• Feb
  • 08
  • 2012

Excise Duty- Value Based Exemption Scheme for Small Scale Industries

CA Lalit Munoyat

Important Note: For a clear & better understanding,  the provisions, wherever possible, have been explained by examples. The readers are earnestly requested to download and  refer the attached Excel Sheet to see the examples which will help them understanding the subject very quickly.

1)      Under the provisions of the Industrial Laws applicable to an industrial Unit SSI means a Unit whose investment if Plant & Machinery does not exceed Rs. Five Hundred Lakhs.

2)      However the definition of SSI under the provisions of the Excise Act is totally different from the definition as provided under Industrial Laws. Under the provisions of the Central Excise Act an Small Scale Industry is one whose aggregate value of Turnover does not exceed Rs. One Hundred and Fifty Lakhs made on or after the 1st day of April in any financial year.

3)      So for the current discussion we have to completely ignore the definition under Industrial Laws (Clause 1 above) for defining SSI  BUT BE CONCERNED only with the definition under the Central Excise Act which is based on Turnover and not on the value of investment in plant & machinery.

DOWNLOAD EXAMPLE 1 TO 4  REFEREED IN THIS ARTICLE

4)      For evaluating the eligibility of an  Small Scale Industry, under Central Excise Act, the following conditions must be satisfied:

a. The turnover of the Unit must not exceed rupees One Hundred and Fifty Lakhs made on or after the 1st day of April in any financial year and

b. The turnover of the Unit must not exceed rupees Four Hundred Lakhs in the preceding financial year. (Excel Example-1)

c. For calculating the eligible turnover , the following clearances shall not be considered:

i.            Turnover of unconditionally exempt goods

ii.            Turnover of branded goods

iii.            Turnover to Units in SEZ, FTZ, 100% EOU etc

iv.            Sales to UNO etc. for their official use

v.            Export Sales (Nepal, Bhutan excluded)

please refer to the attached Excel Sheet which clarifies the concept of taxable turnover. (Excel Example-2)


5) Other Conditions for availing SSI benefit

a.The SSI scheme is Optional.

i.      Option 1: Pay the normal rate of duty on the goods cleared and avail cenvat credit on the inputs.

ii.      Option 2: Avail the exemption scheme and forgo the claim of Cenvat Credit on inputs till you reach the turnover of Rs. 150 Lakhs.

iii.      In both the cases the option shall be exercised before effecting the first clearances at the normal rate of duty. Such option shall not be withdrawn during the remaining part of the financial year.

iv.      However the manufacturer can take the credit on capital goods and use the same for payment of normal duty after he crosses the basic exemption limit of Rs. 150 Lakhs.

6) Provisions for Clubbing of Turnover

i.      Sales by the same manufacturer from different factories : Where goods are cleared from one or more factories by the same manufacturer, the turnover of the factories will be clubbed to determine the exemption limit of Rs. 400 Lakhs/150 Lakhs and not separately for each factory.

ii.      Sales by different manufacturers from the same factory: Where the specified goods are cleared by one or more manufacturers from the same factory, the exemption shall apply to the aggregate value of clearances of all the manufacturers from that factory.

7)      The exemption contained in this notification shall not apply to specified goods bearing a brand name or trade name, whether registered or not, of another person, except in some specified cases. (Refer Notification 8/2003 CE)

VALUE BASED EXEMPTION SCHEME FOR S S I -    GARMENTS

1)      The Finance Bill-2011 levied Excise duty at the rate of 10%  on ready-made garments and made-up articles of textiles when they bear or are sold under a brand name. Hitherto, ready-made garments and made-up articles were exempt from Central Excise duty on the condition that no credit of duty on inputs is taken by the manufacturer. If credit were taken, the applicable rate was 4% for goods of cotton, not containing any other textile material and 10% for others. By the proposed amendment this concessional treatment will apply only to those goods as above stated not bearing a brand name or not sold under a brand name. For such goods not bearing brand name ,therefore, the optional duty regime would continue. In the case of ready-made garments and made-up articles bearing a brand name or sold under a brand name, no such option would be available and a duty of 10% would be payable regardless of the composition of the item/article.

2)      Processes such as affixing a brand name on a product, labeling or re-labeling of containers etc. shall be processes amounting to manufacture. As for the valuation of these goods, tariff value has been fixed at the rate of (60%) 45% of the retail sale price. However  SSI exemption has been extended to the goods attracting this levy.

3)      It is the practice in the garment and made up industry for brand owners who have goods manufactured from several job-workers. The brand owners may or may not, themselves, possess any manufacturing facility. In such a situation the liability to pay duty and comply with Central Excise procedure shall be on the person on whose behalf the goods are manufactured by job-workers. For this purpose, he would be required to register his private store-room or warehouse in which inputs are received for distribution to job-workers and finished goods are received from the job-workers. He would also be required to comply with all the other provisions of Central Excise law. The job-worker is exempt from payment of duty if the merchant manufacturer pays the duty. Alternatively, the merchant manufacturer may authorize the job worker to obtain registration and comply with all formalities of Central Excise including payment of duty. The merchant manufacturer shall be permitted  to avail of credit of duty paid on inputs, input services and capital goods.

4)      However the levy was not at all welcome by the garments manufactures/Traders. While speaking on the Bill the Finance Minister stated “The House would recall that one of the considerations that guided the formulation of my proposals on indirect taxes was to prepare the ground for the transition to GST, beginning with a reduction in the number of exemptions. It was in this background that a mandatory levy of 10 per cent was proposed on branded ready-made garments and made-ups of textiles. I have already announced an increase in the level of abatement on these products so that the overall burden of tax comes down and small manufacturers benefit. I would take this opportunity to re-emphasize that  this would enable an SSI unit to continue to enjoy the exemption even if  it had a turnover based on Retail Sale Price (RSP) of Rs.8.90 crore in 2010-11.

