In a Circular No. 1031/19/2016-CX dated 14th June 2016, the Ministry of Finance has clarified Levy of excise duty only on readymade garments and made articles of textiles bearing a brand name or sold under a brand name and having a retail sale price of Rs. 1000 or more.
The issue raised is whether excise duty would be chargeable on readymade garments or made up articles of textiles that are sold by a retail store which merely affixes the retail sale price on the readymade garments or made up articles of textiles which are purchased by such retail store from the open market.
“The present levy is not on all readymade garments and made-ups, and is restricted only to readymade garments and made up articles of textiles bearing a brand name or sold under a brand name and having retail sale price (RSP) of Rs. 1000 or above. Further, to avoid disputes and minimize duty evasion, it has also been provided that affixing a brand name on the product, labeling or relabeling of its containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture”, said in the Circular.
Merely because the outlets of a retailer, from where readymade garments or made-ups are sold, has a name, say, M/s XYZ and Sons, the readymade garments or made-ups sold from such outlet [shop] cannot be held as branded readymade garments or made-ups and become liable to excise duty. Needless to say, deemed manufacture and liability to excise duty will arise only if such retailer affixes a brand name on the readymade garments and affixes a label bearing the RSP on the packages containing the readymade garments of Rs. 1000 or above
The Circular also directed that field formations shall not visit 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.
Read the full text of the Circular below.
