Industrial
Clothing not under Branded Garments
[CBEC Circular No. 947 dated 21st June 2011]
Subject: Clarification on issues pertaining to the
levy of excise duty on branded readymade garments and made-up articles of
textiles.
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:-
(i) 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
(i) 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.
F.No.B-1/2/2011-TRU