Textiles Committee Draft Rules 2026: How the Proposed Penalty and Appeal Process Will Work

The Ministry of Textiles has published the Draft Textiles Committee (Adjudication of Penalties and Appeal) Rules, 2026 through G.S.R. 746(E), dated 18 August 2026.

The draft explains what may happen when a person is suspected of contravening provisions covered by the Textiles Committee Act, 1963. It lays down the proposed process for starting an inquiry, issuing a show-cause notice, receiving a reply, holding a hearing, considering evidence, passing an order and filing an appeal.

There is one point businesses should keep clear from the beginning: these rules are not final yet.

The Gazette has published them for comments from persons who may be affected. Objections and suggestions can be submitted during the 30-day period stated in the notification. The draft also says that the rules will come into force only when they are finally published in the Official Gazette.

So, at this stage, textile businesses do not need to treat every provision in the draft as an operative compliance duty. They do, however, have a useful preview of how future adjudication proceedings may work if the rules are finalised in their present form.

Notification at a Glance

The draft is mainly procedural. It does not create a general registration, licence or return that every textile business must immediately file. Instead, it explains how an enforcement case may be handled once an inquiry is started.

What Is the Present Status of the Draft Rules?

The August notification is a consultation-stage document.

The Central Government has published the proposed rules so that people likely to be affected can study them and send their views. The Gazette states that objections and suggestions received within the prescribed period will be considered by the Government.

This means the wording available today may not necessarily be the wording that finally becomes law.

Where Can Objections or Suggestions Be Sent?

The Gazette asks stakeholders to send their comments to:

Secretary, Textiles Committee

Ministry of Textiles, Government of India

Prabhadevi Chowk, P. Balu Road

Prabhadevi, Mumbai – 400025

The notification refers to a period of 30 days from the date on which copies of the Gazette notification are made available to the public.

Because of that wording, businesses should rely on the official consultation period rather than assuming that the 30 days automatically run from the printed notification date.

When Will the Rules Actually Start Applying?

The draft itself answers this.

Rule 1 states that the rules will come into force on the date of their final publication in the Official Gazette.

Until that happens, businesses should describe the procedure as proposed rather than operational.

Why Have These Draft Rules Been Issued?

The draft is intended to provide the procedure for adjudication and appeal under the Textiles Committee Act, 1963.

A law may say that a warning or penalty can follow a particular contravention, but businesses and authorities also need to know how that decision will be reached.

Questions naturally arise:

• Who will conduct the inquiry?
• What will the notice contain?
• How much time will a person get to reply?
• Can documents be produced?
• Will there be a hearing?
• What should the final order contain?
• Can the order be challenged?

The draft rules answer these procedural questions.

In simple terms, they try to create a clear route from allegation to decision, while also giving the concerned person an opportunity to explain its side before a penalty is imposed.

Who Are the Main Authorities Under the Proposed Rules?

Two authorities have different roles under the proposed system.

• Adjudicating Officer

The Adjudicating Officer will handle the original inquiry and decide whether the proceedings should be closed, whether a warning should be issued or whether a penalty should be imposed.

The Central Government is proposed to appoint this officer through a Gazette notification.

The officer must not be below the rank of Director to the Government of India or an equivalent rank.

• Appellate Authority

The Appellate Authority enters the picture only after an adjudication order has been passed and an eligible person decides to challenge it.

The draft requires the Appellate Authority to be an officer not below the rank of Joint Secretary to the Government of India or an equivalent rank.

The two roles should not be confused. One decides the original matter, the other reviews that decision through the appeal process.

Who Is a “Concerned Person” Under the Draft?

• The rules use the expression concerned person throughout the inquiry procedure.
• It means the person against whom an inquiry has been initiated under Section 17A of the Textiles Committee Act.
• That person receives the show-cause notice and can submit a reply, produce evidence, attend the hearing and use an authorised representative.
• The term is deliberately broader than simply saying “manufacturer” or “exporter”. Applicability depends on the underlying provision of the Act and the facts of the case.
• Therefore, it would be incorrect to say that every textile manufacturer in India automatically comes under the adjudication process merely because these draft rules have been published.

