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Government of India
Ministry of Finance
(Department of Revenue)
Tax Research Unit
Circular No. 1031/19/2016-CX
New Delhi, 14th of June, 2016
To,
Principal Chief Commissioners/Chief Commissioners/Principal Commissioners of
Central Excise (All);
Principal Chief Commissioners/Chief Commissioners/Principal Commissioners of
Customs& Central Excise (All),
Subject: Levy of excise duty 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 – reg.
Sir/Madam,
Representations have been received from the trade regarding the scope of the
levy of excise duty 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 in this year’s Budget.
2. The issue raised is whether excise duty would be chargeable on readymade
garments or made up articles of textiles which 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.
3. The issue has been examined in the Ministry. 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.
3.1 For this purpose, “Brand name” means a brand name, whether registered or
not, that is to say, a name or a mark, such as a symbol monogram, label,
signature or invented words or any writing which is used in relation to a
product, for the purpose of indicating, or so as to indicate, a connection in
the course of trade between the product and some person using such name or mark
with or without any indication of the identity of that person.
4. However, such retailer shall not be liable to pay excise duty if:
a) the retail sale price of such readymade garments or made up
articles of textiles is less than Rs. 1000, or
b) the aggregate value of clearances for home consumption by such person is less
than Rs. 1.5 crore in a year [provided aggregate value of clearances during
previous financial year was less than Rs. 4 crore].
5. Further, merely because the outlets [shop] 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.
6. Further, it is hereby 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.
7. The above position may be brought to the notice of formations under your
charge for strict compliance. Difficulties, if any, faced in the implementation
of the instructions may be brought to the notice of the Ministry at an early
date.
Yours faithfully,
(Devi Prasad Misra)
Technical Officer (TRU)
F. No. 332/5/2016-TRU
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