Cotton bathmats/rugs for grant of duty credit scrip under VKGUY/FPS – DGFT clarifies
HAND-MADE carpets and other textile floor coverings, covered under Chapter 57 of ITC (HS) Classification Book, are eligible for duty credit scrip under Focus Product Scheme at the rate of 5% for exports made with effect from 23-2-2009. Before 23-2-2009, these were eligible for duty credit scrip under VKGUY/FPS at different rates.
The Trade and Industry have represented that cotton bathmats/rugs are covered under ITC (HS) Codes 5703 and 5705, but exports of cotton bathmats/rugs which are described in the shipping document as only cotton bathmats/rugs or machine-made or machine-tufted cotton bathmats/rugs, are being denied the benefit under Chapter 3 of the Foreign Trade Policy by the RAs on the ground that the policy allows the benefit only to ‘hand-made' category. In this regard, the Trade and Industry have represented that though for tufting, a motor operated tufting machine (similar to table-top type sewing machine) is being used, yet the entire process of making such tufted bathmats/rugs requires elaborate manual handling. In this regard, the Trade and Industry have elaborated that marking of the outlines on the base fabric as per the design and colour combination is done manually, the base fabric/canvas is cut manually to give it the desired shape;; filling of different colours with the needle of the sewing machine is done by moving the base fabric/canvas by hands; after finishing the tufting, uneven threads are cut by hands with the help of a scissor and sheering and embossing is also done by hand with the help a scissor to produce a finished product. Thus, the entire process requires elaborate manual handling by a worker and this motor operated tufting machine is not the kind which can produce the tufted bath mats/rugs automatically without any manual handling.
Now DGFT clarifies that the exports should be considered for the benefit of duty credit scrip at the rate of 5% under the Focus Product Scheme for exports made from 23.2.2009 onwards, and earlier under VKGUY/FPS, at the applicable rates, after obtaining a self declaration from the exporter.
DGFT Policy Circular No. 21/2009-14 , Dated: January 12, 2010