DEPB classification of unstitched odhanies as fabrics: circular treated fringed, unhemmed goods as eligible for higher credit.

Unstitched and unhemmed odhanies with knotted fringes were treated as fabrics, not made-ups, for DEPB purposes. DGFT Policy Circular No. 15(RE-99)/1999-2000 clarified that unhemmed and/or unstitched odhanies fall under fabrics, while hemmed and/or stitched odhanies fall under made-ups. The circular was applied as the governing guideline for the DEPB rate, and fringes were not regarded as stitching or hemming. As a result, the goods were eligible for DEPB credit at 18% rather than 14%.

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Issues: Whether unstitched and unhemmed odhanies with knotted fringes were classifiable as fabrics eligible for DEPB credit at 18% or as made-ups eligible at 14%.

Analysis: The goods were found to be unstitched and unhemmed odhanies. The departmental reliance on Note 7(b) of Section XI of the Customs Tariff Act was displaced by the specific DGFT Policy Circular No. 15(RE-99)/1999-2000 dated 2-7-1999, which clarified that unhemmed and/or unstitched odhanies are to be treated as fabrics, while hemmed and/or stitched odhanies are to be treated as made-ups under the DEPB scheme. Since the issue concerned the DEPB rate, the circular was held to be the governing guideline, and the presence of fringes was not treated as stitching or hemming.

Conclusion: The odhanies were held eligible for DEPB credit as fabrics at 18%, and the appellant succeeded.

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