excise duty on Jewellery Archives - Tax Heal

Excise Duty on Jewellery- Gist of all notifications issued

CA Satbir Singh — Thu, 28 Jul 2016 14:56:34 +0000

Simplified Central Excise norms for Jewellery Sector notified

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 (http://pib.nic.in/newsite/PrintRelease.aspx?relid=147064). In this connection, the Central Government has issued following notifications and circulars to give effect to the Sub-Committee’s recommendations:

Notifications issued:

Notification No.	Gist of notifications
26/2016 – Central Excise	Seeks to amend notification No. 12/2012-Central Excise so as to prescribe 1% excise duty (without input and capital goods credit) on parts of articles of jewellery falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986), and to prescribe a criteria for classification of an articles of jewellery or part of articles of jewellery or both as that of a particular precious metal.
27/2016 – Central Excise	Seeks to partially exempt Central Excise duty on articles of jewelleryfalling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986) manufactured by: (a) re-conversion of jewellery given by the retail customer, or (b) mounting of precious stone given by the retail customer.
28/2016 – Central Excise	Seeks to amend notification No. 8/2003-Central Excise dated 1^st March, 2003, so as to increase for 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): (a) the SSI Exemption limit from Rs. 6 crore to Rs. 10 crore; and (b) the SSI Eligibility limit from Rs. 12 crore to Rs. 15 crore.
29/2016 – Central Excise	Seeks to amend notification No. 17/2011-Central Excise, dated the 1^stMarch, 2011, so as to exclude handicrafts falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986), from the purview of excise duty exemption for “handicrafts”.
33/2016 – Central Excise (N.T.)	Seeks to notify, for articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), (a) for articles of jewellery or parts of articles of jewellery or both (other than those which are manufactured from the precious metal provided by the retail customer), the first sale value, that is the value at which such articles of jewellery or parts of articles of jewellery or both, are sold for the first time, as the tariff value; (b) for articles of jewellery or parts of articles of jewellery or both manufactured from the precious metal provided by the retail customer, the value which is sum of,- i. the cost of additional materials used by the manufacturer or principal manufacturer, as the case may be, for making such articles of jewellery; ii. the labour charges charged by the manufacturer or principal manufacturer, as the case may be, from the retail customer; and iii. the value of precious metal provided by the retail customer, as the tariff value.
34/2016 – Central Excise (N.T.)	Seeks to notify the Articles of Jewellery (Collection of Duty) Rules, 2016, applicable to 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). These rules, inter-alia, provide manner of payment of Central Excise duty on articles of jewellery or parts of articles of jewellery or both, including an optional scheme for payment of such Excise duty.
35/2016 – Central Excise (N.T.)	Seeks to amend the Central Excise Rules, 2002 in relation to articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), so as to: i. provide that the quarterly return (ER.8) will also apply to the manufacturers or principal manufacturers of parts of articles of jewellery, falling under heading 7113; ii. prescribe that the date of submission of quarterly return, for manufacturers or principal manufacturers of articles of jewellery or parts of articles of jewellery or both, falling under heading 7113, for quarter ending on 31st March, 2016, and quarter ending on 30th June, 2016, shall be the 10th August, 2016; and iii. as separate rules are being prescribed for articles of jewellery or parts of articles of jewellery or both falling under heading 7113 of the said Schedule to the said Tariff Act, applicability of Rule 12AA is being restricted to articles of precious metals falling under heading 7114.
36/2016 – Central Excise (N.T.)	Seeks to amend the CENVAT Credit Rules, 2004 in relation to articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), so as to include a principal manufacturer of articles of jewellery or parts of articles of jewellery or both as manufacturer for the purposes of the CENVAT Credit Rules, 2004.
37/2016 – Central Excise (N.T.)	Seeks to provide a modified format for quarterly return, ER-8, for return of excisable goods cleared at the Central Excise duty rate of 1% [including articles of jewellery or parts of articles of jewellery or both, falling under heading 7113] or 2%.
38/2016 – Central Excise (N.T.)	Seeks to amend notification No. 35/2001-Central Excise (N.T.) so as to: (i) provide that a person engaged in the manufacture of articles of jewellery or parts of articles of jewellery or both, falling under chapter heading 7113 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) may get himself registered by 31st day of July, 2016; (ii) exempt a person engaged in the manufacture of articles of jewellery or parts of articles of jewellery or both, falling under chapter heading 7113 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) from the requirement to submit plan of the factory premises under simplified registration procedure.
39/2016 – Central Excise (N.T.)	Seeks to amend notification No. 17/2006-Central Excise (N.T) dated the 1st August, 2006 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 filing of annual return.
40/2016 – Central Excise (N.T.)	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.

