Washing process is amount to mfg for garments?

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R B SHARMA (Querist)
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09 February 2013 Sir,

Our unit is availing exemption under notification no 50/2003-CE from the whole of the duty of excise or additional duty of excise in Dehradun and we are manufacturer of Read Made Garments. we are sending the goods for WASHING purpose to a unit who is also availing the exemption of 50/2003, means in the same area.

Service tax is exempted for manufacturer of Excise-able Goods.

Now the question is, washing process is amount to "Manufacture" or not and Service Tax is applicable or not. Please guide for the same.

Regards
R B Sharma

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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10 February 2013 Washing per se cannot be a process of manufacture. However under sec 2 (f)(ii)/ (iii) if it is deemed manufacture, it would consititue manufacture under central excise. To confirm this youmay have to see the section and chapter notes of the garments chapter 62/63 in the central excise tariff.

R B SHARMA

R B SHARMA (Querist)
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11 February 2013 Dear Madhukar Ji

Thanx for your replay, but in the both Section & Chapter note, there is not a clarification for the same.

Could you clear the same at your end.

Regards
R B Sharma

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2025 Hey! This is a classic question in excise and service tax law related to garments manufacturing and ancillary processes like washing. Here's a detailed explanation:
Question:
Does the washing process amount to "manufacture" for garments under Central Excise? Is Service Tax applicable on washing?
Relevant Legal Provisions & Concepts:
Manufacture under Central Excise:
Central Excise Act defines manufacture as any process which:
Alters the nature, substance, or quality of the goods.
Results in a new product having a distinct name, character, or use.
Section 2(f) of the Central Excise Act defines manufacture.
Chapter Notes under tariff headings provide further clarity on what processes are considered manufacture.
Is Washing a Manufacture?
Washing by itself is generally considered a process of finishing rather than manufacture if it does not create a new product.
However, if washing alters the product to a different form or quality, it may be considered manufacture.
The garments tariff heading (Chapter 62/63) does not explicitly mention washing as manufacture.
Deemed Manufacture:
Certain processes are deemed manufacture by virtue of specific notifications or sections.
Washing might qualify if it changes the product’s character substantially (e.g., stone washing denim to give a different look).
Excise Exemption Notification 50/2003-CE:
Grants exemption from excise duty for manufacturers in specified areas.
Both your unit and the washing unit are availing this exemption.
Service Tax Implications:
Service tax is generally not applicable to manufacturers on services related to goods manufacturing, as they are covered under the exemption.
However, if the washing is treated as a service, then service tax could be applicable unless exempted.
Since washing is ancillary to manufacturing of excisable goods, it may not attract service tax if both units are manufacturers under the exemption.
Practical Position:
Washing in Garments Manufacturing is typically considered a part of the manufacturing process, especially if it changes the product’s quality or appearance.
Many courts and authorities have held that washing to give a finished look to garments is part of manufacture, especially in textile and garment industry.
If washing does not amount to manufacture, then it could be treated as a service and service tax may be payable on it (unless exempt).
Since both your unit and washing unit are located in the same exempted area and covered by Notification 50/2003-CE, no excise duty or service tax is payable on washing.
In practice, washing is treated as part of manufacture, so no separate service tax is charged if done within manufacturing chain.
Suggested Action:
Keep all records of sending garments for washing as part of the manufacturing process.
Confirm that both units continue to avail exemption under Notification 50/2003-CE.
If any dispute arises, rely on legal opinions or seek advance ruling for clarity.
You may also check for any recent clarifications by the CBIC or court judgments related to your jurisdiction.
Summary:
Issue Conclusion
Is washing manufacture? Generally yes, if it alters garment's quality/appearance.
Service tax applicable? No, if both units covered under excise exemption and washing is part of manufacture.
Action Treat washing as manufacturing process, maintain documentation.

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