excise on garments

[satbir singhwahi]

Sir

Garment export unit has received domestic order for supply of garments under brand name ' allensolley'. Now whether it can make domestic supplies with brand name upto ₹ 150 lacs without excise registration.

[PAWAN KUMAR]

Dear Sir,

As per my view, No, SSI exmption for clearance bearing brand name of others will not be eligible for exemption up to 150 lacs during present year.

[CSSANJAY MALHOTRA]

Manufacturer who is manufacturing goods on behalf of a brand owner like Allen solley in this case, will not be eligible for grant of SSI exemption due to the Notification No. 8/2003-CE dated 01.03.2003 in which it is clearly mentioned [Point 3(b]) that for the purpose of determining the first clearances upto an aggregate value not exceeding ₹ 150 lakhs, “the clearances bearing the brand name or trade name of another person” shall not be taken into account (subject to exceptions provided in point 4 of the same notification)

Thereby in such case, the manufacturer, manufacturing products bearing a brand name of another person cannot avail the benefit of SSI exemption hence shall be liable to pay duty on the clearance of such branded goods.

Further, where the brand owner gets his goods manufactured by other manufacturer, the brand owner of such branded garments can avail SSI exemption of ₹ 150 Lakhs, only if following conditions are satisfied:-

Brand owner who is getting its garments manufactured from another manufacturer does not instruct/disclose such manufacturer to affix Retail sale price (RSP) on the manufactured goods (then Manufacturer does not have to pay Excise Duty unless authorised by brand owner) and the readymade garments are having RSP of ₹ 1000 and above when they bear or are sold under a brand name affixed / labelled by the Brand Owner (Brand Owner to avail duty exemption or pay Duty as the case may be)

[satbir singhwahi]

Thks Sanjay Ji

Very informative.

But this branded Allen solley domestic order is of only ₹ 15 lakhs,What best one should do.Going for registration will mean whole export excise procedure .

[CSSANJAY MALHOTRA]

The only option for availing duty exemption in this case is to take up with the brand owner (who may or may not agree) for not disclosing and getting the RSP affixed on the garments manufactured at your end.

[satbir singhwahi]

Thks Sanjay Ji

[Ganeshan Kalyani]

Sir, the conversation enriched my knowledge. Thanks Sri Sanjay Sir. Thanks.

AI Summary

SSI exemption barred for manufacturers clearing garments under another's brand; brand owner may retain exemption if RSP not affixed. A contract manufacturer clearing garments bearing another person's brand name is excluded from the SSI exemption; such branded clearances are not counted towards the exemption threshold under the cited notification, making the manufacturer liable for excise duty. The brand owner may claim the exemption for its own clearances provided the brand owner controls labelling and does not instruct or disclose the manufacturer to affix the Retail Sale Price, consistent with the notification's conditions.