CIR NO.767/83/2003-CX, DT. 31/12/2003

Apparel and Clothing Accessories - No Excise Duty on Sewing Threads, Labels, etc.

Sub : Clarification in respect of Sl. No. 41 of the Ntf. No. 7/2003-CE, Dt. 01/03/2003

I am directed to sate that vide Sl. No. 41 of Ntf. No. 7/2003-CE, Dt. 01/03/2003, "Articles of apparel and clothing accessories of cotton, knitted or crocheted, not containing any other textile material" attract a concessional rate of excise duty of 8%.

2. It has been reported that manufacturers of such articles of apprarel and clothing accessories use items like sewing threads, labels, elastics etc. which are not made of cotton. In this regard, doubts have been raised whether use of such non-cotton material, would render the product ineligible from the concessional duty of 8%.

3. The intention was not to deny the concessional rate of 8% in such cases. In order to clarify the matter, the said notification has been amended so as to insert an Explanation under Sl. No. 41, vide notification No. 80/2003-CE, Dt. 26/12/2003.

4. The "Explanation" inserted clarifies that so long as these apprarel and clothing accessories are made form knitted or crocheted pure cotton base fabrics, the exemption would be available irrespective of use of non-cotton textile materials for stitching, fastening, holding, adornment or labeling.

5. As the said exemption has been issued under sub-section (2A) of section 5A of the Central Excise Act., 1944, this clarification would have effect from 1st march 2003, the date on which the initial notification prescribing concessional duty of 8% was issued.

Sd/-
(Gautam Ray)
Joint Secretary Tax Research Unit

[F.No. 354/141/2003-TRU]

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