Circular No. 41/41/94-CX dated 7/6/94
I am directed to say it has been reported by Chairman, Khadi and Village Industries Commission that consequent upon the budgetary changes, polyvastra and processed khadi is not being allowed to be cleared at nil rate of basic excise duty for the reason that the exemption available to such fabrics before the budget, vide notification No. 45/86-CE dated 10.2.86 (S. No. 6 & 8) does not find specific mention in the Central Excise Tariff. In this connection, it may be mentioned that as all fabrics falling under Chapter 52, 54 and 55 were fully exempted from basic excise duty, (continued vide S. No. 4, 6 & .7 of new Notification No. 27/94-CE dated 1.3.94) the specific exemption available to polyvastra and processed khadi prior to budget vide above mentioned notification, was OTIOSE in nature. In view of this, the exemption from basic excise duty on Polyvastra and processed khadi was withdrawn in the Budget. As the full exemption from basic excise duty is available on all processed fabrics of Chapters 52, 54 & 55 vide notification No. 27/94-CE mentioned above, the benefit of "nil" rate of basic excise duty should not be denied to polyvastra and processed khadi cloth.

Sd/-
(V.V.Hariharan)
Deputy Secretary (TRU)

T. No. 354/32/94-TRU

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