Following the jewellery industry, the branded readymade garment makers have demanded the roll back of excise duty levied in the Budget and want the government to continue with the present optional duty regime, until the GST is introduced.
Incidentally, the jewellery industry is on an indefinite strike from March 1 to protest against the excise duty.
Rahul Mehta, President, Clothing Manufacturers Association of India (CMAI), said once the GST is introduced, the whole value chain would be covered by the duty and compliance will improve considerably.
A few years ago, excise duty was levied by the previous Government but withdrawn subsequently after understanding the adverse consequences. Repeating the same experiment is the last thing that the industry needed, especially when the entire textile and clothing industry is going through a crisis due to fall in demand both in the domestic and export markets, he said while addressing a seminar on Excise Duty on Branded Readymade Garments here.
Fixing the cut off price point at ₹1,000 for levying excise will further complicate and impact the industry when many of the small manufacturers are upgrading themselves to make quality products at higher price point targeting upper segment of the society.
By this single move, the Government is once again encouraging the mushrooming of small, under-productive old manufacturing units, producing poor quality and veering towards the unorganised sector while the Prime Minister Narendra Modi is emphasising on quality manufacturing, said Mehta.
“We have pointed out that the task of collecting this excise duty from the highly dispersed and mostly tiny units in the garment sector would be a formidable task for the Government, especially when the rest of the value chain is exempted and therefore traceability is a serious issue,” he said.
Allying fears of ‘inspector raj’, Shailesh Sheth, Advocate (Indirect Tax Practitioner), said the Central Board of Excise and Customs has relaxed procedures for the sector, including dispensing with post-registration verification of registered premises, acceptance of CA certified stock declarations and turnover for the purpose of exemption.
He pointed out that pre-Budget stock of branded garments with retail selling price of ₹1,000 and above lying with the manufacturers as on February 29 would attract the duty on its clearance after March 1.