How Can an Inquiry Begin?

An inquiry cannot simply begin without some basis.

Rule 6 says the Adjudicating Officer may act where there is reason to believe that a relevant contravention has taken place, based on material received from the Central Government or the Textiles Committee.

That material may come from:

• a report,
• a complaint,
• an inspection,
• a reference, or
• other relevant material.

The officer must also record the grounds for initiating the inquiry. This is important because a complaint or inspection observation is only a starting point, not a final finding. At this stage, the matter still needs to be examined, and the concerned business or person must have an opportunity to respond.

What Powers Will the Adjudicating Officer Have?

Once an inquiry begins, the officer may need information from the concerned person or from others who know the facts.

The draft allows the officer to:

• require a person's attendance,
• call for information,
• ask for records or documents,
• receive written statements,
• receive affidavits or other evidence,
• examine a person who knows the facts of the case,
• regulate the inquiry procedure in line with the Act and Rules, and
• pass procedural orders where required.

These powers are meant to help the officer build a proper record before reaching a decision.

They should not be interpreted more widely than the text allows. The provision, for instance, should not automatically be described as giving the officer unlimited search or seizure powers.

Another important part of Rule 4 is the requirement to give the concerned person a reasonable opportunity of being heard before an order under Section 17A is passed.

What Will a Show-Cause Notice Contain?

A show-cause notice is the point at which the allegation is formally put before the concerned person.

The proposed notice must explain:

• what the alleged contravention is,
• which provision of the Act or Rules is said to have been violated,
• what material is being relied upon, and
• how much time is available for submitting a written response.

The notice will ask the concerned person to explain why a penalty under Section 17A should not be imposed. Businesses should read the notice carefully to understand what is alleged, which rule is involved and what material supports the allegation. Receiving such a notice does not mean the business has already been found responsible. The final decision comes later, after the response, evidence and hearing have been considered.

How Much Time Will Be Available to Reply?

The draft proposes 15 days from the date of receipt of the show-cause notice to submit a reply. The concerned person may also provide supporting documents with the response. For businesses, this can be a relatively short period, especially when information needs to be collected from different departments or older records.

It is therefore important to review the notice promptly, identify the information required and begin preparing the response within the available time.

Can More Time Be Given?

Yes, but an extension is not automatic. The Adjudicating Officer may allow additional time if considered reasonable, and the reasons for granting the extension must be recorded in writing.

Businesses should not assume that simply requesting more time will result in an extension. If additional time is genuinely required, the request should be made promptly and with a clear reason.

What Happens If No Reply Is Sent?

The matter does not automatically close if the concerned person fails to submit a reply. If no response is received within the original or extended period, the Adjudicating Officer may continue the inquiry and decide the matter based on the records and material available.

Before proceeding in this manner, the officer must record the reasons for doing so. This makes it important for businesses to respond within the prescribed period or formally seek additional time where necessary.

This is one of the areas where internal communication can make a real difference. If a notice takes several days to reach the right person inside a company, valuable preparation time may already be lost.

What Rights Will a Person Have During the Inquiry?

The draft does not leave the concerned person without an opportunity to defend its position. Before a penalty is imposed, the person must be given a reasonable opportunity of being heard.

The person may:

• appear personally,
• appear through an authorised representative,
• produce documents,
• produce records,
• submit oral evidence where relevant, and
• submit documentary evidence.

The officer may also ask for additional information or records if they are needed to properly decide the matter. An authorised representative must be authorised in writing.

For businesses that expect an internal employee, adviser or another professional to handle the proceeding, keeping the authorisation clear and documented can avoid unnecessary procedural confusion.

How Will the Evidence Be Examined?

The officer does not decide the matter only based on the original complaint or report. Rule 11 lists the material that may form part of the inquiry.

This includes:

• the show-cause notice,
• the written reply,
• evidence produced by the parties,
• submissions made during the personal hearing, and
• any other material relevant to the case.