Circulars issued:

Circular No.	Gist of circulars
1040/28/2016 – CX	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.
1041/29/2016 – CX	Guidelines for Excise Audit of Manufacturers / Principal Manufacturers of articles of jewellery or parts of articles of jewellery
1042/30/2016 – CX	Export related procedural simplifications – excise duty on articles of jewellery falling under heading 7113.
1043/31/2016 – CX	General procedures regarding excise duty on articles of jewellery or parts of articles of jewellery or both falling under heading 7113.
1044/32/2016 – CX	Guidelines for issue of summons, visits, search, seizure, arrest and prosecution regarding manufacturers or principal manufacturers of articles of jewellery or parts of articles of jewellery or both.
1045/33/2016 – CX	Taxability of stock on February 29, 2016 – Excise duty imposition on articles of jewellery in the Budget 2016-17.

All these notifications and circulars along with Joint Secretary (TRU-I)’ D.O. on the subject, can be downloaded from the CBEC website (http://www.cbec.gov.in).

Excise Duty on Jewellery –Key Takeaway

CA Satbir Singh — Thu, 28 Jul 2016 14:26:55 +0000

Excise Duty on Jewellery –Key Takeaway

The Central Government proposed to impose excise duty on manufacturing of jewellery except silver jewellery (other than studded with diamond and precious stones) in the Union Budget. However, the jewellers protested against such levy of excise duty. They went on strike across the Country demanding withdrawal of excise duty levy on jewellery. Finally the Govt. did not change its stance and retained such levy in the Finance Act, 2016.

Now the rate of excise duty on jewellery is 1% if assessee does not avail of any credit on inputs and capital goods. However, the rate of excise duty will be raised to 12.5% if assessee avails of credit on inputs and capital goods.

Read Procedures for excise duty on jewellery issued by CBEC

Recently the CBEC has issued set of Circulars and Notifications with regard to excise duty on Jewellery. Key takeaways from such Circulars/Notifications are given hereunder:

Date for Taking registration by Jewellers

All persons engaged in manufacturing jewellery should take Excise registration before July 31, 2016. Even if jewellery is manufactured via job-worker then also only Principal-manufacturer is required to take Excise registration.

Exporters not required to take registration

Jewellers exporting 100% of jewellery are not required to take Excise registration. But they will have to furnish a bank guarantee.

Read :

Excise duty on Jewellery – Export procedure simplified by CBEC

1% Excise duty (without Cenvat) on jewellery u/h 7113

Taxability of stock of jewellery on February 29, 2016 : CBEC Clarify

Higher Exemption Limit for Jewellers

On recommendation of Sub-Committee constituted to interact with Trade & Industry, the Central Government has increased the higher threshold exemption limit from Rs.6 Crore to Rs.10 Crore and eligibility limit from Rs.12 Crore to Rs.15 Crore for jewellery manufacturers. Earlier, higher threshold limit of Rs.6 crore for SSI exemption was prescribed with eligibility limit of Rs.12 crores for jewellers.

SSI exemption calculation

The SSI exemption should be calculated individually for each jewellery manufacturer irrespective of number of job-workers or number of premises from which his job-worker operates. This will also apply for determining eligibility of jewellery manufacturer for SSI exemption.