5) It has been pointed out by the garment industry that often brand owners who outsource production to small units do not disclose the RSP to them. Since the duty is payable on a value linked to the RSP, this poses a problem for small manufacturers. A deeming provision is being made to enable such manufacturers to pay duty on the wholesale price at which they make a sale to the brand owner. As and when the brand-owner affixes the RSP on the garment or made-up, he would pay the additional duty, if any.

6)       The garment and made-up industry has a high incidence of return of unsold stock. In order to obviate the burden of double payment on such goods, I propose to exempt from excise duty, returned goods not exceeding 10 per cent of the value of clearances of the unit in the preceding financial year. Physical verification of stock of such returned goods by Central Excise officers would not be necessary.

7)       The doubts and queries raised by the industry have also been examined. A detailed clarification is being issued on these. I would also like to recapitulate to the Hon’ble Members that –

a. The levy does not apply to unbranded goods;
b. It does not apply to goods made to order for a retail customer;
c. The benefit of SSI exemption is available to goods bearing or sold under the brand name of the small manufacturer himself
d. Simplified Export procedure is available to units that predominantly export and sell unbranded goods or goods bearing their own brand name in the domestic market.

8)      However the Finance Minister has compounded the confusion among the garment traders when he stated on the floor of the Lok Sabha that “ I would take this opportunity to re-emphasize that  this would enable an SSI unit to continue to enjoy the exemption even if  it had a turnover based on Retail Sale Price (RSP) of Rs.8.90 crore in 2010-11. What does this statement mean?. In addition to fooling or misleading the trading community it has compounded the confusion within no bounds and this statement is being interpreted differently by Different traders in many different ways namely:-

a. There is no duty until the manufacturer reaches the Turnover of Rs. 8.90 Lakhs.

b. The duty is to be paid upto the turnover of Rs. 8.90 Lakhs and thereafter there is no liability to duty.

c. In the case of General SSI Units duty is payable from first transaction itself if the Unit had a turnover of Rs. 400 Lacs or more during the previous year. Taking  this logic forward someone suggested that as per this provision when the turnover of Rs. 400 lakhs is equated to Rs. 8.90 Lakhs, then the basic exemption of Rs. 150 Lakhs should also be increased proportionately to Rs. 334 Lakhs.

For the discussion that follows, the following definition will be of great importance

Brand name or Trade name : means a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person.

Retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and the price is the sole consideration of such sale.

9)      I shall now make a humble effort to answer the queries raised in response to this topic the first part of which is published at: http://taxguru.in/excise-duty/excise-duty-readymade-garments-magic-figure-exempted-turnover-rs-890-crore.html

a)      SSI unit to continue to enjoy the exemption even if  it had a turnover based on Retail Sale Price (RSP) of Rs.8.90 crore in 2010-11.

It is a totally misleading statement aimed at fooling the trading community so that they may feel that they have been given some relief. It is a simple mathematic . Turnover of Rs. 400 lakhs without any abatement is EQUAL to a turnover of Rs. 8.90 Cr. based on Retail Sale Price (RSP) with an abatement of 55% from the RSP. (Refer Excel Example-3). In this example different rates of abatements have been assumed to find out any real benefit as claimed by the Finance Minister , but in all the cases the Basic Turnover worked out to be Rs. 400 Lakhs in all the cases. The maths is correct while the displayed advantage is totally misleading.

b) The increase in the abatement from 40% to 55% has benefitted only the Retailer and not the SSI manufacturer. (Refer Excel Example-4)

1)      The Government has clarified that where goods bearing the brand name of another person are cleared in the course of sale by a manufacturer to such person and the retail sale price is not affixed on the goods, the Transaction Value of such goods shall be deemed to be the tariff value.(Notification 12/2011 (NT) dated 24th March 2011)

Illustration:

If a manufacturer X clears goods bearing a brand name “ABC” to Y, who is the brand name owner on sale basis at the transaction value of Rs. 200/- per garment, duty at the rate of 10% would be chargeable on  Rs.  200 /-which is the deemed tariff value.

“Transaction Value” means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods.

2)      Exemption on Goods Returned: Notification 31/2011 dated 24th March 2011 exempts all goods bearing a brand name or sold under a brand name from the whole of the duty of excise leviable thereon, when goods, on which appropriate duties of excise have been paid, are returned or brought back to the same premises or factory and cleared therefrom after being re-made, re-conditioned, re-packed or subjected to any other process subject to the following conditions:

(i) No Cenvat credit of the duty paid on such returned goods is taken under the provisions of rule 16 of the Central Excise Rules,2002;

(ii) An intimation containing the details of the document under which goods are returned and their value, is submitted to the jurisdictional Central Excise authority, within 48 hours of the receipt of the returned goods in the factory or premises ; and

(iii) a proper account of receipt and disposal of such goods is maintained and accounted for in the monthly return.

(iv) the aggregate value of goods cleared from a factory or premises under this exemption in a financial year does not exceed 10% of the aggregate value of clearances for home consumption from the same factory or premises in the preceding financial year.

3) Please brief us on the recent levy of excise duty on readymade garments ?

Excise duty has been introduced in Budget 2011 on branded readymade garments @ 10% on Retail Sale Price (RSP) less abatement @ 55% from the RSP. However in a case where retail sale price is not affixed on the goods, then the Transaction Value of such goods shall be deemed to be the tariff value. This means you will have to pay duty at your invoice price without any abatement of 55% which is available only when the branded goods are sold at RSP.

