Zero Duty Route-Excise in ReadyMade Garment

ZERO DUTY EXCISE ROUTE-Garment

The Union Budget 2013-14 presented by the India’s Finance Minister P Chidambaram has brought cheer for the textile and garment industry by providing them “Zero excise duty route”, as existed prior to Budget 2011-12, is being restored on ready-made garments and made ups (for cotton and spun yarn sector at the yarn, fabric and garment stages). 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. In the case of cotton there will be zero duty at the fiber stage also; and, in the case of spun yarn, there will be a duty of 12% at the fiber stage.

Position prior to Budget 2013-14

 Excise was levied on readymade garment by the budget 2001 prior to that these are out of the scope of excise. Excise duty levied @ 16% ad valorem on readymade garments and these are falling under Chapter 62 of the First Schedule of the Central Excise Tariff Act, 1985. . However, certain items such as clothing accessories have been exempt from the duty. Further, the benefit of the small scale sector duty exemption is available on such goods.

To give effect of various changes legislation issued various notifications and to give immediate effect of the proposed amendment notification no 8/2013 dated March 1^st 2013 has been issued and the said notification is detailed below.

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

Notification

Seeks to amend notification No.30/2004-CE, dated the 9th July, 2004, so as to provide ‘zero excise duty route’ to branded ready- made garments and made-ups.

NOTIFICATION No. 11/2013-Central Excise

New Delhi, the 1st March, 2013

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No 30/2004-Central Excise, dated the 9th July, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. 421(E), dated the 9th July, 2004, namely :-

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.

[F.No. 334/3/2013-TRU]

(Akshay Joshi)

 

 

What is Zero duty

Sec.5A of central excise act, 1944 grant power to central government to exempt or make duty free by issuing notification in official gazette.

In Simple words it can be said that readymade garments made up of cotton only are exempted from excise duty when no input is availed and utilized, whereas the assessee has taken the Cenvat on input the excise shall be leviable but at the rate of 6% only.
Therefore credit availed on the same in the past for goods in stock whether in raw material or finished goods stage or in between would disentitle the exemption. However the benefit under this notification can be availed even in a case where the cenvat credit on input services or on capital goods been availed. The said exemption is available from 1^st March 2013 onwards

Process and procedure of Registration

Rule 9 of Central excise Rules deals with registration process in Excise according to it every person who is producing excisable goods or holding a private ware house or desirous to issue Cenvatable invoices are liable to register under this act. But the Central Board of Excise and Customs (CBEC), by Notification No. 36/2001-CE (NT) dt.26.6.2001, has exempted specified categories of persons/premises from obtaining registration, and this notification says that  “person/s who manufactures the Excisable goods, which are chargeable to nil rate of duty or are fully exempt from duty by notification are not liable to register.” Instead of obtain registration under the act they just need to file a declaration in lieu of that.

Filing of Declaration in lieu of registration

The manufacturers who are exempted from the operation of Rule 9 by virtue of Notification no. 36/2001-Central Excise (NT) dt.26/6/2001 have to file a declaration with the Assistant Commissioner of the respective Divisions. Such declaration’s received from the assessee will have to be filed separately, tariff head-wise in the Divisional office. The details should be entered in the register to be maintained in the Divisional office in the enclosed Proforma. Genuine delay in filing the required declaration need not be viewed seriously and the assessee may be allowed to enjoy the exemption from the operation of Rule 9 as well as from the payment of duty provided the conditions stipulated in the respective exemption Notifications have been duly fulfilled.