Clarification on computation of exemption and eligibility and exemption limits and other related issues for small scale industries [SSI] exemption under Notification No. 8/2003-CE dated 1st March 2003 in respect manufacturer or principal manufacturer of articles of jewellery or parts of articles of jewellery or both.
Central Government vide Circular No. 1021/9/2016-CX dated 21.03 .2016 constituted a Sub-Committee of the High Level Committee (HLC) to interact with Trade & Industry and look into the issues related to compliance procedures for the excise duty on articles of jewellery which submitted its report on 23.06.2016. Accordingly, Notification No. ‘s 26/2016-Central Excise to 29/2016-Central Excise; No. ‘s 33/2016-Central Excise (N.T.) to 40/2016-Central Excise (N.T.); and Circular No. 1040/28/2016-CX to No. 1045/33/2016-CX have been issued to give effect to such accepted recommendations.
Following have been provided vide aforesaid notifications & circulars:
a) excise duty of 1% without input and capital goods tax credit or 12.5 % with credit to apply to articles of jewellery, parts of articles of jewellery, made of platinum, gold and silver;
b) to levy duty on handicrafts falling under heading 7113 of the Central Excise Tariff Act, 1985.
c) excise duty on jewellery payable at first sale invoice value
d) in case the invoice does not show excise duty separately, the value for VAT will be treated as cum duty value [value + excise duty];
e) when a retail customer brings jewellery [other than in form of gold or any precious metal] to a jeweller which is converted into new jewellery or precious stones are mounted on the jewellery by the jeweller or a job worker of such jeweller, excise duty will be payable only on value addition, including cost of additional materials and labour charges charged, subject to the maintenance of certain records;
f) no excise duty will be payable on the sale of traded goods;
g) records maintained for State VAT and other private records, showing details of inputs, stocks, manufactured goods, sold/exported goods, etc. to be accepted for excise purposes. Stock details to be maintained on weight and carat basis;
h) an optional scheme may be prescribed for jewellers who are not able to maintain separate physical stocks and / or records of manufactured and traded goods. For availing the optional scheme, a principal manufacturer of jewellery shall maintain separate stocks on weight and/or carat basis separately for Silver studded jewellery, Gold or platinum jewellery studded with diamonds and other gold or platinum jewellery.
i) Repairs and alterations, which do not change the identity, character and use of the goods and do not result in a new item is not “manufacturing” and will not attract excise duty
j) movement of jewellery, which does not involve sale, for example, movement of jewellery, to be shown as samples, branch transfers not involving sale, for display in exhibition, for hallmarking, and for approval before sale, may not be liable to excise duty. No transit checks by excise officers;
k) Articles of Jewellery (Collection of Duty) Rules, 2016 prescribed which, inter-alia provide for date of duty, assessment, manner of payment including an optional scheme for payment of Excise duty, stock position, job-work, dead stock, removal of semi-manufactured jewellery etc.
l) the quarterly return (ER.8) will also apply to the manufacturers or principal manufacturers of parts of articles of jewellery, falling under heading 7113.
m) the date of submission of quarterly returns for quarter ending on 31st March, 2016, and quarter ending on 30th June, 2016, will be the 10th August, 2016
n) a principal manufacturer of articles of jewellery or parts of articles of jewellery or both will be treated as manufacturer for the purposes of the CENVAT Credit Rules, 2004.
o) a person engaged in the manufacture of articles of jewellery or parts of articles of jewellery or both, falling under chapter heading 7113 may get himself registered by 31st day of July, 2016;
p) Exemption from taking Central Excise Registration upto Rs. 10 crores.
q) no requirement to submit any ground plan of the premises for taking Excise registration
r) no registration by a manufacturer or principal manufacturer or a jeweller, who exports 100% of articles of jewellery manufactured by him or got manufactured by him on job work basis subject to specified conditions.
s) Exemption from filing of annual return.
t) no excise audit will be carried out, for the first two years, for units whose duty payment (cash plus credit) is less than Rs. 1 crore, [that is turnover of manufactured goods less than Rs. 100 crore.] Guidelines for Excise Audit prescribed.
u) no visit, search and seizure at job workers premises
v) no visit to premises of the principal manufacturer [jeweller], except on the basis of specific intelligence and with the approval of Commissioner or equivalent rank officer.
w) summons to be issued only with the approval of Commissioner;
In addition to the above recommendation, the Government has also decided the following to increase for manufacturers of articles of jewellery or parts of articles of jewellery or both:
i) the SSI Eligibility limit from Rs. 12 Crore to Rs. 15 Crore;
ii) the SSI Exemption limit from Rs. 6 Crore to Rs. 10 Crore in a financial year and 85 lakh for the Month of March, 2016;
iii) Computation of Eligibility and Exemption limits for SSI exemption is to be done individually for each manufacturer or principal manufacturer.
iv) value of articles of jewellery exported [except those exported to Bhutan] and value of traded articles of jewellery [on which appropriate excise duty, including nil duty, has already been paid] will not be counted for computing SSI limit.