Own drafted Definitions for clarity of understanding: 1) Pre-abated Turnover means Turnover @ RSP before deducting 55% abatement Say Shirt @ RSP Rs. 1000/-. 2) Post-abated Turnover means Turnover @ RSP less abatement @ 55% from RSP i.e. 45% of Rs. 1000/- i.e. Rs. 450/-

Q 1. if one has turnover of Rs. 2.30 Cr from 1.4.2010 to 28.2.2011 ,then what is position of exemption for goods  sold or to be sold between 1.3.2011 to 31.3.2011? We know that he would get exemption  of Rs.  1.50 Cr for first clearance from 1.4.2011

Ans: 1 assume the turnover of Rs. 2.30 Cr is of garments without abatement. In such a case the pre-abated turnover @ 55% would be Rs. 5.11 Cr @RSP. So you can still have a pre-abated turnover of Rs. 3.79 Cr to reach the magic figure of 8.90 Cr to retain SSI eligibility for SSI exemption for 2011-12. The levy is effective from 01-03-2011 and will not be attracted till you reach the pre-abated turnover of Rs. 8.90 CR.

Q 2. What is the relevance of the exemption limit of Rs. 4.00 Cr, 1.50 Cr and 8.90 Cr.? We are all confused

Ans 2: The limit of Rs. 4.00 Cr is the value of turnover during any preceding year based on which the SSI liability is determined for the current year. The  exemption of 1.50 Cr is of Transaction Value. However for Garment SSI the limit of Rs. 4.00 Cr. is equal to pre-abated value of Rs. 8.90 Cr. to be calculated on the basis of RSP. However the liability to duty arise from Rs. 1.50 Cr. normal limit and not from the pre-abated value of Rs. 3.34 Cr RSP ?

Q 3: If I started a manufacturing unit in Jan 2011, till what turnover would  I be exempt from excise for the year ending 31st March 2011 and what are its pros and cons for the following years ?

Ans: 3: As stated above the levy is effective from 01-03-2011 and will not be attracted till you reach the pre-abated turnover of Rs. 8.90 CR.

Q 4: My Turnover of readymade garments I e transaction value from 1.4.2010 to 28.2.2011 is 1.80 crore. My question is how to do business for the month of march? Should I get myself registered before selling the readymade garments ? Will I be eligible for the SSI exemption of Rs. 1.50 crore on sale made during the period from 1.3.2011  to 31.3.2011.

Ans: 4: In the case of branded garments the levy was optional till 28-02-2011 As stated above the levy is mandatory and  is effective from 01-03-2011. If your transaction based turnover for the preceding year 2009-10 was more than Rs. 4.00 Cr then the levy will be applicable from 1st March 2011 itself from the first transaction and SSI benefit will not be available to you.

Q 5: I want to know what is the difference between Normal & SSI Units ? What is the magic figure of 8.90 CR.? If my sale is more than 4 Crs in FY 2011-12 am I still SSI for FY 2012-13 and what is the clause that we have to file declaration if our sale is more than 90 lacs.?

Ans 5: If your pre-abated turnover of branded garments for the financial year 2011-12 is less than Rs. 8.90 Lakhs then your liability for duty during the financial year 2012-13 will not arise until you cross a post-abated turnover of Rs. 1.50 Cr.

Q 6: Do I have to pay the excise duty as a manufacturer or the liability is on   the Retailer ?

Ans 6: In case of Job manufacturing the liability to duty is primarily on the principal who gets the job work done. The job-worker is exempt from payment of duty if the merchant manufacturer pays the duty. Alternatively, the merchant manufacturer may authorize the job worker to obtain registration and comply with all formalities of Central Excise including payment of duty. The merchant manufacturer shall be permitted  to avail of credit of duty paid on inputs, input services and capital goods. (Notification No. 13/2011-CE dated 1-3-2011.)

Q 7: I have a question regarding exemption of 8.90 crore turn over on retail price. Sir I have question related to Retail Price we are giving 55% mark up on our whole sale price then what would be our turnover exemption in current year. example:- 1) our whole sale price is Rs.500/- and its retail price is Rs. 775/- and on this base I did turnover of Rs. 5.50 Crore (as per our whole sale price) at this point am I liable for excise or will I get 1.50 crore exemption for the year 2011-12?

Ans 7: What I have understood from your case is that your total turnover before abatement is Rs. 10.50 Cr. and when loaded with 55% markup it becomes Rs. 1628 Cr. If it is so then you are already liable to duty because your pre-abated turnover is far in excess of Rs. 8.90 Cr. 2) For FY 2011-12 the limit of Rs. 1.50 Cr will not be jacked upto Rs. 2.73 . You are liable to duty from ZERO point.

Q 8: I am small scale garment manufacture having turnover based on sale price less than 1 CR. Am l liable  to pay excise duty and it is necessary to take Excise number.?

Ans 8: No liability to duty and no need for registration

Q 9: If you cross the turnover by Rs.8.90 crore in the year 2010-11 then your liability of excise duty will start in the year 2011-12 when you cross the turnover by  Rs.1.50 crore. Sir this magic figure 8.90 crore is basically 4.00 crore so my view is that if you cross the limit of 8.90 crore in the year 2011 then you have to pay excise from first point of sales rather after 1.50 crore.

Ans 9: You are correct. The last line of my article published at www. taxguru.in had a drafting error. The error has been rectified. Thanks

Q 10: If a manufacturer does not sell at wholesale price without marking MRP.    Will he be eligible for enhances limit of 9.9 lacs or general SSI Limit.

Ans 10: In terms of the recently introduced Legal Metrology Act, 2009 (1 of 2010) (replacing  Standards of Weights and Measures Act, 1976 ) a manufacturer is obliged to declare the retail sale price on the retail packages. So RSP is necessarily to be declared in terms of the above legal provisions. However this type of situation has been addressed to by Notification No. 12/2011 dated 24-03-2011 referred above.

