Change in Notification levying Duty on Ready-made Garments, Made-up Articles & Textiles

Change in Notification levying duty on ready-made garments, made-up articles, textiles

Prepared By:
CA Pradeep Jain,
CA Preeti Parihar

Previous Provision-

Notification No. 31/2011-CE dated 24.03.2011 was issued for the benefit of manufacturers of Branded Goods falling under Chapter no. 61, 62, or 63 of Central Excise Tariff i.e. Branded Apparels etc. This notification was issued to facilitate the return of duty paid goods to the same premises/factory. Duty free clearance of these returned goods was allowed after being re-made, re-conditioned, re-packed or subjected to any other process in the factory.

Following conditions have been stipulated to avail the said exemption notification:-

1.            Cenvat credit on the returned goods was not allowed.
2.            Intimation was required to be filed to jurisdictional Central Excise Authority     within 48 hrs. of the receipt of the returned goods alongwith the details.
3.            Proper accounts of receipt and disposal of such goods was required and these were to be mentioned in their monthly return as well.
4.            The exemption is available upto 10% of the aggregate value of clearance for home consumption from the same premises/factory in preceding financial year.

By virtue of Budget, 2012 certain procedural relaxations have been made in the operation of this exemption. These are as follows: -

- Exemption will now be available to goods returned or brought back to any registered premises of the same brand owner/ manufacturer.

- The goods are returned or brought back within a maximum period of one year from the date of their clearance.

- The threshold limit of 10% is to be computed for each factory/ registered premises separately. While computing this limit, the value of goods cleared under the provisions ofrule 16 of the Central Excise Rules are to be excluded.

- Finally, duty-free clearance under this notification will be allowed on the basis of a declaration from the manufacturer that the goods are duty-paid. This aspect should be verified on the basis of documents/ records maintained by the manufacturer at the time of audit of the unit.

Further, the effective excise duty rate applicable to the textile sector (other than readymade garments and made ups bearing a brand name or sold under a brand name) is currently covered by Notification No. 29/2004-CE dated 9.7.2004. This notification is being superseded by notification no. 7/2012 –CE dated 17th March, 2012. Under this notification, the rate of excise duty on ready-made garments and made-up articles of textiles bearing or sold under brand name and falling under Chapters 61, 62 and 63 (heading nos.63.01 to 63.08) has been increased from 10% to 12%. This notification is not applicable on tariff heading nos.63.09 and 63.10.

Further, the tariff value for these items has been revised. The abatement has been increased from 55% to 70%. In other words, duty would be payable on 30% of the Retail Sale Price.

Net Effect-

Previous provision	Amended provision
1. Only chapters 61, 62, 63 are covered.	Chapters 61, 62 and 63 (heading no. 63.01and 63.08) are covered but heading no. 63.09 and 63.10 are not included.
2. Rate of abatement was 55%.	Now rate of abatement is 70%.
3. Full exemption was available to duty paid branded ready-made garments and made-ups which were returned or brought back to the same premises/factory and cleared after being reconditioned, re-made or subjected to some process and conditions.	Now, exemption will be available even if duty paid ready-made garments and made-ups are returned or brought-back to any registered premises of the same brand owner/ manufacturer.
4. There is no time limit of returning goods to the factory.	The exemption will be allowed only if goods are returned within a period of 1 year from the date of their clearance.
5. The excise duty applicable to textile sector is currently covered by notification no. 29/2001-CE dated 9.7.2004.	The notification no. 29/2001-CE dated 9.7.2004 is superseded by notification no. 7/2012 CE dated 17^th march, 2012.
6. In computing threshold limit, value of goods cleared under Rule 16 of central excise rules is included.	In computing threshold limit, value of goods cleared under Rule 16 of central excise rules is excluded.

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Change in Notification levying Duty on Ready-made Garments, Made-up Articles & Textiles

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