Classification of carpets and floor coverings having mixed composition in the Drawback Schedule – CBEC clarifies

By Vijay Kumar

Several representations have been received by the Board on the issue of classification of carpets having mixed composition under the Drawback Schedule, 2007-08. It has been represented that hand woven rugs/floor coverings made of 57% wool +25% cotton +18% viscose or 52% wool +13% nylon+ 35% cotton are being assessed by the Customs authorities under the Drawback Schedule entry 570299 (“others including coir mats”) at the drawback rate of 2.5% instead of the entry number 570201 which covers carpets of wool or fine animal hair with a drawback of 12.5%.

It has been further stated that in the Drawback Schedule, 2006-07 such items were being classified under the entry 570203 which read “others including of man-made fibers” with drawback rate of 9%. However, after creation of a separate entry for carpets and floor coverings of MMF in the Drawback Schedule, 2007-08 with a drawback rate of 12%, the carpets of mixed composition are being classified under the residuary entry 570299 which reads “others including coir mats” with a drawback rate of 2.5%.

The Handloom Export Promotion Council (HEPC) has stated that carpets/floor coverings of wool contain other materials such as cotton, viscose, nylon etc. ranging between 10% to 40% and since the duty drawback rates are on ad valorem basis, any change in FOB value on account of composition or quality of goods would automatically determine the quantum of drawback. The HEPC has recommended that the carpets of mixed composition may be classified on the basis of predominant fibre.

So, Board has clarified that carpets and floor coverings, whether knotted, woven, tufted or others may be classified as carpets or floor coverings of that textile material (wool/ silk/ MMF etc.) which predominates by weight.

Board wants the Chief Commissioners to issue a Public Notice for information of the Trade and Standing Order for guidance of the staff.

CBEC Circular - NO.2 /2008-CUS ., Dated: January 10, 2008