Q 11: Which premises are required to be registered with the department ?

Ans 11: Generally the premises where cenvatable inputs are received, the premises where the final product is stored before removal and the factory where the final product is manufactured,  are required to be registered. However in the present case of readymade garments where cenvat credit is not available (since abatement has been given) , the place where the final products are stored for clearance , will required to be registered.

Q 12: Can  a retailer who does not have excise number purchases garments at wholesale rate.? If he is not allowed to purchase, how the trade will go on.?

Ans 12: This type of situation has been addressed to by Notification No. 12/2011 dated 24-03-2011 referred above.

Q 13: Please tell us about duty liability during the intervening period 1-3-2011 to 31-3-2011?

Ans 13: If the value of your turnover during the financial year 2009-2010 was Rs. 4.00 Cr or more you will have to pay duty from the very first transaction in the month of March 2011.SSI exemption is not available to you.

Note: The source of the above information is 1) Budget Speech of the Finance Minister 2) Notifications issued from time to time, TRU issued, Finance Bill-2011, Press Release of the Ministry of Finance and other web based content. This compilation is as authentic as the source itself is. The examples have been worked out based on the source which may or may not correctly display the real intention of the clauses of the Finance Bill-2011. The readers are advised to refer to the authentic source before relying upon the above compilation.

To know further in regard to above post  Please Visit the following link:-

Excise Duty- Value Based Exemption Scheme for Small Scale Industries

Other Related Article

Excise Duty on Readymade Garments- The magic figure of exempted turnover of Rs. 8.90 Crore

Compiled By:

CA Lalit Munoyat

B.Com.(Hons.), CS., FCA, DISA

munoyat@gmail.com

98201 93508

The Article was First Published on 26.05.2011

Sandeep Kanoi

77 Responses to “Excise Duty- Value Based Exemption Scheme for Small Scale Industries”

  1. setu trivedi says:

    Dear sir,
    We enjoy SSI limit of 1.5 Cr.We have MRP based excise duty MRP less 70%.We keep 50% MRP on out product than sales prise.If we have touched 1.46 Cr. please what will be the Assessable value. Oue sale as per invoice or MRP base assessable value.Pls give any document proof in support of your kind reply.Thanks.

  2. pilot santosh says:

    R/Sir.
    I am a manufacture of tin containers my unit is registered under SSI .The total manufacturing. turnover is below Rs-150 lack.I wants to start trading of tinplate.please let me know that this trading amount will be clubbed or counted separate for excise exemption.Kindly clear.

  3. Neethu says:

    Dear sir,
    we are a bakery manufacturing firm availing SSI Excemption from Cenvat. on August we got 1.50 crores and on January touch 4 crore,what is the procedure at the time of touch 4 crore with Central excise .
    Awaiting your valuable reply.

    Regards

  4. VAIBHAV BHATT says:

    1.5 LACKS LIMIT WITH VAT

  5. Raju Chakraboty says:

    Dear Sir,

    Please let me Know whether is Excise duty on jute mill machinery (jute loom) purchased by jute mill in west bengal.

    Thanking You,
    With Regards,
    Raju

  6. Raju Chakraboty says:

    Dear Sir,

    Please know me whether there is excise duty on jute mill machinery (jute loom).That is sell in West Bengal in the Jute Mill.

    Thanking You,

    With Regards,
    Raju.

  7. navya says:

    dear sir,

    my company product modular furniture this year turn over 1580000 with vat

    it will come excise duty or not come please and how much turn over eliable please tell me

  8. Sambit says:

    Respected Sir,
    We have a printing firm where we print labels for various other brands like alcoholic beverages,book covers.The sale amount has zoomed past 150 lacks which was unexpected.We have yet not given any intimation to the excise dept as such.What should be our next step.

  9. Radhakrishna says:

    we are the veterinary pharma manufacturer and our turn over is less than 1.5crores. we manufacture for other brands with p2p license apart from our own brand. for the sake of excise, whether turn over is considered for for p2p license also.

    with reg
    ———

  10. S. Rao says:

    We had a domestic sales turn over of less than Rs.150 lakhs, in the past several years and so also during the year 2011-12. During the current financial year we are just about to cross Rs.150 lakhs of domestic sales.
    The month of March is still left in this Financial year and we expect another 10-12 lacs sales.
    What intimation should we give to the Central Excise dept.
    What are the requirements (such as forms, documents etc.,)if we have to get registered at this stage.
    Our current turnover partially includes some traded goods such as caustic soda/sodaash which were purchased from local market and resold to our customers as such.
    What are the consequences if not getting registered if turnover exceeds Rs.150 lacs by just 4-5 lacs only?
    What is the notification no. which exempts export sales being added in the turnover?
    Shall be very much thankful for assistance and guidance.

  11. GIRISH SHAH says:

    Dear sir,
    we are in manufacturing spring washers for last 50 years. earlier we were using brand name to sell our products in wholesale market as there were other brand of our competitors. so for last 6 to 7 years we have left wholesale market and we were 90 % catering only OE, how does not know our brand name, only they are familar with our firm name.

    now the brand or logo is printed on our invoices only and we have not registered our brand till now. so whether excise duty is applicable to us from Re.1 or exempted till 1.5 cr under SSI.
    please advice.
    GIRISH SHAH

  12. S.N. SHEIKH says:

    I have purchased non excusable material and sell the same with another product as free using my own brand name can i paid excise duty on that free product or otherwilse

  13. S Subramanian says:

    My query is : we had a turn over of Rs.206 lakhs,during the year 2011-12 and during the current financial year we are just crossing Rs.150 lakhs, should we intimate the Central Excise dept. and get it is registered.

