Committee’s recommendations on “issues relating levy of excise duty on Jewellery” accepted by Govt.

Government accepts recommendations of Sub Committee on issues relating levy of excise duty on Articles of Jewellery

Government accepts recommendations of Committee on issues relating excise duty compliance procedure, maintenance of records and other relevant administrative issues reg. levy of excise duty on Jewellers. Also, the Government has decided to increase the SSI Eligibility limit and SSI Exemption limit for manufacturers of articles of jewellery or parts of articles of jewellery or both.

In this year’s Budget, a nominal excise duty of 1% [without input and capital goods credit] or 12.5% [with input tax credit] has been imposed on articles of jewellery with simplified procedures.

In this connection, the Central Government had constituted a Sub-Committee of the High Level Committee to interact with Trade & Industry on issues relating to compliance procedure for the excise duty, including records to be maintained and any other administrative issues that may be relevant.

Since then, the said Sub-Committee has submitted its report on 23.06.2016, and interalia recommended the following:

a) no requirement to submit any ground plan of the premises for taking Excise registration;

b) excise duty on jewellery is payable at first sale invoice value;

c) in case the invoice does not show excise duty separately, the value for VAT will be treated as cum duty value [value + excise duty];

d) no excise duty may be payable on the sale of traded goods;

e) 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 cartage basis;

f) 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;

g) 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 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;

h) 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 may not attract excise duty;

i) excise duty of 1% without input and capital goods tax credit or 12.5% with credit may apply to parts of articles of jewellery, made of platinum, gold and silver;

j) 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:

i) Silver studded jewellery;

ii) Gold or platinum jewellery studded with diamonds; and

iii) Other gold or platinum jewellery [that is other than gold or platinum jewellery studded with diamonds];

k) no excise audit may 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].

l) no visit, search and seizure at job workers premises;

m) 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

n) summons may be issued only with the approval of Commissioner;

All these recommendations have been accepted by the Government.

In this context, independent of Committee’s recommendations, the Government has also decided to increase for manufacturers of articles of jewellery or parts of articles of jewellery or both:

a) the SSI Eligibility limit from fromRs. 12 Crore to Rs. 15 Crore;

b) the SSI Exemption limit from Rs. 6 Crore to Rs. 10 Crore in a financial year and Rs. 85 lakh for the Month of March, 2016. PIB

Constitution of Sub-committee of High Level Committee dt.21st March 2016

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 subcommittee 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.

CBEC Circular No. 1021/9/2016-CX  dt 21st March 2016

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