Read Notification

Calcaution of SSI Exemotion in case Jewellery supplied by Retail Customers

If jewellery is manufactured out of jewellery or precious stones supplied by the individual retail customers, then only value of additional material used will be considered to compute aforesaid limits of SSI. Moreover, the duty liability will arise only on value of additional materials used by manufacture in addition to jewellery or precious stones supplied by the individual retail customers.

Read Notification :Excise duty on jewellery -Exemption if jewellery given by Retail customers

SSI Exeption in case of multiple manufacturers operates from Single premises

If multiple manufacturers which operate from same premise but take separate excise registration, then value of all clearances of all such manufacturers will be clubbed to determine SSI exemption and eligibility exemption limits.

Items not included for calculating SSI Exemption

Following items shall not be included for calculating the eligibility and exemption limit for SSI:

a) Jewellery exported to foreign countries (except Bhutan).

a. Jewellery sold as a trader.

Excise Audit

No excise audit will be carried out for jewellery manufacturer in first two years if their duty liability during the financial year is less than Rs.1 crore. Jewellers who are liable to pay duty more than Rs.1 crore but less than Rs.2 crore may be audited once in every two years. And jewellers who are liable to pay duty more than Rs.3 crore may be audited every year.

Guidelines for Excise Audit of Jewellers issued by CBEC

After expiry first two years:

i. Commissioner will select maximum 5% of total jewellers who are liable to pay duty less than Rs.50 lakh for excise audit.

ii. Jewellers who are liable to pay duty more than Rs.50 lakh but less than Rs.1 crore may be audited once in every five years.

Note: However, such audit will under no circumstances involve any physical verification of jewellery stock in the premises.

No Transit Checks

Departmental officers will not do transit checks for checking movement of semi-finished or finished articles of jewellery.

Visit of Commissioner

Commissioner can visit and search premises of jewellery manufacturer only if he has reason to believe that there is evasion of excise duty. However, search cannot be undertaken for procedure or compliance related matters.

Arrest by Commissioner

Commissioner cannot arrest jewellery manufacturer where duty evasion is up to Rs 2 crores.

Guidelines for search or arrest of jewellers issued by CBEC

Search and seizure by Commissioner

Commissioner can initiate search and seizure where expected evasion of duty is more than Rs.75 lakhs.

No excise on Repairs or alterations

Repairs and alterations in Jewellery articles will not attract excise duty if it does not change the identity, character, use of jewellery and do not result in new item

Maintenance of Records

Jewellers which manufactures jewellery from jewellery or precious stones supplied by a retail customers should maintain record of following particulars:

a) Name and address of retail customer.

b) Weight and purity of material provided by customer.

c) Receipt number and date.

d) Value of additional material used in manufacturing and labour charges

Related Post

1% Excise duty (without Cenvat) on jewellery u/h 7113

CA Satbir Singh — Wed, 27 Jul 2016 13:34:59 +0000

Seeks to amend notification No. 12/2012-Central Excise so as to prescribe 1% excise duty (without input and capital goods credit) on parts of articles of jewellery falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986), and to prescribe a criteria for classification of an articles of jewellery or part of articles of jewellery or both as that of a particular precious metal.

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 26/2016 – Central Excise

New Delhi, the 26th July, 2016

G.S.R. (E). – In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2012-Central Excise, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. 163 (E), dated the 17th March, 2012, namely:-

In the said notification,

(A) in the Table, for serial number 199 and the entries relating thereto, the following shall be substituted, namely:-

(1)

(2)

(3)

(4)

(5)

“199

7113

(I) Articles of jewellery(II) Parts of articles of jewellery

(II) Articles of silver jewellery, other than those studded with diamond, ruby, emerald or sapphire

