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In a significant policy shift aimed at bolstering export earnings, curtailing lead times for the readymade garment sector, and generating employment, the National Board of Revenue (NBR) has granted conditional approval for non-bonded deemed export mills to produce and supply specialized melange yarn. The decision was formalized through a general regulatory order issued by the NBR's Export and Bond wing, according to revenue officials on Tuesday.
Under the new regulatory framework, bonded deemed-export dyeing factories are granted policy clearance to acquire Utilization Permission (UP) and deliver dyed fiber to melange yarn manufacturing units that operate without a bonded warehouse license. The revenue authority highlighted that this facilitation will boost domestic value addition and save foreign currency by reducing dependence on imported specialty yarn.
To utilize this facility, qualifying manufacturers must adhere to a set of compliance criteria. The back-to-back letter of credit (LC) opened by the non-bonded melange yarn producer in favor of the bonded dyeing entity must be directly backed by the master LC or sales contract of a direct export-oriented garment manufacturer. The LC documentation must explicitly state "Fiber Dyeing for Melange Yarn Production" along with the precise product quantity, and all relevant LC copies and proforma invoices must accompany the UP application.
Furthermore, the final melange yarn spun from this dyed fiber must be delivered directly to the export-oriented RMG units. Unlicensed melange yarn mills are additionally required to enlist in the Customs Bond Management System (CBMS) with their Business Identification Number (BIN), hold a valid Industrial Import Registration Certificate (IRC), maintain full VAT compliance, and submit detailed statements of dyed fiber acquisitions to their respective Customs, Excise, and VAT Commissionerates at the end of each tax period.
