No Refund
of 4% Spl CVD for Textile Sector if Final Product is
at Zero Excise
[CBEC Circular No. 34 dated 15th September 2010]
Subject: Refund of
4% Additional Duty of Customs (4% Special CVD) in pursuance of
NotificationNo.102/2007-Customs dated 14.9.2007 – Applicability to
manufacturers in textile sector.
Your kind attention is invited to the Notification
No.102/2007-Customs dated 14th September 2007 whereby exemption from Special
CVD of 4% leviable under sub-section (5) of Section 3
of the Customs tariff Act, 1975 has been provided subject to the fulfillment of
certain conditions.
2. Representations
have been received from trade and industry (especially the textile sector)
through the Department of Commerce to allow the benefit of this exemption to
manufacturer-importers, especially those who have opted out of the CENVAT
Credit Scheme and do not pay excise duty on their final products.
3. The matter has
been examined. Special CVD is one of the duties specified under sub-rule (1) of
rule 3 of the CENVAT Credit Rules, 2004. Credit of this duty, when paid on inputs
(imported) used in or in or in relation to the manufacture of excisable goods,
is available. This credit can be used for payment of duty on the final product.
Hence a textile manufacturer who opts to pay excise duty on his final product
can avail of CENVAT credit of 4% Special CVD paid on his inputs. But this
benefit obviously cannot be extended to a manufacturer who opts to avail of
full exemption (and hence not pay excise duty)) on his final product. Further,
if the imported inputs on which 4% Special CVD has been paid are used by such a
manufacturer for the manufacture of final products, the benefit of exemption
(by way of refund) under notification no 102/2007-Customs dated 14th September
2007would also not be available. This is because the condition regarding
payment of State VAT on imported inputs cannot be fulfilled in this situation
where inputs are consumed and not sold as such
4. 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 this Circular may be
brought to the notice of the Board at an early date.
F. No.
354/138/2010-TRU