred in condition No.21(b) which read : “the total value of goods imported shall not exceed 3 per cent of the FOB value of textile garments or leather garments exported during the preceding financial year, however, the value of lining, and inter-lining materials imported shall not exceed 2 per cent of the said total value”. As a result, some of the customs field formations took the view that in terms of the said condition, duty free import of lining and interlining materials under the two entries would be allowed only upto 2% of 3% ~ .06% of the total FOB value of exports of garments made during the preceding financial year.

2. The issue has been examined by this Ministry and in order to remove this anomaly, notification No.21/2002-Cus. dated 1.3.2002 has been amended by notification No.26/2005-Cus. dated 2.3.2005 to permit inter alia, duty free import of lining and interlining materials upto 2% of the total FOB value of export of garments made during the preceding financial year. It is reiterated that right from the beginning the intention of the Government has been to permit duty free import of lining and inter-lining materials upto 2% of the FOB value of exports made by the exporters during the preceding financial year within the overall ceiling of 3%. Therefore, in all those cases where the Custom Houses have already allowed duty free import of lining and interlining materials upto 2% of the total FOB value of export of garments made during the preceding year, no recovery action shall be initiated.

3. A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date.

Receipt of this Circular may kindly be acknowledged.

SD/-
(R.K. TALAJIA)
OFFICER ON SPECIAL DUTY(DBK)

F.NO.605/40/2004-DBK

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