Explanation. – For the purposes of this exemption,-

An article of jewellery or part of article of jewellery or both, produced or manufactured from an alloy (including a sintered mixture and an inter-metallic compound) containing precious metal may be treated as an article of jewellery or part of article of jewellery or both of a precious metal, if any one precious metal constitutes as much as 2% by weight of the article of jewellery or part of article of jewellery or both (excluding the weight of the precious or semi-precious stones, mounted or set), in 1% 1% Nil 16 16 -”; accordance to the following :

(i) an article of jewellery or part of article of jewellery or both, containing 2% or more, by weight, of platinum is to be treated as an article of jewellery or part of article of jewellery or both, of platinum;

(ii) an article of jewellery or part of article of jewellery or both, containing 2% or more, by weight, of gold but not platinum, or less than 2% by weight, of platinum, is to be treated as an article of jewellery or part of article of jewellery or both, of gold ;

(iii) other articles of jewellery or parts of articles of jewellery or both, containing 2% or more, by weight, of silver are to be treated as articles of jewellery or parts of articles of jewellery or both, of silver.

1%1%

Nil

1616

-”;

[F. No. 354/25/2016 –TRU (Pt.-I)]

(Anurag Sehgal)

Under Secretary to the Government of India

Note:- The principal notification No. 12/2012-Central Excise, dated the 17th March, 2012 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 163(E), dated the 17th March, 2012 and last amended vide notification No. 23/2016 -Central Excise, dated the 17th May, 2016 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 525(E), dated the 17th May, 2016.

Excise duty on jewellery -Exemption if jewellery given by Retail customers

CA Satbir Singh — Wed, 27 Jul 2016 13:25:42 +0000

Seeks to partially exempt Central Excise duty on articles of jewellery falling under heading 7113 of the Central Excise Tariff Act, 1985 (5 of 1986) manufactured by:
(a) re-conversion of jewellery given by the retail customer, or
(b) mounting of precious stone given by the retail customer.

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 27/2016 – Central Excise

New Delhi, the 26th of July, 2016

(i) from jewellery provided by a retail customer; or

(ii) by mounting of precious stones provided by a retail customer,

from so much of the excise duty leviable thereon, as is in excess of the duty of excise payable on a value which is sum of the cost of additional materials used by the manufacturer or principal manufacturer, as the case may be, for making such article of jewellery and labour charges charged by the manufacturer or principal manufacturer, as the case may be, from the retail customer.

2. For availing the exemption under this notification, the manufacturer or principal manufacturer, as the case may be, shall maintain a proper record containing the following details, namely:-

(i) name and address of the retail customer;

(ii) weight and purity of the jewellery, weight of precious stone provided by the retail customer;

(iii) receipt number and date;

(iv) issue voucher number and date of sending such jewellery or precious stones to a job worker or to the manufacturing premises of the jeweller himself; and

(v) value addition, including cost of additional materials and labour charges, charged by the jeweller, which shall also be mentioned separately in the invoice issued to the retail customer.

Explanation.-1 – For the purposes of this notification, weight refers to weight in grams for precious metals; and in carats for precious stones.

Explanation.-2 – For the removal of doubts, it is hereby clarified that for the purposes of this notification, the expression “jewellery” shall not include precious metal in any form, other than jewellery provided by a retail customer for the manufacture of articles of jewellery to a manufacturer or principal manufacturer, as the case may be.

[F. No. 354/25/2016 –TRU (Pt.-I)]

(Anurag Sehgal)

Under Secretary to the Government of India

Increase in SSI Exemption & Eligibility limit for articles of jewellery

CA Satbir Singh — Wed, 27 Jul 2016 13:09:56 +0000

Seeks to amend notification No. 8/2003-Central Excise dated 1st March, 2003, so as to increase the SSI Exemption limit and the SSI Eligibility limit for 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).

