CHAPTER 12

Special Procedure for Specified Goods

Part-III

COMPOUNDED LEVY ON INDEPENDENT TEXTILE PROCESSORS
1. Introduction

1.1 The scheme of compounded levy of duty on basis of hot air stenters with anindependent textile manufacturer has been introduced effect from 1 st May, 2001 byNotifications No.16/2001-CE(N.T.), and No.21/2001-CE, bothdated 30.4.2001.

1.2 The scheme of compounded levy is optional. Thus, an independent textileprocessor has the option of availing this scheme and paying the duty prescribedthereunder. In the alternative the processor may pay the duty at the specified rate ofduty on the basis of the value of the goods produced.

2. Rate of compounded levy

2.1 The rate of duty under the compounded levy scheme is, as follows:Value of Processed Textile Fabrics Rate of compounded dutyPer stenter per chamberUpto and including Rs. 30 per sq. meter Rs. 2.5 lakhs per monthOver Rs. 30 per sq. meter Rs.3 lakhs per month

2.2 The 50% of the compounded duty has to be paid by the 20 th. of the month andthe balance 50% by the 5 th of the succeeding month.

3. Salient features of compounded levy scheme

3.1 The eligibility conditions for availing the scheme are:

(i) The scheme does not apply to open air stenter. It applies only to hotair stenters.

(ii) The scheme can be availed only if the original value of investment onplant and machinery, duly certified by a Chartered Accountant ofCost Accountant, in the factory of the processor is not more than Rs.3crore. For this purpose, the higher of the original value of theinvestment on plant and machinery that was installed as on 1.3.2001and as installed on 1.5.2001 in the factory of processor is to be takeninto account.

3.2 An independent processor, who is eligible for availing of the scheme, has toapply for exercising the option through an application to be submitted to thejurisdictional Commissioner of Central Excise by the 20 th May, 2001. However, shouldhe commence business subsequently, he should apply before the commencementof the production.

3.3 Once the option has been exercised for the scheme, and accepted by theCommissioner of Central Excise, it can not be withdrawn during the remaining part ofthe financial year.

3.4 No abatement if available on account of any reduction in stenter orchambers or on account of closure or absence of use of the same. The duty liabilitywould remain unchanged during the period of option of the scheme i.e. thefinancial year. However, should all the manufacturing operations in the factory beclosed for more than 30 days abatement is permissible.

3.5 In the event that after application and acceptance thereof anyenhancement is made in the number of chambers the duty liability would getenhanced for the balance part of the financial year.

3.6 The applicant availing the scheme has to do the stentering in his factory itself.

3.7 Detailed instructions regarding the valuation of processed fabric and otherprocedure have been issued from F.No.B.4/6/2001-TRU dated 30.4.2001, which willapply, mutatis mutandis, under the Central Excise (No.2) Rules, 2001.

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