01 January 2010
Our client is running proprietorship firm and engaged in export of Handmade Carpets. He purchases the yarn from market after that gives to the contractors on jobwork basis and carpets have been prepared. They are also claiming drawback on export of carpet but there is objection of the department that it is not clear that the client is working as manufacturer or merchant exporter. If it comes under the manufacture activity than they are not registered with Excise Deptt. As in our knowledge there is no excise duty on manufacturing of handmade carpets. ( It is prepared by use of 85% Viscose yarn and 15% of cotton.) The contention of the department is that since they are not taking the benefit of cenvat credit therefore not eligible for Drawback. Please guide us the procedure for taking the drawback and DEPB on export of carpet and whether the product is dutiable under the Excise Act or not. In this case , the category of the applicant will be manufacturer or merchant exporter?