Actual excise duty on branded apparel 4.5 percent, SSIs exempted – CBEC

New Delhi, (PTI) Addressing concerns of garment manufacturers, the Central Board of Customs and Excise today said effective rate of excise on branded apparel is only 4.50 per cent and small manufacturers are exempted from the levy. “Manufacturers having a turnover of Rs four crore are eligible for SSI (small scale industry) exemption from central excise duty for clearance up to Rs 1.5 crore, “the CBEC said in a public notice.

The manufacturers with turnover of up to Rs 8.9 crore would get an SSI exemption of up to Rs 3.5 crore on retail sale price clearance, it added.

While the government levied 10 per cent central excise duty on branded readymade garments and textile made ups in the Budget, the effective rate works out 4.5 per cent due to the abatement.

“The duty is to be paid on a reduced value that is 45 percent of the retail sale price, the CBEC said. The excise duty on branded garments was levied in a move aimed towards transition to the Goods and Services Tax (GST) proposed to be implemented from next financial year. The CBEC issued the public notice in response to widespread protests and strikes by the garment industry for the past few weeks.

As an additional facilitation measure, it said” full exemption from the excise duty has been provided to duty paid goods returned to the manufacturer up to 10 per cent of the total clearance value”.

However, the Clothing Manufacturers Association of India.(CMAI), which has been pressing for a rollback, said the imposition of excise would lead to fragmentation of the garment industry.

“Senior officials keep talking about clear norms but the ground reality is quite different. We will have to watch whether the clarity percolates, CMAI President Rahul Mehta said

To make compliance easier, self-declaration by the manufacturer or a certificate from a chartered accountant of total value of clearances would be accepted, the CBEC said. Over concerns about maintenance of records, the CBEC said in any case a unit with turnover exceeding Rs 10 lakh has to fulfill the requirement, therefore, the maintenance of similar records for Central Excise duty payment will not add to their compliance burden.