4th March, 2005
F.No. B-1/1/2005-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
Sub: Excise duty levy on branded articles of jewellery.
In this year’s budget 2005-06, an excise duty of 2% has been imposed on branded articles of jewellery of heading 7113 of the Central Excise Tariff. The duty is leviable only if the brand name or the trade name, as defined, is indelibly affixed or embossed on the article of jewellery itself.
2. In this context, relevant extracts of Finance Minister’s budget speech is reproduced below:
“.. expensive and premium jewellery is now manufactured and sold under alluring brand names. On such branded jewellery, I propose to levy an excise duty of 2 per cent. I may clarify that there is no levy on unbranded jewellery, including unbranded gold jewellery.”
It is thus clear that for attracting this levy, the article of jewellery must be marketed and sold under a brand name. Despite this, there have been some misgivings among a section of the trade about the scope of this levy. To allay the apprehensions of the trade, some illustrations are given below to explain the scope of this levy:
(i) A jeweller “ABC Jewellers” gets his articles of jewellery from gold smiths/job-workers who put a mark/sign/initials, etc. on the article of jewellery. This is only to identify that the article of jewellery was received from a particular goldsmith, etc. This is not branded jewellery and will not attract the tax.
(ii) “ABC jewellers”, when it sells articles of jewellery to customers, puts a distinctive sign/mark/initials etc. on the jewellery. This is again for the purpose of identification so that when the jewellery is returned to ABC jewellers, they will recognize the jewellery as their own. ABC jewellers does not sell the jewellery under a brand name. This again is not branded jewellery, and will not attract the tax.
(iii) “ABC jewellers” advertises and sells its products under the brand “Star”. It also puts the same brand name or an abbreviation thereof or a mark which has a connection with such brand name on the article of jewellery. Such jewellery will be branded jewellery and will be liable to the tax.
3. As regards ‘hallmarked’ gold jewellery, it is observed that ‘hallmarking’ is the accurate determination and official recording of the proportionate content of precious metal in gold. Hallmarks are thus only official marks used as a guarantee of purity or fineness of gold jewellery, and cannot be treated as ‘branding’ for the purposes of the excise levy.
4. Whether a particular name or mark or symbol etc. is a brand name or not is a matter of fact, and can be ascertained as how the name is understood in commercial parlance. In the jewellery trade, there are certain well known brand names like ‘ Tanishq’, ‘Sangini’, etc. and thescope of the levy is only with respect to jewellery marketed and sold under such brand names as clearly understood in the trade. It is requested that the gold dealers/manufacturers associations may be suitably briefed about the scope of the excise duty levied on branded articles of jewellery so that there is no inconvenience to the trade.
Yours faithfully,
V. Sivasubramanian
Deputy Secretary (TRU)
Tel. No. 23092236