This makes document consistency important. If the reply says one thing while invoices, test records, correspondence or other supporting documents point in another direction, the difference may need to be explained.

The draft does not prescribe one common record list for every case. The documents that matter will depend on what the alleged contravention is.

How Long Can the Adjudication Take?

The proposed Rules provide a 180-day period for completing the adjudication. Under Rule 12, the Adjudicating Officer should complete the inquiry and pass a speaking order within 180 days. A speaking order is a reasoned decision explaining the basis for the conclusion.

• If a Reply Has Been Submitted

The 180 days are proposed to run from the date the reply to the show-cause notice is received.

• If No Reply Has Been Submitted

Where no response is filed, the starting point is linked to the expiry of the normal reply period or any additional period granted under Rule 8.

• What If the Order Comes After 180 Days?

The 180-day period is not an automatic cut-off. If the order is passed after 180 days, the reasons for the delay must be recorded in writing.

Rule 14 also states that an order does not become invalid merely because it was passed late. So, crossing the 180-day period does not automatically bring the adjudication to an end.

What Can Happen at the End of the Inquiry?

The conclusion of an inquiry does not automatically mean that a financial penalty will be imposed. The outcome will depend on the findings, the evidence available and whether a contravention is established under the applicable provision. The proposed Rules provide for three broad outcomes:

• Proceedings May Be Closed

If no contravention is established, the Adjudicating Officer may close the matter.

• A Warning May Be Issued

Where the relevant provision allows for it, the officer may issue a warning instead of imposing a financial penalty.

• A Penalty May Be Imposed

If the contravention is established and the statutory requirements for imposing a penalty are satisfied, the Adjudicating Officer may impose the applicable penalty.

This distinction is important for businesses because being subject to an inquiry does not, by itself, mean that a penalty will follow.

What Will Be Considered While Deciding the Penalty?

If a penalty is to be imposed, the draft allows the officer to look at the facts of the particular case.

The following factors may be considered:

A mitigating circumstance is basically a fact that may justify taking a less severe view of the case. The draft itself does not provide a new table of fixed penalty amounts. It refers back to the statutory framework.

For that reason, an article on the draft should not invent slabs or present one fixed penalty figure as applicable to every case.

What Must the Final Adjudication Order Explain?

The proposed order must be more detailed than a simple statement that a penalty has been imposed.

It should contain:

• the facts of the case,
• issues that had to be decided,
• findings,
• reasons for those findings,
• the warning or penalty, as applicable,
• the period for depositing the penalty, and
• Information about the available right of appeal.

This matters if the affected person wants to challenge the decision. A useful appeal normally starts with understanding exactly what the Adjudicating Officer decided and why.

How Will an Order Reach the Concerned Person?

The draft recognises several modes through which an order may be served. It may be sent through:

• Registered post
• Speed post
• Electronic mail
• Another recognised mode of service

Copies may also be sent to specified officials connected with the Textiles Committee and the Central Government.

For businesses, this makes regular monitoring of official correspondence important. Regulatory emails should not depend on a single employee checking an inbox occasionally. Similarly, registered-office mail should reach the compliance or management team without unnecessary delay. These are internal good practices, rather than separate duties created by the draft.

What Happens If a Penalty Is Not Deposited?

The adjudication order is proposed to specify the time within which the penalty must be deposited. If the amount is not paid within that period, Rule 15 provides that it may be recovered as an arrear of land revenue in accordance with Section 17A(6) of the Act.

In simple terms, an unpaid penalty can move into a statutory recovery process. The draft does not state that non-payment automatically leads to licence cancellation, criminal prosecution, additional interest or another penalty. Such consequences should not be assumed unless they are supported by another applicable legal provision.

How Will the Appeal Process Work?

A person who is aggrieved by an order of the Adjudicating Officer may use the appeal mechanism provided under Section 17A. The appeal goes to the Appellate Authority.

The Central Government is proposed to appoint this authority through the Official Gazette. The officer must not be below the level of Joint Secretary to the Government of India or an equivalent rank.

What Must Be Written in the Appeal?

