CHAPTER 12

Special Procedure for Specified Goods

PART II

Embroidered Fabrics
1. Introduction

1.1 The Central Government has specified under rule 15 of the Central Excise(No. 2) Rules, 2001 (hereinafter referred to as the ‘said Rules’) rate of duty andspecial procedure for embroidery in the piece, in strips or in motifs on cotton fabrics,man made fabrics, silk fabrics or woollen fabrics by notification No.33/2001-CE, dated 28th June, 2001. This notification is effective from 1 st July, 2001.

2. Duty payable under special procedure

2.1 An assessee shall have the option to pay the duty of excise on the basis of meterlength of the machine per shift and fixes a rate of duty of Rs. 45 per meter length of themachine (i.e. the distance between the points provided for the first needle and the lastneedle of only one roller of the machine) per shift (i.e. a period not exceeding eighthours working in a day, exclusive of rest interval, provided the work of the same kind iscarried out by the same set of workers), for embroidery machines utilised formanufacture of the said goods subject to certain conditions.

3. Conditions

3.1 The conditions to be complied with for availing the special procedure are, asfollows:

(a) No credit of duty paid on inputs used in the manufacture of the embroidery andcapital goods used within the factory of manufacture of such embroidery shall betaken under the CENVAT Credit Rules, 2001, and

(b) The procedure mentioned in the notification is followed.

4. Application to avail of special procedure

4.1 A manufacturer of embroidery in the piece, in strips or in motifs (hereinafterreferred to as “the embroidery”) shall make an application in the form specified in(Annexure 30) to the said notification to the Superintendent of Central Excise in this behalf.

4.2 The application shall be made so as to cover a period of not less than sixconsecutive calendar months, but may be granted for a shorter period, for reasons to berecorded in writing by the Assistant Commissioner or the Deputy Commissioner, as thecase may be.

4.3 If the manufacturer desires to avail himself of the special procedures containedherein on the expiry of the period for which his application was granted, he shall, notlater than a week before such expiry, make an application to the Deputy/AssistantCommissioner of Central Excise; and on his failure to do so, he shall, except as providedherein, be precluded from availing himself of such procedures for a period of six monthsfrom the date of such expiry.

5. Opting out of the special procedure

5.1 If, at any time during the period of availment of the special procedure, themanufacturer desires to opt out, he shall give a notice in writing to the Deputy/AssistantCommissioner of Central Excise in charge of the factory of his intention at least one weekin advance. Once the manufacturer has ceased to avail himself of such specialprovisions, from any date, he shall be precluded from availing himself of such procedurefor a period of six months from that date.

6. Transitional provision

6.1 Notwithstanding anything contained in sub-paragraph (1), an application madeby a manufacturer before the commencement of this notification under erstwhile sub-rule(1) of rule 96ZH of the Central Excise Rules, 1944, shall be deemed to be anapplication made under sub-paragraph (1) and the same shall be deemed to havebeen granted under sub-paragraph (1) and where such application has not beengranted, the Assistant Commissioner or the Deputy Commissioner shall dispose of thesame as if it is an application under sub-paragraph (1).

7. Discharge of liability for duty on payment of certain sum

7.1 If a manufacturer whose application has been granted pays before thecommencement of any shift a sum calculated according to such rate, in the mannerand subject to the conditions herein laid down, such payment shall be in full discharge ofhis liability for the duty leviable on his production of the embroidery during the said shift.

7.2 If there is revision in the rate of duty, the sum payable shall be recalculated onthe basis of the revised rates from the date of revision and liability for duty leviable onthe production of the embroidery from that date shall not be discharged unless thedifferential duty is paid, and in case the amount of duty so recalculated is less than thesum paid, the balance shall be refunded to the manufacturer:

7.3 The sum payable shall be calculated by application of the appropriate rate tothe meter length of each of the machines intended to be employed by themanufacturer during the shift.

7.4 The sum shall be paid by such manufacturer by debit in the account-currentmaintained under these provisions before commencement of the shift.

8. Default in payment of duty

8.1 If the payment of duty is not made in the prescribed manner and within thespecified time-limit, the manufacturer shall, unless otherwise directed by theDeputy/Assistant Commissioner of Central Excise, and in exceptional circumstances, beliable to pay duty on his entire production of the embroidery during the shift or shifts, inrespect of which the payment was to be made, at the rate specified in the First Scheduleto the Central Excise Tariff Act, 1985 (5 of 1986). However, where the period of delay isupto five days, the decision will be taken by the Superintendent of Central Excise.

9. Manufacturer’ s accounts

9.1 The manufacturer shall keep account-current with the Commissioner, of the sumspayable by him under the special procedure. Such account-current shall be maintainedin triplicate by using indelible pencil and double sided carbon and the assessee shallperiodically make credit in such account-current by cash payment into the treasury so asto keep sufficient balance in such account-current to cover the sums payable.

9.2 The manufacturer shall maintain a Daily Stock Account in the form specified inAppendix II to the said notification.

10. Returns and intimations

10.1 The manufacturer shall file a monthly return in proper form prescribed under rule12 of the said Rules appending therewith two carbon copies of the Daily Stock Accountduly signed.

10.2 The manufacturer shall intimate the Superintendent of Central Excise in writing ofany change in the number, meter length and speed of the machines installed by him;and

11. Exemption from certain provisions

11.1 During the period in respect of which a manufacturer has been permitted to availhimself of the special procedure under the said notification, he shall be exempt from theoperation of the provisions of rule 8 of the said Rules.

11.2 Except in accordance with such terms, conditions and limitations as the CentralGovernment may by notification specify in this behalf, no rebate of excise duty shall bepaid under rule 18 of the said Rules, in respect of any embroidery exported out of Indiaout of the stock produced by such manufacturer during such period.

12. Power to condone failure to apply for special procedure

12.1 Notwithstanding anything contained in the aforesaid notification, theAdditional/Joint Commissioner of Central Excise may, at his discretion and subject tosuch conditions as he may deem fit, apply the provisions contained in the saidnotification to a manufacturer who has failed to avail himself of the special procedure,or to comply with any condition, laid down in the said notification.

11. Confiscation and penalty

11.1 If any manufacturer contravenes any provision of the said notification in respectof any excisable goods, then all such goods shall be liable to confiscation, and themanufacturer shall be liable to penalty under rule 25 of the said Rules.

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