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Excise for reeadymade garments

amol (proprietor) (25 Points)

15 March 2011

dear sir,

i need help in my problem as stated below.

i had ordered for 1000 shirts in the month of december to a manufacturer who make shirts for leading brands.the stitchinh got delayed due to some issues and the goods are now ready.they are insisting that i pay the excise duty of 10% now to release to the goods.

pls let me know if this is ok as the goods were in stock before 28th feb - can it be exempted form excise duty.

can i take deliveryt from them stating that the excise liability is on me and not on them?

pls guide me on how to tackle this situation as the excise if paid amounts 30000.00 and i will lose close to 15000.00 if excise is paid as my buyer is n ot ready to inflate the price.

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18 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 15 March 2011

Goods was not ready that’s why It can not be exempt hence Excise duty is payable by manufacturer at the time of removal of goods so he is right he have to pay excise duty now….

1 Like

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amol (proprietor) (25 Points)
Replied 15 March 2011

dear sir,thanks for the reply.

i want to know that if the goods were ready befor 28th feb,then excise would not be applicable isn't it.500 shirts were ready before 28th march.

pls pls help me with last reply.

Originally posted by : amol
	dear sir, i need help in my problem as stated below. i had ordered for 1000 shirts in the month of december to a manufacturer who make shirts for leading brands.the stitchinh got delayed due to some issues and the goods are now ready.they are insisting that i pay the excise duty of 10% now to release to the goods. pls let me know if this is ok as the goods were in stock before 28th feb - can it be exempted form excise duty. can i take deliveryt from them stating that the excise liability is on me and not on them? pls guide me on how to tackle this situation as the excise if paid amounts 30000.00 and i will lose close to 15000.00 if excise is paid as my buyer is n ot ready to inflate the price.

Pankaj Arora (Learner) (3134 Points)
Replied 15 March 2011

Goods were ready but not dispatch from the manufacturer factory….

Excise duty is payable at the time of removal of goods…

https://business.gov.in/taxation/excise_duty.php

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 15 March 2011

duty applicable at the time of removal only, irrespective of the facts that materials were ready early or not.

if goods were ready by 28th feb then u had to take delivery without excise control, but once excise is imposed he can not clear the goods without duty.

SAMAR JEET SINGH (CA) (72 Points)
Replied 15 March 2011

Hi,

In my opinion,

Excise is on manufacture and not on sale or removal, only for the convinence the collection is at the time of removal of goods so the rate applicable at the time of removable becomes applicable.

If the goods are excisable at the time of manufacture than the same are liable to excise at the rate applicable at the time of removal. Even 0 rate of duty means goods are excisable.

So what needs to be checked whether goods were excisable at the time of manufacture.

warm regards

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annamalai (manager) (21 Points)
Replied 15 March 2011

Amol,

1. If the order for 1000 shirts is for Job Work (Material provided by you) duty can be paid either by you or job worker.

2. You need not pay duty if your turnover is below 3 crores in previous or this financial year.

3. Even if manufacturer is paying duty, he can avail credit on inputs which can be setoff and net difference duty can be paid upon costing.

Hope this is clarified

(Guest)

Originally posted by : U S Sharma
	duty applicable at the time of removal only, irrespective of the facts that materials were ready early or not. if goods were ready by 28th feb then u had to take delivery without excise control, but once excise is imposed he can not clear the goods without duty.

agreed

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 15 March 2011

despite of excise imposition, most of the garment manufacturers are still under the threshold limit of 150 lacs (limit is calculated now by excise department for match 2011 only), clear your goods as early as u can, as after 01-04-2011 the things would be more strict.

CA Saiyum khan (Practicing CA) (690 Points)
Replied 16 March 2011

The threshold limit of Rs.150 lacs is applicable only if the garment is manufactured in the owned brand by the manufacuterer. If it is manufactured in third party brand then excise is levied from the fist delivery itself i.e. wef 01-03-2011.

SAMAR JEET SINGH (CA) (72 Points)
Replied 16 March 2011

Precisely you are liable to pay the excise duty as I said earlier it is required to be seen whether the goods were excisable or not when manufactured.

The readymade garments were excisable goods though exempt upto 28-2-2011. So if you have taken delivery 28-02-2011 you escape the excise duty else its payable

However, if such goods are cleared on or after 1-3-2011 from the factory, excise duty will become payable.

Your query

"can i take delivery from them stating that the excise liability is on me and not on them?"

Rightly said by Mr. Annamalai you can take the responsibility of paying the excise duty as if you were the manufacturer.

Next is exemption limit

If you net T.O. during the FY 2009-10 (preceeding FY) was less than 4 cr. than for the period 1.3.2011 to 31.3.2011 you can claim exemption upto 1.50 Cr as SSI.

If the brand name owner accepts liability of payment of duty, the job worker will be exempt from excise duty vide Notification No. 13/2011-CE dated 1-3-2011.

Warm regards

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venkatachalapathy (Tax Consultant) (27 Points)
Replied 16 March 2011

Dear Sir,

i request you to, please send the Go or notification for changes of excise duty for readymade garments from march 01,2011. Because i traced i various way. But i hve not it.

Regards.

P.VENKATACHLAPATHY.MBA

SALES TAX PRACTITIONER

Pankaj Arora (Learner) (3134 Points)
Replied 16 March 2011

/articles/branded-goods-stitched-to-excise-duty-8967.asp

venkatachalapathy (Tax Consultant) (27 Points)
Replied 16 March 2011

Dear Sir,

one of the comany have head office at bangalore and they opened a branch at tamilnadu. So they issue the invoice from tamilnadu to his foreign buyers for export Sales. But they mentioned his head office address in his Export Invoice. Is it correct by income tax act? or wrong?. Because the assessing authority (Tamilnadu) has talked with me if any concern have opened a branch in tamilnadu. the concern people has issued the invoice from branch office address only.

Regards,

P.VENKATACHLAPATHY.MBA

SALES TAX PRACTITIONER