CA Bhavin Mehta

CA Bhavin MehtaGold and diamond jewellery are set to become dearer, with the government deciding to hike excise duties. Consumers will have to shell out more for the gold and diamond jewellery as the budget has imposed 1 per cent excise duty, which comes as a blow to the gems and jewellery sector. Let us try to analyze the impact of excise duty on jeweler sector: –

Excise Duty Applicability on articles of Jewellery

  • Applicable to Articles of Jewellery (excluding silver jewellery, other than studded with diamonds/precious metal stones)

SSI exemption:-

  • Jewellery manufacturers having turnover of more than Rs. 12 crore in the previous financial year 2014 – 15 shall not be eligible for SSI exemption.
  • If the value of clearances in the preceding financial year 2014–15 is less than 12 crore, no Central excise duty shall be payable on 1st clearances up to Rs. 6 crore.
  • The eligibility for availing of SSI exemption in 2015–16 for the month of March 2016 is that the value of clearances for home consumption from one or more manufacturer from one or more unit, should not exceed RS. 50 lakhs in the previous financial year 2014–15.
  • The computation of SSI exemption should be backed by Chartered Accountant certificate based on the books of accounts of 2014–15.
  • Similarly, for determining the eligibility for availing SSI exemption for the financial year 2016 – 17, a certificate from Chartered Accountant shall suffice.

Stock declaration: –

  • Excisable goods which were produced on or before 29.02.2016, but lying in stock as on 29.02.2016 shall attract excise duty at the time of clearance.
  • Manufacturers who intend to avail Cenvat credit on inputs or inputs contained in goods lying in stock shall keep the stock declaration of finished goods, goods in process & inputs, as on 29.02.2016 duly certified by Chartered Accountant.
  • No stock declaration will be required to be made to the jurisdictional Central excise authorities.

Simplified procedure & guidelines:-

  • Central excise registration shall be granted within 2 working days.
  • Post registration no physical verification of the premises shall be done.
  • Documents maintained by jewellery manufacturers for State VAT or Bureau of Indian Standards (in case of hallmarked jewellery) shall be sufficient for Central excise purpose.
  • No separate RG 1 Or a Daily Stock Account as required under rule 10 Of the Central Excise Rules, 2002 , is required. Private records giving details of daily stock shall be accepted.
  • Provision of optional Centralised Central Excise Registration for manufacturers having centralised billing for accounting system is being introduced.
  • Simplified return i.e ER 8 shall be applicable to jewellery manufacturers.
  • Liability to pay Central excise duty shall be on the person who gets goods manufactured from the job worker. Principal Manufacturer (and not the job worker) will be required to get registered with the Central excise & pay duty & follow other compliance requirements.
  • Small artisans/goldsmiths are not required to take a new Central excise registration.

(Author can be reached at bhavin@deecee.net.in)

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13 responses to “Budget 2016: Excise Duty Applicability on articles of Jewellery”

  1. Aakash says:

    Sir,
    I have a business turnover of Rs 2.5 crore approx.,for 2015-16, so do I need to register for the excise duty.
    Please guide.
    Thanks

  2. Aakash says:

    Sir,
    We have a turnover of 2.5 crore p.a, do we need to register for Exise duty. Please kindly suggest.
    Aakash

  3. Pandurangan says:

    Is SSI registration must to get the Excise duty exemption?

  4. Pandurangan says:

    Is it necessary to get SSI registration to avail the exemption?

  5. Mohammed Asadullah Baig says:

    1)When they say above 12crs turnover, is it sales turnover or manufacturing turnover?
    2)if it is manufacturing turnover, how does one evaluate the value of gold as raw gold lying in stock will have different purchase rates?
    3)what if i was a manufacturer with turnover above 12crs previous year, but from this year i stop manufacturing and only become a trader. Then can i claim exemption from excise and do i need to still take up excise registartion/license?
    4)is there any restriction in refining of gold?
    5) is 1% excise duty having a tariff value like last time in 2012 they mentioned 30% of product value or do you think it is entire value?
    6)Gold stocks are generally maintained weight wise and not piece wise. So how can the excise officials differentiate, which ornaments are excisable(manufactured) and which are not(traded)?

    Please answer these questions as it can help a lot of jewellers during these difficult times.

  6. Manoj soni says:

    Small scale manufacturer ko kya karna hoga

  7. Ankit says:

    if turnover is less than 6 crore then excise registration and record mantananse is required or not.

  8. Bhavin Mehta says:

    The applicability of SSI exemption has to be seen on 2 fronts: –

    1. For the month of March 2016 – If the turnover for the previous financial year 2014 – 15 is less than Rs. 12 crores, SSI exemption upto aggregate value of clearances of Rs. 50 lakh shall be available for the month of March 2016.

    2. For the financial year 2016 – 17: – if the turnover for the previous financial year 2014-15 is less than Rs. 12 crores, SSI exemption upto aggregate value of clearances of Rs. 6 crores shall be available for the financial year 2016 – 17.

  9. Bhavin Mehta says:

    SSI exemption has to be considered on 2 fronts, one for the month of March 16 & other for the financial year 2016 – 17

    1. If the value of clearances in the preceding financial year 2014–15 is less than 12 crore, no Central excise duty shall be payable on 1st clearances up to Rs. 50 lakhs for the month of March 2016.

    2. Similarly, If the value of clearances in the preceding financial year 2014–15 is less than 12 crore, no Central excise duty shall be payable on 1st clearances up to Rs. 6 crore, for the financial year 2016 – 17

    • rk says:

      dear sir

      in the second row the previous financial year for 2016-17 shall be 2015-16 but how come we consider 2014-15 turnover to see whether we are eligible for exemption in 2016-17??? can u please clarify.
      CA SRK

      • Bhavin Mehta says:

        Yes you are right for claiming exemption for 2016 – 17, we need to consider the previous financial year i.e. 2015 – 16.

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