exempt supplies in composition scheme

If you deal in Exempted supplies only, no need for registration Section 23(1)(a) of CGST act

Sir,

Textile is not taxable under VAT system & no registration is needed. so all the goods held in stock on appointed day is purchased from unregistered. now I want to opt for composite scheme. am I eligible. Please explain Rule 3(1)(c) which is not clear. all other conditions fulfilled. Thanking you