CA Pradeep Jain, CA Preeti Parihar
It is the most expensive amendment ever… Yes, now by virtue of amendments made by Budget, 2016; excise duty is being levied on articles of jewellery [excluding silver jewellery, other than studded with diamonds/other precious stones]. Thus, all the jewellery items except pure silver jewellery will now be subject to excise duty w.e.f. 1.3.2016. This article is about the changes brought by the recent budget with respect to jewellery.
Notification no. 8/2003-CE dated 1.3.2003 which prescribes the threshold exemption for the small scale manufacturers have been amended to incorporate the separate threshold for jewellery. According to amendments made, if the turnover of jeweler does not exceed Rs. 12 crores in previous financial year, no excise duty will be payable upto clearance of Rs. 6 crores in current financial year. In other words, jewellery manufacturer having aggregate value of clearances in a financial year exceeding Rs. 12 crore, will not be eligible for this threshold exemption in the subsequent financial year. Since the excise duty is to be levied w.e.f. 1.3.2016; the proportionate SSI exemption of Rs. 50 lacs has been fixed for the month of March. This exemption shall be available only if value of clearances for home consumption from one or more manufacturer from one or more factory or premises of production or manufacture during the financial year 2014-15 did not exceed Rs. 12 crores.
Amendment in Notification no. 12/2012-CE:–
Entry no. 199 to the notification no. 12/2012-CE allowed the exemption to all types of jewellery items falling under tariff heading 7113. This notification has been amended vide notification no. 12/2016-CE dated 1.3.2016 and now excise duty @ 1% is leviable on articles of jewellery provided no Cenvat Credit is taken under provisions of Cenvat Credit Rules, 2004. However, exemption already available to articles of silver jewellery, other than those studded with diamond, ruby, emerald or sapphire is being continued. The effect being that all types of jewellery items except pure silver jewellery are now subject to excise duty @ 1% provided facility of Cenvat Credit is not availed.
Options regarding Rates of excise duty:-
If the benefit of notification no. 12/2012-CE is not availed, the excise duty @ 12.5% can be paid with Cenvat facility. Thus, the two options are being given to jewelers:–
Procedure to be followed:-
A simplified procedure has been prescribed for this purpose which is being explained as follows:-
The above are the simple steps to be taken by the jewelers for getting registered and to help them overcome the difficulties faced during transitional period.
Special provision for returned goods:-
TRU letter issued vide D.O.F. no. 338/8/2016-TRU dated 29.2.2016 states that full exemption from Central Excise duty will be available to duty-paid goods returned to the manufacturer during a financial year. This exemption will be allowed up to a limit of 10% of the value of clearances for home consumption made in the preceding financial year. However, following conditions shall have to be satisfied:-
This facility has been provided since it is a common practice in this industry that the duty-paid stock cleared to the wholesale dealer/retailer on consignment basis that remains unsold is returned to the manufacturer either at the end of the season or from time to time. Such returned goods are cleared either as such or after re-finishing operations to another wholesaler or retailer for sale (often at reduced prices). The re-finishing operations could involve cleaning, ironing, re-folding, repacking or relabeling, some of which constitute “manufacture” in terms of the relevant Chapter Notes. This facility obviates the need to pay excise duty twice on the same goods.
At last, the jewellery has been brought under excise net. It will perhaps bring a lot of revenue to Government particularly in the Country where buying the jewellery is treated as customary on the various occasions. However, at the same time, the chances of litigation on this levy are on much higher side and may face ignition by the various jewelers associations’.
|1||Guide to Excise Duty Levy on Jewellery under Budget 2016|
|2||Clarifications on Excise Duty imposed on jewellery|
|3||Budget 2016: Excise Duty Applicability on articles of Jewellery|
|4||Excise Duty on Jewellery articles: No visit at jeweller’s premises|
|5||‘Excise Duty Studded on Jewellery by Budget, 2016|
|6||105 FAQs on Excise Duty on Jewellery|
|7||Excise duty on jewellery– No arrest,prosecution, search or seizure|
|8||BRIEF ON Excise duty on items of jewellery levied by Budget 2016|
|9||Govt forms Committee on issues related to excise duty on jewellery|
|10||Central Excise on Jewellery : Whether fears are real?|
|11||Excise on Jewellery – A Brief Overview|
|12||Procedure for Centralized Excise Registration for jewellery article manufacturers|
|13.||Valuation of jewellery under excise: Practical scenarios|
|14||Registration under excise by jeweler: A Thoughtful Decision|