  14. Shah Dhaval says:

    Respected Sir,

    I am the manufacturer of brass metal components in Jamnagar. My manufacturing unit is not under excise. The raw material required to manufacture brass components is brass rods. When I purchase brass rods they charge 12.36% excise duty. I want to take the rebate of excise duty. I have dought that we can that the rebate of excise duty by taking govt bond…. Or else sir please suggest me the way in which I can take by duty refund…

    Awaiting your valuable reply.

    Regards

  15. darshan says:

    Dear sir,

    I have a registered excisee unit, my client also has a registered, excise unit, my client intends to do job work from me, whereby he wants to issue part i and when i give the finished goods i shall give part ii, in that case the job work charges i will charge should i charge service tax or no i should not charge service tax.

    awaiting your Reply

    regards

  16. Anilsharma says:

    Dear Sir,

    If i want to open a Garment stores, up to what amount of sales, Taxes are exempted Please advice legal formalities i need to follow for opening a small garment stores.

    And also please advice what are the taxes applicable on the sale or purchase of Stock Lot garments( non-Branded ) from Garment Manufacturing company’s.

    Please advice.

    Regards
    Anilsharma

  17. Kishore Dulani says:

    Sir,
    I am manufacturer of Air pollution Control Equipment.
    Our customer is RCF Mumbai , placed order on Turn Key Supplier.
    We have supplied Full equipment having more than 70 items.
    Order value was Rs 11,00,000/-
    By mistake we have not sent item worth of rs 10,000/-
    Since we have raised full invoice during supply of material.
    We have supplied material with Zero value.
    now as per audit team of excise , we have to reverse Cenvet for the short supplied item for which we have raised zero invoice

    Pl let me know for a Turn key supplier, if any material is left / short .
    Cannot we send item with ZERO Value

  18. Kishore Dulani says:

    We have export 3 consignment in financial year 2011-12.
    We were not aware that ARE 1 is to be submitted to EXCISE Depart.
    We have submitted undertaking UT 1.

    Now what is the liability

  19. KALPESH PARMAR says:

    Dear sir,

    I have a ssi unit, please give me information for excise duty , our sales is below 150 lakhs, our mfg unit in pharma medicine, my thinking is excise duty is applicable is above 150 lakhs. some people says , pharma medicine manufacture unit is applicable excise duty on sales of 50 lakhs because the mrp is higher of medicine and sale s rate is lower Example : 10 tablet mrp 65.00 rs and our sales rate of 10 tablet 6.5 rs. if excise duty applicable is mrp basis? please give me information.

  20. vaishali says:

    I want to know that if i am shifting my factory i.e. all used and excise able machinery and capital goods, input to my new business palce, shall i pay the duty for the same agian? which i was already paid when i purchase the same. or is there any way to shift the directly material to new place.
    Pl help me and give me proper guidance in this matter.

  21. vidit says:

    sir , we are an ssi (registered) unit , we were charged 14 % excise by an govt company , and we in-turn charged 12 % excise to the forwarding (registered )company .. now the officer says that we cant claim the cenvat benefit and we have to pay the 12% excise which we charged , now whats the solution, as we were mis-informed .(due to present low demend we didnt even cross the 1.5 C in turn over this year and last yr too.)

  22. suresh kumar says:

    Sir, I am working under garment export unit local sales around 9.00 lakhs no branded goods availed C form. company turnover for the year 2011-2012 334 Lakhs as a export garments.Our unit falls under SSI
    We have to register with Central Excise kindly adv us.

    Regds
    Suresh kumar

  23. Prabhat Jauhari says:

    Dear CA Lalit Munoyat,

    Your artical is very easy to understand . One thing I want to notice that in Your Excel Sheet (Excel Example-2). A company last year  turn over is Rs 500 Lakh more than 400 lakh even then  it is exempted from ED for next year so any reason behind it . 

  24. pawan says:

    Dear sir ,   our turnover is less then 1.5 cr ……. understand we would be exempted for our own brand …… however if we make the goods bearing customers brand but  the customer is exporting those goods then ??  are we exempted too ??   secondly if the other is not exporting but has a turnover below 1.5 . then ?   awaiting your reply 

  25. vivekanandan.R says:

    sir,
    i’m working in a pharmaceutical manufacturing organisation in pondicherry now i need whether i purchase local industrial inputs of packing material such as corrugated boxes in this regard they create excise duty such as duty payable. In this kind i asking about i should want to pay that money or if i can take any credit because we comes under exemption of SSI.

  26. somesh says:

    dear sir,

    iam from SSI unit for example crossed in 1.5 crores month middle date. excise office submit of any intimation or not
    pl clarify

    somesh

  27. surendra says:

    i can take canvat credit in our head office address bill

  28. ismail says:

    i am running a partnership firm for manufacturer under SSI unit, there is exemption from levy of excise duty till turnover limit of Rs. 1.5 crore during the year 2011-12, weather this limit is extend or not for next year e.i. financial year 2012-13

  29. kamlesh patel says:

    I am a manufacturer of readymade garments. This year our total turnover is 6.5 crores in which 1 crore is domestic sales in name of other brands and balance 5.5 crore is export slaes. In the next year we received the orders of 1.2 crores from one retailer. Please advise us that we’ve to pay any excise duty here or excise duty is exempted for us or our buyer has to pay excise duty.

  30. b.m.mathad says:

    Sir, we are furniture dealer cum manufacture, my comment chairs, tables, and other furniture spares purchase from different parties, example base, back, legs, screw, and assembling the chairs sell to customer, for this process excise attract or not 

  31. rahul.p.b says:

    sir,
    the article is very enlightening. please update it as and when changes are introduced in the same 

  32. pawan anand says:

    I am having a SSI Unit and my this year turnover will be around around 1.75 crore but out of it 75% sale was exports.. So do I need to take Excise registration or Will I be able to avail exemption. Please explain?

