28 February, 2013

Print to PDF

Excise Duty on Readymade Garments – Budget 2013

Budget 2016 - Excise Duty Imposed on Ready Made Garments (Analysis by CA Ankit Gulgulia - Jain) 
 
(No Change in Readymade Garments by Budget 2014 - Relaxations & Exemptions as per 
Earlier Budget 2013 Continues)...

Excise Duty on Readymade Garments – Budget 2013 by CA Ankit Gulgulia (Jain)
 

In context to the excise duty on readymade garments, two important notification are prescribed. These are notification 8/2013-CT & 11/2013-CE. These notifications are supported by TRU 334/3/2013 dated 28th February, 2013.

The explanation is as provided below:-
  1. Notification 8/2013-CE dated 28th Feb,2013

This notification amends Notification 7/2012-CE dated 17.3.2012 as:-

In the said notification, in the Table, against serial number 7, in column (3), for the entry, the following shall be substituted namely:-
“All goods of cotton, not containing any other textile material.


The pre amended notification’s entry read as follows:-

All goods of cotton, not containing any other textile material, other than those bearing a brand name or sold under a brand name.

Simply to say, this notification essentially exempted the goods partially i.e. to tax the goods at lower rate of 6%.

  1. Notification 11/2013-CE dated 28th Feb,2013

This notification amends Notification 30/2004-CE dated 9.7.2004 as:-

In the said notification, in the Table, against serial number 16, for the existing entry in column (3), the entry “All goods” shall be substituted.

Earlier the actual words in Sl. No. 16 were:-
All goods other than those bearing a brand name or sold under a brand name

This notification exempts the excisable goods from whole of the duty of excise leviable thereon under the said Central Excise Act. Provided, this notification shall not apply to the goods in respect of which credit of duty on inputs has been taken under the provisions of the CENVAT Credit Rules, 3[2004].

As per D.O.F.No.334/ 3/2013-TRU,
“61.1 Zero excise duty route, as existed prior to Budget 2011-12, is being restored on readymade garments and made ups. The zero excise duty route will now be available in addition to the CENVAT route under which manufacturers can pay excise duty on the final product and avail of credit of duty paid on inputs. S.No.16 of notification No. 30/2004-CE dated the 9th July, 2004 as amended by notification No.11/2013-CE dated the 1st March, 2013 and S. No.7 of notification No. 7/2012-CE dated 17th March,2012, as amended by notification No. 8/2013- CE dated the 1st March, 2013 may be referred to for details.”

Conclusion:- On a harmonious reading of above provisions it can be said that readymade garments are exempted from excise duty when no input is availed and utilised. Where the assessee has taken the Cenvat on input the excise shall be leviable but at the rate of 6% only.

About the Author:

CA Ankit Gulgulia (Jain)
Author is practicing Chartered Accountant in New Delhi and specialising in Indirect Taxes, Corporate Laws and Transfer Pricing. He can be reached at ankitgulguliagmail.com/+91-9811653975.

DISCLAIMER: This article is provided purely for your information only and you should check other information sources before taking any action based on any of the content in this article. Neither the authors nor website hosting the article make any warranty as to the quality or currency of the information contained in any of the site's articles.



Note : As a part of Our Quality Policy , We Don't Publish any Restricted Material on our Website . If you have issues kindly let us know here

Subscribe to Get our Articles directly in Your E-Mail