The proposed appeal should contain:

• name and address of the appellant,
• details of the order being challenged,
• facts of the case,
• grounds of appeal,
• relief sought, and
• Other details needed for deciding the matter.

The grounds of appeal explain why the appellant believes the order should be changed or set aside. The relief sought tells the authority what result the appellant is asking for. 

Which Documents Must Be Attached?

The draft specifically mentions:

The appeal may be submitted personally, through registered post, speed post or electronic means as later specified by the Central Government. No filing portal, standard fee or specific email address is given in this part of the draft.

Those details should not be added unless they are officially notified.

What If the Appeal Is Filed Late?

Rule 16 refers to the appeal period prescribed under Section 17A (2) of the Act. If an appeal is filed after the prescribed period, the appellant must submit an application explaining the reason for the delay.

This does not mean that every delayed appeal will automatically be accepted. Businesses should therefore identify the applicable appeal period as soon as the adjudication order is received and take timely action if an appeal is required.

What Happens at the Appeal Hearing?

Once an appeal is admitted, the Appellate Authority may fix a hearing.

The notice may mention:

• date of hearing,
• time,
• place, and
• Documents or information that the appellant may need to produce.

The authority can also call for the original proceeding records from the Adjudicating Officer.

Before making its decision, the Appellate Authority must give the appellant a reasonable opportunity of being heard. The appellant may appear personally or through an authorised representative. If the appellant does not attend on the fixed date, the authority may decide the appeal using the records already available.

A hearing may also be adjourned if the authority records the reasons in writing.

What Can the Appellate Authority Do?

After considering the appeal, case records and submissions made during the hearing, the Appellate Authority may:

1. Confirm the original order.
2. Modify the original order.
3. Set aside the original order.

The decision must state the relevant facts, points for determination, findings with reasons and the final decision.

The draft says that the Appellate Authority’s decision will be final and binding. However, this should be understood in the context of the proposed Rules. If there are any other legal remedies available beyond this appeal process, those would need to be considered separately based on the applicable law.

In What Language Will the Proceedings Take Place?

Rule 21 deals with the language used in the proceedings. Notices, replies, orders, records and other proceedings under the proposed Rules will ordinarily be conducted in Hindi or English.

Where required, translation support may be provided. This gives businesses clarity on the languages generally expected for documents and communication during the proposed proceedings.

How Will Businesses Know Who the Authorities Are?

Rule 22 proposes publication of the names and designations of the Adjudicating Officer and Appellate Authority on the official website.

The Central Government or Textiles Committee will also update those details from time to time. This will be useful once the framework becomes operational because businesses will be able to check who is officially holding the relevant position. The draft itself does not mean a particular officer should already be assumed to hold the post.

Can the Government Relax a Procedural Requirement?

The draft gives the Central Government a limited power to relax procedural requirements. That power can be used where:

• reasons are recorded in writing,
• relaxation is considered necessary in the public interest, and
• the relaxation does not conflict with the Act.

This is not a general exemption that a business can automatically claim. The Government must make the decision.

Rule 23 separately allows administrative directions to be issued where difficulties arise in implementing the Rules. Those directions must also remain consistent with the Act and the Rules.

Proposed Process in Simple Terms

Not every matter will necessarily move through every stage. The table only shows the broad process contemplated by the draft.

What Risks Should Textile Businesses Watch For?

The proposed system does not create a routine filing obligation for every textile business, but it does show where procedural problems can arise once a proceeding starts.

• A Notice Reaches the Right Team Too Late

Fifteen days can pass quickly where the notice first reaches administration, then moves to operations, then legal and finally senior management.

Businesses may therefore want a simple internal escalation system for regulatory correspondence.

• Records Cannot Be Found Quickly

A response becomes harder to prepare where relevant records are spread across departments, emails or old files.

The issue is not about creating documents after a notice arrives. It is about being able to find genuine records that already exist.

• The Written Reply and Evidence Do Not Match

The authority can consider several pieces of material together. If different submissions tell different stories, the business may have to explain the inconsistency.