  33. Manoj Arora says:

    Dear Sir,

    I have unit in H.P. for printing (offset) established after the end of rebates(Benefits).So Kindly inform should we give any type of intimation to Central Excise if sales accross to Rs. 100.00 lacs but remains between Rs. 150.00 lacs before March 2012.

    Thanks & Regards Manoj Arora

  34. GOPALBHAI RAVAJIBHAI AGHERA says:

    I INTEND TO START MENUFECTURING OF LUBE OIL IN A MAHARASHTRA AND ALSO INTEND TO TAKE BANK LOAN FROM PUNE BRANCH OF ABOUT RS. 75 LAKHS BUT BANK ASK ME TO TAKE EXCISE NUMBER BUT I THING IT IS UNNECESSARY BURDAIN TO ME UNTILL I REACH A TURNOVER OF Rs. One Hundred and Fifty Lakhs (.) I REQUESTED TO BANK THAT I WILL ASK FOR EXCISE NUMBER WHEN TURNOVER REACHES UPTO Rs. One Hundred and Fifty Lakhs BUT I REQUESTED THAT AT PRESENT I MAY BE GRANTED LOAN WITHOUT TAKING EXCIXE NUMBER (.) SO I REQUEST YOUR GOOD SELF TO KINDLY GIVE ME SOME GUIDANCE SO THAT ACCORDING TO RULE I CAN TAKE A BANK LOAN WITHOUT TAKING EXCISE NUMBER (.) I ALSO ASSURED THAT I WILL ASK FOR EXCISE NUMBER WHEN I REACH TURNOVER UPTO Rs. One Hundred and Fifty Lakhs (.) SO IS REQUESTED THAT IF ANY SUCH NOTIFICATIONS OR ANY RULE NUMBER IS AVILABLE I MAY KINDLY BE SHOWN TO ME SO THAT I CAN SHOW TO BANK MANAGER AS HE ASKED ME FOR THE SAME FOR FURTHER PROCESS (.) THANK YOU SIR(.)

  35. Harish says:

    Suppose “A” is a partner in a firm named “XYZ”.  A’s wife B also starts a proprietorship firm in her name.  Will the turnover of both XYZ & B, be clubbed for SSI exemption of Rs. 1.50 crores.

  36. jk says:

    Dear Sir,

    I m having a SSI Unit and my last year turnover came around 4.5 crore but out of it 75% sale was in SEZ unit. So am I need to take Excise registration or Will I be able to avail exemption. Please explain in detail.

  37. hitesh says:

    hello sir thanks for ur advice, we are a ssi with a turnover less than 40lakh, we are making garments for brands with turnover of more than 400cr, the company is asking us to get ourself registered with the exsice department or get a excise registratoin number so would you kindly guide me how to get the number

  38. K.Raveendran says:

    Sir,

    We are a SSI copper slag sieving and segregating company and our assessment order for 2010-2011.Taxable turnover Rs. 5809930/ + Excempted sales Rs. 890100/Total= Rs. 6700030/

    Is it necessary to enter into Central Excise. Pls reply

  39. BHUPENSRA JAIN says:

    sir

    i am manifacturer taken cenvet please confirm duty charge on our finished goods turnovr 20 caroed
    iam manifacturer uniform & branded garments

    reg
    bhupendra jain
    09406600831

  40. Davinder says:

    We are the retailers of Readymade Garments. We don’t have any manufacturing unit. We get job work done from other manufactures. In financial year 2011-2012 till 30th September our sale is 1.5cr (MRP) and 1.2cr (Net Sale after discount). And we are expecting a sale of 2.0cr (MRP) and 1.6cr (Net Sale after discount) which comes of 3.5cr (MRP) and 2.8cr (Net Sale after discount)for financial year 2011-2012. Are we liable to pay excise?

  41. sarvesh says:

    sir , Have a nice day . we are manufacturing propritory ayurvedic medicine and our turnover is about 30 lac. should we calculate our sale on mrp base. pl clear it

  42. vishal says:

    Under SSI,

    1. If tag is hang on a garment, This garment will be consider as Branded or Non- Branded ? (Tag Details :- Name of Showromm, MRP, Barcode Lines, Manufacturer
    name, Manufacturer Code etc.. Basically I want to clear How tag can play a role
    to distinguse between a branded or non- branded garment.

  43. Nitai lal Mandal says:

    Say , i am manufacturing readymade garments(Whole the product for export) bearing brand name and crossed the value of Rs.9 crores of exported goods.

    whether i have required to take central excise Registration and i have to maintain any export procedure from central excise?

  44. C.A. PRAKASH VEGAD says:

    Dear Sir,

    I have query,

    If property in joint name and Husband have already readymade manufacturing buisness and he want to start new business which is export in his wife name…so as per excise turnover can be merge…..

    So what is solution that turnover can not be merger.

  45. Dear Sir,

    Your article was really elightening on excise duty on branded garments, but there is still a slight confusion with regard to SSI Units exemption. We are a small branded garments manufactures registered as SSI unit, last year till March.’2011 we had a MRP sales turnover of Rs.1.22 crores but in this financial year from 1st.April.’2011 to 31st.May.’2012 we have already recorded an total MRP Sales turnover of Rs.1.44 Crores, do we need to get our unit registered in Excise and start paying Excise duty @ 10% on 45% of MRP Sales the moment our MRP Sales Turnover croses Rs.1.50 Crores, which can happen anytime this month, or shall we wait for our MRP Sales Turnover to touch Rs.3.34 Crores{i.e., 45% Of Rs.3.34 Crores is Rs.1.50 Crores}. Sir please advise us on this very confusing SSI exemption limit and guide us when to get the excise registration done in this financial year 2011-12, when our MRP Sales Turnover crosses Rs.1.50 Crores or Rs.3.34 Crores, in the current financial year.

