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Customs Circular No- 23/2005
dated 12.5.2005
Duty free import of lining and interlining materials under Sr.Nos.167 and 168
read with condition No.21 of notification No.21/2002-Cus. dated 1.3.2002 for
garment industry – regarding.
Kind attention is invited to Sr.Nos.167, 168 and condition No.21of the subject
customs notification in terms of which duty free import of lining and
interlining materials required by garment exporters for use in the export
product is permitted upto 2% of the FOB value of exports of garments made during
the preceding financial year. However, an inadvertent error had ocucred in
condition No.21(b) which read : “the total value of goods imported shall not
exceed 3 per cent of the FOB value of textile garments or leather garments
exported during the preceding financial year, however, the value of lining, and
inter-lining materials imported shall not exceed 2 per cent of the said total
value”. As a result, some of the customs field formations took the view that in
terms of the said condition, duty free import of lining and interlining
materials under the two entries would be allowed only upto 2% of 3% ~ .06% of
the total FOB value of exports of garments made during the preceding financial
year.
2. The issue has been examined by this Ministry and in order to remove this
anomaly, notification No.21/2002-Cus. dated 1.3.2002 has been amended by
notification No.26/2005-Cus. dated 2.3.2005 to permit inter alia, duty free
import of lining and interlining materials upto 2% of the total FOB value of
export of garments made during the preceding financial year. It is reiterated
that right from the beginning the intention of the Government has been to permit
duty free import of lining and inter-lining materials upto 2% of the FOB value
of exports made by the exporters during the preceding financial year within the
overall ceiling of 3%. Therefore, in all those cases where the Custom Houses
have already allowed duty free import of lining and interlining materials upto
2% of the total FOB value of export of garments made during the preceding year,
no recovery action shall be initiated.
3. 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 the
Circular may be brought to the notice of the Board at an early date.
Receipt of this Circular may kindly be acknowledged.
SD/-
(R.K. TALAJIA)
OFFICER ON SPECIAL DUTY(DBK)
F.NO.605/40/2004-DBK