• No One Is Clearly Responsible

Businesses that do not have a dedicated regulatory team may still benefit from deciding in advance who will coordinate a government notice.

This is particularly relevant for smaller organisations where the same people handle operations, finance and compliance.

• An Order Is Received but Not Reviewed Promptly

An adjudication order may contain both a penalty-payment period and information on appeal.

Leaving it unattended could reduce the practical time available to decide what to do next.

What Should Textile Businesses Do at the Draft Stage?

There is no reason to create unnecessary paperwork simply because a draft has been published. A better approach is to prepare sensibly.

• Review Whether the Underlying Act Is Relevant

The first question is not “How do we comply with the draft?”

The first question is whether the business and the activity in question could fall within the relevant provisions of the Textiles Committee Act.

• Check How Regulatory Notices Are Received

Businesses can review who monitors:

• official email addresses,
• registered-office mail,
• correspondence from the Textiles Committee,
• Ministry communications, and
• communications sent to company officials.

• Identify the People Who Would Handle a Notice

Depending on the issue, this may involve:

• compliance,
• legal,
• quality,
• production,
• export,
• management, or
• another technical team.

• Keep Genuine Records Organised

The draft allows evidence and supporting documents to be considered. Good record organisation can save time if a response is ever needed.

• Follow the Final Notification

Businesses should compare the final rules with this draft instead of assuming every current provision will remain unchanged.

That comparison may be more useful than changing internal processes immediately.

Should Businesses Send Suggestions on the Draft?

Businesses do not have to submit comments simply because the draft has been published. However, if a stakeholder identifies a genuine practical concern, the consultation period provides an opportunity to raise it with the Government. A useful submission should clearly explain the issue and its operational impact.

For example, stakeholders may comment on:

• Procedural clarity
• Response time
• Electronic filing
• Communication of notices
• Hearing arrangements
• Implementation challenges

The Gazette confirms that objections and suggestions received within the prescribed period will be considered. However, it does not state that every suggestion will necessarily be accepted. Specific, practical feedback is likely to be more useful than general comments that the proposed Rules are simply “too strict” or “too difficult.”

What Could Be Helpful About the Proposed Rules?

One of the strongest features of the draft is that it sets out the adjudication process in a more structured way. A person facing an allegation can understand the main stages of the proceeding, including:

• Written notice of the allegation
• Opportunity to submit a reply
• Submission of evidence
• Opportunity for a hearing
• A reasoned adjudication order
• Right to appeal

From a business perspective, this clarity can make the enforcement process easier to understand and prepare for. The draft also allows the authority to consider the seriousness of the alleged contravention and other relevant factors while determining the penalty.

These are procedural benefits, not a guarantee of a favourable outcome. They also do not mean that enforcement disputes will disappear.

Where Could Businesses Face Difficulty?

The same framework that provides a clearer process can also demand quick action from the business involved.

• The 15-Day Reply Period Can Be Tight

A straightforward matter may be manageable within 15 days.

A complicated matter involving several years of records, multiple departments or technical documents may take longer to organise.

The draft does allow additional time, but that remains discretionary.

• Smaller Businesses May Have Fewer Dedicated Resources

An MSME may not have an in-house legal department or a separate regulatory team.

If a notice arrives, the owner or a small management group may have to coordinate the entire response while continuing normal business operations.

• Proceedings Can Require Detailed Documentation

The inquiry can involve notices, written replies, evidence, hearing submissions and an appeal.

Even where a business ultimately succeeds, handling the matter can take management time.

• The Draft Still Needs to Be Finalised

At present, businesses also need to avoid overreacting to a proposal. Building a complete internal compliance system around draft wording that later changes may create unnecessary work.

Is This a Right Decision or an Additional Burden?

The answer depends on which part of the proposed process is being considered. The draft does not appear to create a new routine compliance requirement for every textile business. Instead, most of the work becomes relevant when a business is actually involved in an inquiry or adjudication proceeding.

