Clarification on availability of Proportionate CENVAT Credit for textile items under Chapter 55

Circular No. 948/09/2011-CX

F.No.354/97/2011 -TRU

Government of India

Ministry of Finance

(Department of Revenue)

Tax Research Unit


New Delhi,

dated the 5th July, 2011


All Chief Commissioners of Central Excise (including LTU),

All Chief Commissioners of Customs & Central Excise,

All Director Generals,

Sir/ Madam,

Subject: Applicability of Circular No. 845/03/2006-CX dated 1.02.2007 on textile products falling under Chapter 55 – regarding.

It has been brought to the notice of the Board that doubts have arisen on whether the benefit of proportionate Cenvat credit as clarified by Circular 845/03/2006-CX dated 1.02.2007 would be available to textile items of heading 5508, 5509, 5510, 5511, 5512, 5513 and 5514 of the First Schedule to the Central Excise tariff Act since a reference to these headings was omitted in Notification No.29/2004-CE dated 9th July, 2004 vide notification No.11/2009-CE dated 7th July,2009.

2.         The matter has been examined. Prior to 7th December,2008  textile goods of pure cotton attracted a concessional excise duty of 4% while others attracted a concessional excise duty of 8% under Notification no. 29/2004-CE dated 9th July, 2004 . The duty rates under the said notification were reduced from 4% to Nil and from 8% to 4% respectively vide notification no. 58/2008-CE dated 7th December, 2008. When the duty rates were restored from Nil to 4% and from 4% to 8% in the said notification vide notification no.11/2009-CE dated 7th July, 2009, the reference to headings 5508, 5509, 5510, 5511, 5512, 5513 and 5514 were omitted in the said notification 29/2004-CE.  This was done because items falling under these headings already attracted 8% by tariff. Thus the effective rate of excise duty on these textile items operated through the tariff since both the effective as well as the tariff/statutory rate was at 8%. Subsequently in Budget, 2010-11, when the general Cenvat rate was increased from 8% to 10%, the tariff rates for these headings were also increased to 10%. Since both the effective duty rate and the tariff rate are at 10% for these goods, the excise duty rates on these goods continue to operate by tariff even though they are no longer referred to in notification no. 29/2004-CE.

3.         In view of the above, the non mention of these headings in notification no.29/2004-CE has no bearing on the availability of Cenvat credit and applicability of Circular no. 845/3/2006. It is hereby clarified that the benefit of proportionate credit would continue be available to textile items falling under the aforementioned headings.

4.         Trade & Industry as well as field formations may be suitably informed.

5.         Receipt of this circular may kindly be acknowledged.

6.         Hindi version will follow.

Yours Faithfully,

(Limatula Yaden)

Director (TRU)


profile image


Leave a Reply

Your email address will not be published. Required fields are marked *

Corporate Law Referencer

Corporate Law Referencer

Corporate Law Referencer

India’s Leading Compliance Software

India’s Leading Compliance Software

Get A Demo Today !

Recent Articles

Recent Legal updates

Recent Gst Updates