Dutydrawback on Export (Handmade Carpets)

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arun sharma (Querist)
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01 January 2010 Our client is running proprietorship firm and engaged in export of Handmade Carpets. He purchases the yarn from market after that gives to the contractors on jobwork basis and carpets have been prepared.
They are also claiming drawback on export of carpet but there is objection of the department that it is not clear that the client is working as manufacturer or merchant exporter. If it comes under the manufacture activity than they are not registered with Excise Deptt. As in our knowledge there is no excise duty on manufacturing of handmade carpet. ( It is prepared by use of 85% Viscose yarn and 15% of cotton.)
The contention of the department is that since they are not taking the benefit of cenvat credit therefore not eligible for Drawback.
Please guide us the procedure for taking the drawback and DEPB on export of carpet and whether the product is dutiable under the Excise Act or not. In this case , the category of the applicant will be manufacturer or merchant exporter?

SANJAY JAIN

SANJAY JAIN (Expert)
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02 January 2010 The excisable goods carpets falls under chapter 57 and conditionally exempted from whole of the duty under Notification No. 29/2004-CE.

In case the goods got manufactured on job work basis, then the job worker would be manufacturer and the person who is exporting, shall constitute merchant exporter. In this regard the definition of manufacture in the drawback rules,1995 is precious clear.

In the above situation , the merchant export is to enclose CENVAT declaration obtained from supporting manufacturer(job worker) to the effect that supporting manufacturer has not taken CENVAT credit on the inputs. Here, it would be best to get a certification from the Superintendent of Central Excise having jurisdiction over the job workers factory stating that the said job worker is not registered in the Central Excise and accordingly taking no credit.

By the above means, hope there would be no objection from the Customs in allowing higher duty drawback amount.
For further query, feel free to write sanjayinfbd@yahoo.com (M-09350048731) or visit, HNO. 2489/8,Faridabad(Haryana).

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