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Excise duty on Ready Made Garments under Chapter 61, 62 and 63

Central Excise - Started By: - Sanketh Meri - Dated:- 13-9-2016 Last Replied Date:- 18-9-2016 - Dear All, We are a Garment Manufacturing unit producing readymade garments on contract for certain brand. Our Brand Owner is not disclosing their RSP to us and hence we are not affixing Price Label. Hence, in such a case whether we are exempt from Excise Duty or whether we have to discharge excise duty under section 4 at transaction value. - Reply By KASTURI SETHI - The Reply = Textiles and readymade .....

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iable to pay Excise Duty. - Reply By Ganeshan Kalyani - The Reply = Sir , the querist has manufactured the garment, hence excise duty shall become payable. It is payable by principal manufacturer or job worker. - Reply By CS SANJAY MALHOTRA - The Reply = Para 3.1.2 of DOF Letter 334/8/2016-TRU dated 29.02.2016 (v) In cases where the brand name owner gets goods bearing its brand manufactured from other manufacturers (normally small units) without providing the raw materials or inputs, and if the .....

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1000 or above and clears them for further sale. - Reply By Sanketh Meri - The Reply = Dear Kasthuri Sir,The circular does not clarify my query - Reply By Sanketh Meri - The Reply = Dear Sanjay, From where does the exemption from excise come into picture in case RSP is not affixed by the contractor. Since notification 20/2001 very clearly says if RSP is not affixed then excise shall be chargeable on transaction value. Your suggestion was similarly given in budget proposal but has not been amended .....

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ated 29.02.2016 in the finance bill or notifications. But I could not find anything. If you can help, it will be really great - Reply By YAGAY AND SUN - The Reply = Excise duty liability on readymade garments (Source of Info: LKS- Excise Update No. 14/16th June, 2016) • The CBEC has issued Circular No. 1031/19/2016-CX dated 14.06.2016 wherein the excise duty liability on readymade garments has been clarified. • Vide Budget 2016, readymade garments bearing a brand name or sold under a b .....

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from a retail outlet which has a name say M/s XYZ and Sons, such readymade garments will not be liable to excise duty as they will not be considered as branded goods. • Further, the CBEC has directed the field formations not to visit the individual retail outlets or retail chains, except based on specific inputs regarding duty evasion and with the approval of the jurisdictional Commissioner or Additional Director General or above. Issue • The Supreme Court in the case of CCE vs. Austr .....

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e Notification, which has not been done. Firstly the condition as mentioned in DOF letter dated 29.02.16 has limited applicability i.e. small units and not universally applicable, which may invite litigation on small units definition. Notf No 20/2001 as rightly stated by you provides for levy of duty at transaction value, but in the recent case, the levy is based on RSP > than ₹ 1000/-, hence the scenario changes. This is my view and other experts may have different view. - Reply By YAG .....

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eries replied. Quantity cannot override quality. - Reply By CS SANJAY MALHOTRA - The Reply = Dear Yagay and Sun Ji / Sh Kasturi Ji,Am speechless with the courtesy you people extend, but I learn lot from all my friends. Everyone has unique qualities for e.g Yagay and sun replies depicts competency in drafting legal matters, Sh Kasturi Ji depicts going to root cause and revert irrespective of output which enriches learning curve. Sh Ganeshan Ji, debate this involving experts to remain at Tmi platf .....

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hy i like to post technical queries in this forum rather than any where else. With regard to your reply on my query, i differ with you since if you read the notification 20/2001, it clearly says that abatement of 60% will be available on RSP and not on transaction value. Hence, the mention of RSP clearly links it to Notification 1/2011 (amended by 2016 notification) which spells out that RSP 1000/- and above is taxable. Since it links it to RSP, they have given clarification in Notification 20/2 .....

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statutory force. Both help in understanding law. No doubt Board's circulars are binding on the department but they are devoid of legal force. These cannot override rules or notifications. - Reply By KASTURI SETHI - The Reply = Sh.Sanketh Ji, Does Para No.5 of Board's Circular No. 1031/19/2016-CX, dated 14-6-2016 not help you ? - Reply By Sanketh Meri - The Reply = No sir. Since, the context of Para 5 clearly talks about branded outlets liability to charge excise duty on affixing brand n .....

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experts. Thanks. - Reply By Ganeshan Kalyani - The Reply = Sri Kasturi Sir, I agree to your views/praise to Sri Sanjay Sir. The presentation on GST prepared by him was really helpful in understanding the basis of taxation in GST. The pictorial slides made easy to understand. The examples given depicting tax structure is very nice. In short it is simple and to precise. Thanks to his effort and for sharing the same with us. - Reply By Sanketh Meri - The Reply = Dear Ganesh sir, Can you guide me w .....

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, CE duty is payable. I also think that query has not been properly drafted. Contract viz-a-viz billing system has to be checked for fool proof reply. Best option is to pay CE duty under protest and avoid interest and penalty. - Reply By CS SANJAY MALHOTRA - The Reply = Dear Sanket, Am in agreement with Sh. Kasturi ji that if you have doubts, then pay the duty under protest and seek for clarification, which would take time. Refer to Notification No. 09/2016-CE dated 01.03.2016 (amendment to Noti .....

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. Ganeshan ji rightly shared his view to take up with CBEC. You may write to Chairman CBEC, North Block, New Delhi but you may / may not get reply. - Reply By KASTURI SETHI - The Reply = Sh. CS Sanjay Malhotra Ji, If any querist is not satisfied by any reason whatever may be, the better option for querist is to engage professional advocate or consultant. Sir, on this platform advice is given on the basis of construction of a query by the assessee and that too in the absence of statutory and non- .....

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ly By CS SANJAY MALHOTRA - The Reply = Dear Sh Kasturi Ji,Am in agreement with you. We can share , guide but finally Querist has to take call what best suits him. - Reply By KASTURI SETHI - The Reply = Yes Sir. We are are performing our moral duty in the interest of society, in turn, nation through TMI. - Reply By Ganeshan Kalyani - The Reply = Sri Sanket Ji, please refer Section 23A to 23H of Central Excise Act, 1944 which provides for Advance Rulings. You may take benefit of this provision. As .....

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shall purchase the materials and make the final product for the brand owner. It is a contract for sale and not works contract. In this, we shall be affixing the brand name of the brand owner and supply the material. In case of job work, Rule 4 (1)A clearly exempts job worker from liability if brand owner is discharging liability. However, we are not job worker. Hope this gives more clarification. With regard to notification 1/2011, it clearly says 2% without cenvat credit can be charged for entr .....

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