    Thanks & B/Regards

    M. Murugappan
    Mobile No.09811299795

  46. Kantilal Patel says:

    Dear Sir

    i am from SSI unit ,has turnover of year 2010-11 is Rs 246 lakh. availing SSI benefit but pay duty from turnover of Rs 1 means from beginning and pay excise duty on 1 to 5 day on Quarterly basis and file return on 1 to 10 days Quarterly.

    my excise consultant say that we have to pay excise duty on monthly basis instead of Quarterly basis.
    please suggest right time to pay duty.
    Thanks and Best Regards

    Kantilal Patel

  47. Suresh says:

    If I have a principal input which I use in the manufacture
    of excisable goods, but the manufacturer of the principal
    input is exempt from excise duties being an SSI, how do I
    enter the purchase such that it still reflects in the RG23A
    Part 1 register without any excise duties but with the
    purchase quantities so that there is accurate representation
    of stock in RG23A Part 1

  48. CA Lalit Munoyat says:

    In respect of garments bearing brand name of others, the liability to duty is that of the owners of the brand owner. He is required to the needful for payment of duty. Alternatively, he can authorise you to fulfil all the requirements of duty on his behalf in which case you will have to do the needful required for payment of duty.

    In respect of manufacture of garments under your own brand name, you are eligible to SSI exemption(Refer my new article on this subject published 12-04-11 on this site itself) In such a case you will be required to obtain registration and fulfil the excise requirements.

  49. CA Lalit Munoyat says:

    Yes. The ACES number generated online will be treated as your provisional number. After completing the formalities of submitting relevant documents, you will be alloted permanent reg. no.

  50. CA Lalit Munoyat says:

    Since your turnover during 2010-11 is less than Rs. 4 Cr. you are eligible to SSI exemption during 2011-12. You liability to duty will commence the moment you reach a turnover of Rs. 1.50 CR during 2011-12

  51. CA Lalit Munoyat says:

    What I have understood from what you stated is that you are exporting branded readymade garments. Export of any product whether branded or unbranded is from from excise duty. After reducing the figure of export from your turnover if the balance turnover is less than Rs. 4 CR, then you are eligible for SSI exemption in 2011-12 in respect of your local sales under your own brand name and your liability would commence after reaching a local turnover of Rs. 1.50 CR.

  52. biju says:

    Dear Sir,
    I am small manufacturer having turn over 4crs till 28-02-2011.I am manufacturing and selling to overseas.what i would like to know is if i qualify for excise duty under branded goods and if i qualify for any exemption.

    Regards
    biju

  53. aman jain says:

    sir, first of all, thanks for making aware of excise rules.
    i am manufacture of garment under my label with annaual turnover of 1,42,000.00.
    may i know how i have to go ahead in regard to excise department.

  54. SUNIL AKHTAR says:

    sir,
    we manufacture readymade garments for other brands. i have applied for excise registration number on line. i have got a number but the physical verification of the ware house is still pending and my delivery date is expiring what should i do to know the status of my application? can i use that number as my registration number?
    Thanks

  55. CA Lalit Munoyat says:

    Primarily your retailers are responsible for the duty in respect of their brand name. This duty will be 10.30% of 45% of the MRP. However, your retailer may authorise to pay duty on his behalf.

  56. CA Lalit Munoyat says:

    YES . For garments under own brand name., SSI exemption is available

  57. CA Lalit Munoyat says:

    Say your cost is Rs. 500 and you add 30% to it. That makes the MRP 650/- Now for paying excise duty you will get an abatement of 55% from the MRP i.e. 55% of 650/-i.e. Rs. 358/- so you have to pay duty on the balance Rs. 292/-This is a very simplistic example. The Rule is : deduct 55% from the MRP printed on the packet and pay the duty on the balance 45% @ 10.30%

  58. CA Lalit Munoyat says:

    Excise duty is payable by a manufacturer and you are a manufacturer. So the primary liability to excise duty is yours, Job work make no difference. However under the present scheme of garments , you can authorise your job worker to pay the duty and do all the needful on your behalf. In that case your Job worker will be liable to excise duty.

    Since you are using your own brand name, you will get SSI exemption upto first sales of Rs. 1.50 Cr. If you , as a manufacturer, use third party brand name, then SSI exemption is not available to you, meaning thereby , you will have to pay duty from the first bill itslef. When SSI exemption is not available to you, then you must apply for Excise Registration.In respect of your own brand name, you will get SSI exemption

  59. CA Lalit Munoyat says:

    You are eligible to SSI exemption till you reach a turnover of Rs. 1.50 Cr

  60. CA Lalit Munoyat says:

    Rs. 1.1 Cr. Trading turnover is not included

  61. CA Lalit Munoyat says:

    Cenvat credit is available to all manufacturers provided the inputs are used in or in relation to the manufacture of final dutiable product. So long as you are an SSI you can’t claim cenvat credit till you reach a turnover of Rs. 1.50 Cr. However you can take credit of excise duty paid on purchase of capital goods but the same can again be used only after you start paying duty after reaching 1.50 Cr turnover

  62. PARVEEN GUPTA says:

    Sir,
    thxs for your valuable support

    sir i have a query related to
    Q 11: Which premises are required to be registered with the department ?
    Ans 11: Generally the premises where cenvatable inputs are received, the premises where the final product is stored before removal and the factory where the final product is manufactured, are required to be registered. However in the present case of readymade garments where cenvat credit is not available (since abatement has been given) , the place where the final products are stored for clearance , will required to be registered.

    query:-for a ready made garment manufacturer liable to pay excise duty(not falling under ssi or any other exemption),for him whether cenvat credit is available or not

    Awaiting your valuable reply.

