No exemption is available to manufacturers of quilts & quilted bedspreads - CBEC. But happened if the same is treated as handicraft products

Notification no. 30/2004 has been issued as on 1-3-2004 to provide full exemption to the products falling under chapter 50 to 63 (barring few exceptions)

The manufacturers of quilts & quilted bedspreads were availing the exemption on the premise that these products are classifiable under heading 5811.

More than 5 years have gone after issuance of Notification no. 30/2004, now CBEC has issued a clarification that quilts & quilted bedspreads are not classifiable under heading 5811 but these products are classifiable under heading 9404 [CETA - Classification and Basic Rate of Excise Duty]

After this clarification, now the manufacturers of quilts & quilted bedspreads are not eligible for exemption under Notification no. 30/2004.

On the other hand, Notification No. 76/86-C.E., dated 10-2-1986 provides exemption to handicraft items. Most of the manufacturers of quilts & quilted bedspreads hire laborers for the purpose of stitching of quilts and quilted bedspreads. These laborers are specialized in stitching and major work is done manually.

Now the issue would arise that whether these products are handicraft items or not. If the answer is yes, the manufacturers would be relaxed and free from burden of excise duty but if the answer is no, they have to pay duty of excise. Indeed department would try to raise a demand for the past 5 years alleging suppression etc.