Excise Duty on Readymade Garments – Budget 2013

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 28thFebruary, 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%.

2. 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 atankitgulguliagmail.com/+91-9811653975.

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