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 28/2016 – Central Excise

New Delhi, the 26th July, 2016

G.S.R. (E). – In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 8/2003-Central Excise dated the 1st March, 2003, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 138 (E) dated, the 1 st March, 2003, namely :-

In the said notification,-

(a) in the Table, for serial number 3, and the entries relating thereto, the following serial number and entries shall be substituted, namely:-

(1)	(2)	(3)
“3	First clearances of the articles of jewellery or parts of articles of jewellery or both for home consumption, other than articles of silver jewellery but inclusive of articles of silver jewellery studded with diamond, ruby, emerald or sapphire, falling under chapter heading 7113 of the First Schedule upto an aggregate value not exceeding ten crore rupees made on or after the 1st day of April in any financial year, from the whole of the duty of excise specified thereon in the First Schedule :Provided that during the period starting from 1st March, 2016 and ending on 31st March, 2016, the exemption shall apply to the first clearances of the articles of jewellery or parts of articles of jewellery or both for home consumption, other than articles of silver jewellery but inclusive of articles of silver jewellery studded with diamond, ruby, emerald or sapphire, falling under chapter heading 7113 of the First Schedule, up to an aggregate value not exceeding eighty five lakh rupees.	Nil.”;

(b) in paragraph 2,-

(i) in sub-paragraph (iii), for the proviso, the following shall be substituted, namely:-

“Provided that the manufacturer of the articles of jewellery or parts of articles of jewellery or both other than articles of silver jewellery but inclusive of articles of silver jewellery studded with diamond, ruby, emerald or sapphire, falling under chapter heading 7113 of the First Schedule shall not avail the credit of duty on inputs under rule 3 or rule 11 of the said rules, paid on inputs used in the manufacture of these goods cleared for home consumption, the aggregate value of first clearances of which, as calculated in the manner specified in the said Table does not exceed ten crore rupees :

Provided further that nothing contained in this sub-paragraph shall apply to the inputs used in the manufacture of specified goods bearing the brand name or trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 4;”;

(ii) in sub-paragraph (iv), for the proviso, the following shall be substituted, namely:-

“Provided that the manufacturer of the articles of jewellery or parts of articles of jewellery or both other than articles of silver jewellery but inclusive of articles of silver jewellery studded with diamond, ruby, emerald or sapphire, falling under chapter heading 7113 of the First Schedule also does not utilise the credit on capital goods under rule 3 or rule 11 of the said rules, paid on capital goods, for payment of duty, if any, on the aforesaid clearances, the aggregate value of first clearances of which does not exceed ten crore rupees, as calculated in the manner specified in the said Table;”;

(iii)in sub-paragraph (vii), for the proviso, the following shall be substituted, namely:-

“Provided that aggregate value of clearances of all excisable goods for home consumption by a manufacturer of the articles of jewellery or parts of articles of jewellery or both other than articles of silver jewellery but inclusive of articles of silver jewellery studded with diamond, ruby, emerald or sapphire, falling under chapter heading 7113 of the First Schedule, from one or more factory or premises of production or manufacture, or from a factory or premise of production or manufacture by one or more manufacturers, does not exceed rupees fifteen crore in the preceding financial year;”;

(c) in paragraph 3, for the words beginning with “For the purposes of determining”, and ending with “taken into account, namely :-”, the following shall be substituted, namely:-

“For the purposes of determining the first clearances upto an aggregate value not exceeding one hundred and fifty lakh rupees made against serial number 1 or upto an aggregate value not exceeding ten crore rupees made against serial number 3, of the said Table, as the case may be, on or after the 1st day of April in any financial year, the following clearances shall not be taken into account, namely:-”.

[F. No. 354/25/2016 –TRU (Pt.-I)]

(Anurag Sehgal)

Under Secretary to the Government of India

Note:- The principal notification No. 8/2003-Central Excise, dated the 1st March, 2003, was published in the Gazette of India, Extraordinary, vide number G.S.R. 138(E), dated the 1st March, 2012 and was last amended vide notification No. 8/2016-Central Excise, dated the 1st March, 2016, published vide number G.S.R. 225(E), dated the 1st March, 2016.