For more details please visit www.cbec.gov.in.
Circular No. 1040/28/2016- Central Excise
F. No. 354/25/2016 – TRU (Pt.-I)
Government of India
Ministry of Finance
(Department of Revenue)
Tax Research Unit
*****
New Delhi, the 26th July, 2016
To,
Principal Chief Commissioners/Chief Commissioners of Central Excise (All);
Principal Chief Commissioners/Chief Commissioners of Customs & Central Excise (All);
All Director Generals of Customs, Central Excise & Service Tax
Madam/Sir,
Subject: Clarification on computation of exemption and eligibility and exemption limits and other related issues for small scale industries [SSI] exemption under Notification No. 8/2003-CE dated 1st March 2003 in respect manufacturer or principal manufacturer of articles of jewellery or parts of articles of jewellery or both-regarding.
In this year’s Budget, central excise duty of 1% without input and capital goods tax credit or 12.5% with credit was imposed on articles of jewellery falling under heading 7113 of the First Schedule to the Central Excise Tariff 1985. Subsequent to that, the Government had set up a Sub-Committee of the High Level Committee, headed by Dr. Ashok Lahiri to interact with Trade & Industry on issues relating to procedure and compliance relating to excise duty of articles of jewellery. The Sub-Committee has given its report on 23.06.2016, which has been accepted by the Government.
2. In the context of computation of exemption and eligibility and exemption limits and other related issues for small scale industries [SSI] exemption under Notification no. 8/2003- CE dated 1st March 2003 and other SSI issues, relating to manufacturers/principal manufacturers of articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the Central Excise Tariff Act [hereinafter referred to as articles of jewellery] the Sub-Committee has made certain recommendations, which have been accepted by the Government. Accordingly, notwithstanding anything to the contrary provided in any other circular/instructions, in respect of SSI exemption for manufacturers or principal manufacturers of articles of jewellery the following may be followed scrumptiously,-
i. Computation of Eligibility and Exemption limits for SSI exemption [Notification no. 8/2003-CE dated 1st March 2003] is to be done individually for each manufacturer or principal manufacturer, irrespective of the number of job workers employed by such manufacturer or principal manufacturer or the number of premises from which his job workers operate.
ii. For computation of Eligibility and Exemption limits for SSI exemption the value of articles of jewellery exported [except those exported to Bhutan] will not be counted.
iii. Similarly, for computation of Eligibility and Exemption limits for SSI exemption the value of traded articles of jewellery [on which appropriate excise duty, including nil duty, has already been paid] will not be included.
iv. Further, in respect of jewellery manufactured out of jewellery or precious stones supplied by the individual retail customer, only the value addition [sum of cost of additional material used and labour charges/making charges charged by the manufacturer or principal manufacturer] shall be taken into consideration for computation of such limits.
v. Multiple manufacturers or principal manufacturers, operating from the same premises and individually registered under State VAT on or before February 29, 2016, may be allowed separate central excise registrations. However, in such cases the value of clearances of all such manufacturers or principal manufacturers shall be clubbed together for determining the eligibility/exemption limits for the purposes of the small scale industries [SSI] excise duty exemption. Thus, if the clubbed together aggregate value of clearances of all such manufacturers or principal manufacturers during the preceding year is more than Rs. 15 crore then none of such manufacturers or principal manufacturers will be eligible for SSI exemption. Similarly, as and when the clubbed together aggregate value of clearances of such manufacturers or principal manufacturers in a financial year crosses Rs. 10 crore, all such manufacturers or principal manufacturers will be liable to pay excise duty on their clearances thereafter.
3. Hindi version will follow. Trade Notice/Public Notice may be issued on the above lines.
4. Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the Board.
(Anurag Sehgal)
Under Secretary to the Government of India
