Excise Duty on Garments

[Rohit Jain]

Dear All,

We are a Garment Manufacturing unit producing readymade garments on contract for certain international brand. Our Brand Owner shares the price labels to be affixed with garments. Price tags are in foreign currency, normally in dollar and it ranges from $15 to $35. Hence, in such a case whether we are exempt from Excise Duty or whether we have to discharge excise duty by converting foreign currency price into INR?

Please suggest.

[Rajagopalan Ranganathan]

sir,

You are engaged in export of ready made garments. You can export it under bond without payment of duty. However you nhave to declare the value of the consignment in form ARE-1. OR you can export the garments on payment of duty under claim of rebate. For payment of duty you have to declare the transaction value of the consignment in for ARE-1 and pay appropriate duty on the same.

[Rohit Jain]

Sir,

Thanks for your reply.

We are not engaged in export of garments. We sold these garments to Indian unit of that international brand and that unit in return exported the same. So we are making only domestic sales tagging price in foreign currency.

[KASTURI SETHI]

So you are to pay GST at the transactional value at the time of supply to the Indian Unit. After export by that unit, you can claim rebate after getting disclaimer certificate from that unit.

AI Summary

Tax treatment of garments with foreign currency price tags requires GST on domestic supply at value; rebate possible after export.
If the manufacturer exports, they may export under bond without duty or export on payment and claim rebate by declaring the transaction value in ARE 1. If the manufacturer supplies domestically to the Indian affiliate, the supply attracts GST assessed on the transaction value at the time of supply; after export by the affiliate the supplier may claim rebate with a disclaimer certificate from that affiliate.