Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
Circular No. 947/8/2011- CX
New Delhi dated the 21st June, 2011.
To
All Chief Commissioners of Central Excise
All Chief Commissioners of Customs & Central Excise.
All Commissioners of Central Excise
All Commissioners of Customs & Central Excise.
All Directors General
Subject: Clarification on issues pertaining to the levy of excise duty on
branded readymade garments and made-up articles of textiles– regarding.
Sir / Madam,
Board has received representations from trade and industry seeking clarification
on certain issues pertaining to the levy of excise duty on readymade
garments/made-ups that either bear or are sold under a brand name. These issues
are:-
- applicability of the mandatory levy of excise duty on school uniforms,
uniforms for private security guards, companies, hotels, airlines etc and
made-ups such as linens, towels etc bearing the name or logo of a hotel,
restaurant or airlines etc; and
- applicability of mandatory levy of excise duty on made-ups such as blankets
bearing the name of the manufacturer and supplied to the Ministry of Defence or
its organisations
2. The matter has been examined. On the issue of applicability of excise duty on
uniforms or made-up articles like quilt, blankets, towels, linen etc bearing the
name or logo of a school, security agency, company, hotel or airline etc., it is
clarified that such products would not merit treatment as “branded” products
merely because the name of the school, institution or company or their logo is
either printed, embroidered or etched on them. This is equally true of made ups
such as towels, linen etc bearing the name of a hotel, restaurant or airlines.
In all these cases, there is no nexus between such a name or logo & the product
at the time of its sale which is essential ingredient in the definition of the
term “brand name”. Unless such garments/made- ups also bear a brand name in
addition to the name or logo of the school, security agency, hotels, airlines
and company, such goods would not attract the excise duty. It is also gathered
that in some cases, apart from the name or logo of such organisations, the name
of the tailor or manufacturer is affixed on such garments. However, mere
affixing of name of the tailor or manufacturer would not constitute a brand
name. Another related issue is the applicability of the mandatory excise duty to
blankets which are supplied to the defence establishment, armed forces, police
forces etc against tenders that stipulate that the name of the manufacturer
should be clearly indicated or marked on the product. As pointed out above,
affixing the name of the manufacturer on such goods would not, by itself, bring
them within the ambit of branded goods.
3. Another issue raised by the trade concerns the determination of eligibility
of a manufacturer or factory to the benefit of small scale exemption contained
in
notification no. 8/2003-CE dated 1.3.2003. Under the exemption, a
manufacturer or a factory whose aggregate value of clearances for home
consumption did not exceed Rs.4 crore in the preceding financial year is
eligible for full exemption on similar clearances not exceeding Rs. 1.5 crore in
this financial year. It has already been clarified that a certificate from a
chartered Accountant about the aggregate value of clearances for home
consumption in the preceding financial year may be accepted. It has now been
decided that self certification by a manufacturer may also be accepted for this
purpose. As regards maintenance of records by such manufacturers, Central Excise
law does not prescribe any specific record which is to be maintained by an
assessee. Hence records of production, clearance & purchases that are maintained
for the purpose of VAT purposes can be accepted for purposes of Central Excise.
(5). Suitable trade notice / standing order may be issued to guide the trade and
industry.
(6). Difficulty, if any, faced in implementation of these instructions may be
brought to the notice of the Board immediately.
Yours faithfully,
(Yogendra Garg)
Director (TRU)
F.No.B-1/2/2011-TRU