The draft does not require every textile business to obtain a new licence, file a new return or submit a new registration. Its impact is mainly event-based. If an inquiry begins, the concerned person may need to prepare a reply within 15 days, gather evidence, participate in a hearing and, where necessary, pursue an appeal.

At the same time, the proposed process gives businesses a fair chance to explain their side before any penalty is imposed. The officer also has to give reasons for the decision, and there is a provision for appeal. So, for now, the proposal is better seen as a way of setting out how enforcement proceedings will work, rather than as another routine compliance requirement for every textile business.

What Can Still Change?

Several procedural details may still change because the notification is currently in draft form. After reviewing stakeholder comments, the Government may retain the existing wording, modify specific provisions or issue a different version in the final Rules.

Businesses should avoid assuming what those changes will be. The practical approach is to use the draft for advance preparation but rely on the final Gazette notification for actual implementation. The draft itself states that the Rules will come into force only after final publication.

How Corpseed Can Help

A Textiles Committee matter may involve more than reading a notice. A business first has to understand why the underlying provision applies, what the authority is alleging, which records matter and what procedural stage has been reached.

Corpseed can support businesses with the documentation and regulatory side of that work.

• Applicability Review

Corpseed can help examine the business activity, available regulatory records and relevant notification to understand whether the applicable provision appears relevant to the matter.

• Draft and Final Notification Review

Once the rules are finalised, the draft and final text can be compared to identify changes in:

• timelines,
• authority powers,
• hearing procedure,
• appeal requirements, and
• other procedural conditions.

• Show-Cause Notice Review

Where a notice is issued under an operative legal framework, support may include reviewing:

• the allegation,
• provisions referred to in the notice,
• material relied upon,
• response timeline, and
• records that may require further review.

• Documentation Gap Assessment

A business may have the underlying records but find that they are scattered, inconsistent or difficult to trace.

Corpseed can help identify such documentation gaps and organise records for further regulatory or professional review.

• Reply Documentation Coordination

Different parts of a response may depend on inputs from technical, operational, compliance and management teams.

Corpseed can assist in bringing the relevant information together in an organised form.

• Hearing Readiness

Where a hearing is scheduled, support can include arranging the document set, tracking the procedural position and helping the business keep its records organised.

• Appeal Documentation Support

Where an appeal is considered, Corpseed can assist with organising:

• the challenged order,
• supporting documents,
• authorisation records,
• previous submissions, and
• other case material needed for professional review.

• Regulatory Monitoring

Because the August 2026 notification is still a draft, businesses may also need to track the final Gazette publication and any later implementation directions.

Corpseed assists with regulatory interpretation, documentation and compliance coordination. Decisions on inquiry, warning, penalty and appeal remain with the competent government authorities.

Businesses dealing with a Textiles Committee notice or assessing the effect of the proposed rules can seek a matter-specific review through Corpseed's regulatory compliance services rather than relying on a generic compliance checklist

Key Takeaways

• The Ministry of Textiles has issued the Draft Textiles Committee (Adjudication of Penalties and Appeal) Rules, 2026.
• They are currently proposed rules, not the final operative framework.
• Stakeholders can submit objections and suggestions during the consultation period stated in the Gazette.
• An inquiry may arise from a report, complaint, inspection, reference or other relevant material.
• A written show-cause notice must set out the alleged contravention and relied material.
• The draft proposes 15 days from receipt of the notice for submitting a reply.
• The concerned person can produce evidence and receive a reasonable opportunity of hearing.
• The Adjudicating Officer may close the case, issue a warning or impose a penalty, depending on what is established.
• The draft proposes a 180-day adjudication period but also addresses orders passed after that period.
• A separate appeal procedure is provided before an Appellate Authority.
• Businesses should monitor the final Gazette publication before changing their compliance process on the basis of the draft alone.

Disclaimer

This article is meant for general information and is based on the Draft Textiles Committee (Adjudication of Penalties and Appeal) Rules, 2026. The draft may change before final publication. Businesses should review the final notified rules, the applicable provisions of the Textiles Committee Act and the facts of their own matter before taking a legal or compliance decision.