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  • CCI AD FROM 5th April 2021

Import of Cotton – Impact of Budgetary Change

Circular No. ES/425/2020-21                                                                   6th February, 2021

To: Members of the Council

Sub:  Import of Cotton – Impact of Budgetary Change

Dear Member,

As you are aware, the Central Government has removed the exemption available to import of Cotton & Cotton waste through the Union Budget 2021-22 and the effective rates from 2nd February, 2021 are as follows:-

S. No.

Category / Items

Rate of Duty






5%+5% (AID Cess)


Cotton waste




Accordingly, members have the option to:

  • Import raw cotton on payment of Customs Duty for manufacture and export of yarn/fabric/garments and are eligible to claim Duty Drawback.


  • Import Raw Cotton through Advance Authorization Scheme without payment of Customs Duty.

Details regarding import through Advance Authorization Scheme (AA Scheme) are as follows:

  • Cotton can be imported under AA Scheme both by the manufacturer-exporter or merchant exporter tied to the supporting manufacturer.
  • Exemption from the Customs Duty is granted through Notification No. 18/2015 – Customs dated 1.04.2015 as amended.
  • Agriculture Infrastructure and Development Cess (AIDC) being defined as a “Duty of Customs” under Clause 115 of the Finance Bill, 2021 and exemption from payment of the said Cess on import is extended by Notification No.11/2021 – Customs dated 1st February, 2021 (Sl.No.18).
  • Exemption from payment of IGST has been granted vide Notification No.01/2019-Customs, dated 10.01.2019 as amended till 31st March, 2021.
  • The condition of pre-import (goods/raw material have to be imported first and then the final products manufactured from such imported goods and exported) under the AA Scheme has been removed w.e.f. 10.01.2019 vide DGFT Notification No. 53/2015-20 dated 10.01.2019.
  • Export of goods manufactured utilizing inputs imported under AA Scheme is not eligible for claiming Duty Drawback.

Members may kindly make a note of the above.

Thanking you, 

Yours faithfully,