CBEC vide Circular No. 1021/9/2016-CX, Dated: March 21, 2016 has provided that in order to tackle the issues related to compliance procedure for the excise duty, including records to be maintained, forms to be filled including Form 12AA, operating procedures and any other issued that may be relevant, a Sub-Committee of the High Level Committee to Interact with Trade & Industry on Tax Laws has been constituted.

It would be chaired by Sh. Ashok Lahiri with 3 industry representatives, legal expert, one officer nominated by Ministry of Commerce & Industry and CBEC representative(s). The Sub-Committee will submit its report within 60 days of its constitution.

The key guidelines for jewellers include:

√ Payment of excise based on first sale invoice value

√ CBEC not to challenge valuation of product given in the invoice (weight of gold and carat weight of diamonds and precious gemstone is mentioned on invoice)

√ Excise officials not to visit shops! residence!manufacturing unit v’ No arrests or criminal prosecution

√ No search and seizure of stock

√ Exporters to be allowed on self-declaration on submission of LUT with need to ratify with excise.

√ Exporters will be allowed to export on self-declaration and submission of LUT to customs without the need to get LUT ratified by central excise. Prevailing system will continue.

√ The registration of the establishment with the central excise department can be taken within 60 days from 1st March, 2016. However, the liability for payment of central excise duty will be with effect from 1st March, 2016, and as a special case for the month of March, 2016, the assessee jewellers will be permitted to make payment of excise duty along with the payment of excise duty for the month of April, 2016.

Circular No. 1021/9/2016-CX

F.No. 354/25/2016-TRU
Government of India
Ministry of Finance
Tax Research Unit

***

New Delhi, the 21st March, 2016

To,

Principal Chief Commissioners / Chief Commissioners of Customs (All)

Principal Chief Commissioners / Chief Commissioners of Customs & Central Excise (All)

Sir / Madam,

Subject: Imposition of Central Excise duty on jewellery – Constitution of sub-committee of the High Level Committee –regarding

In the Budget 2016-17, Central Excise duty at the rate of 1% (without input tax credit) and 12.5% (with input tax credit) has been imposed on all articles of jewellery (except for silver jewellery, other than those studded with diamond, ruby, emerald or sapphire).

2 In this regard, it has been decided to constitute a Sub-Committee of the High Level Committee to Interact with Trade & Industry on Tax Laws, chaired by Dr. Ashok Lahiri, which will consist of:

a. three representatives of the trade [to be decided by the Government];

b. one legal expert [to be decided by the Government];

c. officer concerned from the Ministry of Commerce & Industry [MoC&I] to be nominated by the MoC&I; and

d. high level officials from the central excise department to be nominated by the Central Board of Excise and Customs.

The composition of the Sub-Committee will be circulated once the names of its members are finalized.

3 All associations will be given an opportunity to submit representation before the sub‑committee in writing and the all India associations to state their case in person.

4. Terms of reference of the Sub-Committee will include the issues related to compliance procedure for the excise duty, including records to be maintained, forms to be filled including Form 12AA, operating procedures and any other issued that may be relevant. The Sub-Committee will submit its report within 60 days of its constitution.

5. Till the recommendations of the Sub-Committee are finalized, the following shall be adhered to:

a) All payments of central excise duty will be based on first sale invoice value;

b) The central excise authorities will not challenge the valuation given in the invoice provided the caratage / purity and weight of the gold/silver with precious stones; and carats of diamond/precious stones are mentioned on the invoice;

c) The central excise officers will not visit the manufacturing units/ shops/ place of business/residence of the jewelers;

d) No arrest or criminal prosecution of any jeweler will be done;

e) No search or seizure of stocks by any central excise official will be effected;

f) Exporters will be allowed to export on self-declaration and submission of LUT to customs without the need to get LUT ratified by central excise. Prevailing system will continue.

6 The registration of the establishment with the central excise department can be taken within 60 days from 1st March, 2016. However, the liability for payment of central excise duty will be with effect from 1st March, 2016, and as a special case for the month of March, 2016, the assessee jewelers will be permitted to make payment of excise duty along with the payment of excise duty for the month of April, 2016.

7 Any further communications with the regard to the aforesaid Sub-Committee may be addressed to the Office of the High Level Committee (HLC), Suite No. 215, The Janpath Hotel, Janpath Road, Opp. BSNL Building, and New Delhi-110001.

8. Wide publicity may be given to this circular. Difficulty, if any, in implementing the circular should be brought to the notice of the Board. Hindi version would follow.

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3 responses to “Excise duty on jewellery- No arrest,prosecution, search or seizure”

  1. Sha Bhavarlal says:

    Sir, What about jewellery dead stock, i mean after few months the design becomes old and we have to melt and make new ornaments. Then what is the procedure according to new central excise rules.

  2. Amar Pal Singh says:

    Dear Manish ji, will you please help me to understand about this new rule of taxation on gold.
    How SSI will be effected by this if turnover is less than 2 crores.
    What will be when a customer will ask to replace his old gold ring by new one.
    What will be when a customer will ask for some rework in his gold jewellery.

  3. Manish says:

    It is not really the additional tax burden, but the additional levy of excise. The jewelers are already paying taxes of about Rs. 31K Crores, an additional tax of around 1.5K Crore wont do much harm, but additional compliance would certainly do so.

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