    Regards

  63. Peter says:

    Sir,

    We are a manufacture cum distributor of food items. Our manufactured items has a Turn Over of about 1.1 Cr and others’s items for which we are the distributor is about 1 Cr. For the purpose of Central excise exemption, will our Turnover be calculated as 1.1 Cr or 2.1 Cr ?

  64. satyam says:

    we are manufacturers of paints below Turnover of rs 30 laks,the me know the exice policy fo us

  65. Krishnan says:

    Good Day Sir

    Thx a lot for your valuable information on the Excise duty Subject.

    We run a Branded Garment company. We are involved in procuring raw materials and giving out job work to small manufacturing companies to make the ready made garments. Brand labels are provided by us to the job workers and is affixed at the manufacturing unit.

    Once we get the finished garments, we market it and do wholesale distribution of the garments. Where by we sell the garments at whole sale price to the retailers and are not aware of the RSP of our products.

    Now our Turnover till 28-feb-2011 was 1 cr (Whole sale price)
    We are expecting to cross 2.5 cr between 1-mar-2011 to 31-mar-2012

    Now where do we fall….
    - Should we pay the excise duty or should the retailer pay or should the job workers pay?
    - There is strong pressure from retailers to remove brand name from out garments – will it help the cause ?
    - Lets say our turn over is less than 1.5 cr and we are exempted from paying excise duty, then will the retailer have to pay the duty?
    - Lets say our turn over is more than 1.5 cr and we do pay excise on sales more than 1.5 cr mark. Do the retailers still have to pay excise? why are they worried?
    - We want to maintain the brand name by any means , what would be our options?

    These are my queries kindly find time to respond.

    Brgds
    Krishnan

  66. vinod kumar says:

    Dear sir,
    We are a manufactrer of undergarments.We make bill to party below 30% on MRP.Now after applying the central excise duty @10% how can billing to party. Pls give illustration.

    Regards
    Vinod
    Tirupur

  67. Piyush says:

    And we are eligible for SSI Exemption

  68. Piyush says:

    Dear Sir,

    I understood the fact that SSI Exemption is not available on goods bearing brand name of others.

    But if we manufacture both our brand names plus other brand names, then??
    WE WILL BE PAYING DUTY ON OTHER BRAND NAMES….BUT WHAT ABOUT THE REST GOODS WHICH WE HAVE MANUFACTURED IN OUR OWN BRAND NAME?

  69. Lalit Munoyat says:

    SSI exemption on self branded garments available. However for manufacturer of goods under brand names of others, SSI exemption is not available. You will have to charge duty on other branded goods from 1st Bill itself

  70. Lalit Munoyat says:

    Branded garments sold under own brand have SSI exemption benefit upto Rs. 1.50 Cr. If you getting garments manufactured on job basis from other manufacturer, then for that other manufacture, your brand name will not be treated as his own and therefore he will not enjoy SSI benefit

  71. Lalit Munoyat says:

    Branded Garments sold under own brand name are covered by the SSI Scheme i.e. No duty upto Rs. 1.50 Cr Turnover. However SSI exemption is not available when you manufacture under the brand name of others

  72. Lalit Munoyat says:

    No. Not At all. Duty on non branded garments is fully exempt without any turnover limit Not 30/2004. You will be SSI when you cross turnover of 1.50 Cr. NO need for any legal compliance

  73. suri rajah says:

    pls clarify the following doubts on ED for 2011-2012:-
    1.we are an SSI with expected TO less than Rs1.5 cr in 11-12
    2.we supply branded Socks(is it Garments?)for major retailers in their own label supplied to us
    3.shd we register with ED authorities and start paying ED @45%of Retail Px as per the new policy?
    4.Or is it the Retailer to whom we supply the socks,they will have to pay at their end
    will appreciate your immediate advice and by email to us.
    with best regds
    suri rajah

  74. Arvind says:

    Dear Sir,

    First of all thanks for such a nice support.

    Here am having a small query,

    1.) We are manufacture of school dress
    2.) Having no brand name
    3.) Annual turn over is around 9 lacs
    4.) We buy cloth which is not branded for raw material.

    Question :
    1.) Should i apply for excise registration no ?
    2.) Would our sales be applicable for Excise ?

    Kindly do your nice support.

    Thanks & Regards
    Arvind Mangal

  75. Roshan says:

    Sir,

    7C. The benefit of SSI exemption is available to goods bearing or sold under the brand name of the small manufacturer himself

    Does this mean manufacturer has to sell though own stores or has option of selling through franchisee stores?. Awaiting your valuable reply.

    regards,
    Roshan

  76. lal ahuja says:

    dear sir,

    i am a small manufacturer and i have my brand registered and my turnover till 28-2-2011 is 40 lakhs and further i get my garments through various small job workers, what i would like to know is if i qualify for excise duty under branded goods and if i qualify for any exemptions.

    regards…
    lal ahuja

  77. Piyush says:

    Sir,
    Thanks a lot for the above articles.

    I have a query and I it would your kindness id you answer the same.

    We are manufactures of readymade garments eligible for SSI Exemtion.

    But we manufacture goods in our brand name plus we manufacture goods in brand name of other person/company.
    As stated above by you, goods cleared bearing brand name of other is not eligible for SSI Exemption.

    So, do I have to register with the Excise Department to pay duty on goods cleared on other brand names?

    Will I be able to avail exemption on manufactured on our own brand names?

    Awaiting your valuable reply.

    Regards

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