Seeks to amend notification No. 36/2001-Central Excise (N.T.) dated 26th June, 2001, so as to exempt a manufacturer or principal manufacturer of articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986) from taking central excise registration upto the full exemption limit, which is being increased to Rs. 10 Crore. 

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.

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Notification No. 40/2016 Central Excise (N.T.)

New Delhi, the 26th July, 2016

G.S.R (E)- In exercise of the powers conferred by sub-rule (2) of rule 9 of the Central Excise Rules, 2002, the Central Board of Excise and Customs, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification number 36/2001-Central Excise (N.T.), dated the 26th June, 2001, in the Ministry of Finance, Department of Revenue, 2001, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 465 (E), dated the 26th June, 2001, namely,-

In the said notification, in the paragraph (3), for Explanation, the following shall be substituted, namely:-

“Explanation. – For the purpose of this notification, the expression “specified limit” shall mean,-

(a)   in respect of goods falling under heading 7113 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), full exemption limit;

(b)  for goods, other than (a) above, full exemption limit minus sixty lakh rupees.”. [F. No. 354/25/2016 –TRU (Pt.-I)]

(Anurag Sehgal)

Under Secretary to the Government of India

Note: The principal notification No. 36/2001 – Central Excise (N.T.), dated the 26th June, 2001 was published in the Gazette of India, vide number G.S.R. 465 (E), dated the 26th June, 2001 and was last amended, vide notification No. 19/2016-Central Excise (N.T.), dated the 1st March, 2016 published in the Gazette of India, vide number G.S.R. 250(E), dated the 1st March, 2016.

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