“The Central Excise duty of 2% (without CENVAT credit) or 12.5% (with CENVAT credit) is being levied on readymade garments and made up articles of textiles falling under Chapters 61, 62 and 63 (heading Nos. 6301 to 6308) of the Central Excise Tariff except those falling under 6309 and 6310 of Retail Sale Price (RSP) of Rs.1000/- and above when they bear or are sold under a brand name” – Budget 2016
In the above case, where the Retail Sale Price of item was Rs 1,000/- or above, the duty was made applicable. On Similar Lines the GST Council in its meeting dated 3rd June, 2017 while introducing the GST Rates on Textiles passed that barring few items viz Indian National Flag etc all Chapter 61, 62 and 63 Items (Predominantly constituting the Readymade garments) shall be either taxed at 5% or 12% depending on the Sale value.
This means, where the sale value is Rs 1,000/- or less per piece then the rate shall be 5% in other case it shall be @ 12%.
Now comes the key point, see first of all, the rate differential is 7% so it is quite substantial the interpretation must not have any lacunas or being subject to multiple interpretations.
Second, there is no mention of any interpretation in Addendum dated 03.06.2017 in regard to chapter 61, 62 or 63.
Key Point – The Term mentioned against Rs 1,000/- is not Retail Sales Price (RSP) as in earlier Excise Regime but ‘Sale Value’. This is bound to create a Lot of Problems. Such as:-
It can be simplified by considering the Retail Sales Price as the basis of Differentiation instead of Sale Value. If not done, a lot confusion will percolate which is uncalled for.
Thanks & Regards,
CA Ankit Gulgulia (Jain)
Related Tags CA Ankit Gulgulia, GST
