EXCISE CLARIFICATION ON EXCISE DUTY ON TEXTILE

Excise department has issued a clarification about excise duty on textile. There was a confusion about rate of excise duty on textile as there was a notification about rate of excise duty on textile reduced to 4%. Excise department has cleared with the circular no. 948 dated 05-07-2011 that excise duty on textile product is 10%.

This was done because items falling under these headings already attracted 8% by tariff. Thus the effective rate of excise duty on these textile items operated through the tariff since both the effective as well as the tariff/statutory rate was at 8%. Subsequently in Budget, 2010-11, when the general Cenvat rate was increased from 8% to 10%, the tariff rates for these headings were also increased to 10%. Since both the effective duty rate and the tariff rate are at 10% for these goods, the excise duty rates on these goods continue to operate by tariff even though they are no longer referred to in notification no. 29/2004-CE

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