CBEC Clarifications/ Salient Features of Excise Duty Imposed on Jewellery in Budget 2016-17
a) CBEC Clarification dt. 18th March 2016
1. In this year’s Budget, a nominal excise duty of 1% [without input tax credit] and 12.5% [with input tax credit] has been imposed on articles of jewellery with simplified procedures. Salient features of the simplified procedures for this levy have been explained vide press release issued by the Government on 4th of March, 2016.
2. In this connection, on 17th of March, 2016, a number of representatives of jewellery industry met Secretary (Revenue) and Chairman (Central Board of Excise & Customs) to discuss the concerns regarding imposition of this levy.
3. During the meeting, the aforesaid representatives inter-alia raised the following issues:
a) Re-imposition of levy will bring back regime of erstwhile Gold control Act leading to harassment of Jewellers, especially artisans and small goldsmiths.
b) This will also result in visits of Inspectors to the Jewellers thereby bringing back the days of Inspector Raj.
c) Who has to take excise registration and file return? d) What documents are to be maintained for excise purposes?
4. The representatives of industry also requested for increase in exemption limit of Rs. 6 Crore in a year to Rs. 10 Crore, and urged for an early consideration of the same.
5. Regarding concerns relating to procedures and compliance to the levy, the representatives of industry were informed that all these issues have already been clarified vide Chairman’s D.O. letter dated 3rd March, 2016 to field formations and the Press release dated 4th March, 2016, copies of which were also provided to them. Further, in the meeting, the following was clarified:
a) In case of jewellery manufactured on job work basis, the liability to take registration, pay duty and to file return is on the principal manufacturer and not on the job worker.
b) Further, exemption from excise duty up to the clearance limit of Rs. 6 Crore is available to a jewellery manufacturer if his aggregate value of domestic clearances is less than Rs. 12 Crore in the preceding financial year.
c) Artisans and job-workers are not covered within the ambit of this duty and thus they are not required to take registration, pay duty, file returns and maintain any books of account.
d) A jewellery manufacturer having turnover less than Rs. 12 Crore during the preceding financial year and less than Rs. 6 Crore in the current financial year is not required to take registration and file return.
e) Application for excise registration as well as returns can be filled online.
f) Directions have been issued to the field formations to provide hassle free registration within two working days. There will be no post registration physical verification of the jeweller’s premises.
g) There is no requirement of declaring pre-budget stocks. Directions have also been issued barring any visits to the jeweller’s premises.
h) Jeweller’s private records or his records for State VAT or for Bureau of Indian Standards (in the case of hallmarked jewellery) would be accepted for all Central Excise purposes.
b) CBEC Clarification dt. 4th March 2016
Budget 206-17 has imposed a nominal excise duty of 1% [without input tax credit] and 12.5% [with input tax credit] on articles of jewellery. Even for this nominal 1% excise duty, manufacturers are allowed to take credit of input services, which can be utilised for payment of duty on jewellery.
Some doubts have been expressed by the trade and industry regarding this levy. However, for clarifications, the salient features of the said levy are as under:
i) Easy compliance with provision for on line application for registration, payment of excise duty and filing of returns, with zero interface with the departmental officers.
ii) The central excise officers have been directed not to visit the premises of Jewellery manufacturers.
iii) Articles of silver jewellery [other than those studded with diamonds, ruby, emerald or sapphire] are exempt from this duty.
iv) An artisan or goldsmith who only manufactures jewellery on job-work basis is not required to register with the Central Excise, pay duty and file returns, as all these obligations will be on the principal manufacturers [Rule 12AA of the Central Excise Rules, 2002].
v) There is a substantially high Small Scale Industries excise duty exemption limit of Rs. 6 crore in a year [as against normal SSI exemption limit of Rs. 1.5 crore] along with a higher eligibility limit of Rs. 12 crore [as against normal SSI eligibility limit of Rs. 4 crore].
vi) Thus, only if the turnover of a jeweler during preceding financial year was more than Rs. 12 crore, he will be liable to pay the excise duty. Jewelers having turnover below Rs. 12 crore during preceding financial year will be eligible for exemption unto Rs. 6 crore during next financial year. Such small jewelers will be eligible for exemptions upto Rs. 50 lakh for the month of March, 2016.
vii) For determination of eligibility for the SSI exemption for the month of March, 2016 or financial year 2016-17, a certificate from a Chartered Accountant, based on the books of accounts for 2014-15 and 2015-16 respectively, would suffice.
viii) Further, facility of Optional Centralized Registration has also been provided. Thus, there is no need for a jewellery manufacturer to take separate registrations for all his premises.
ix) Field formations have been directed to grant hassle free registrations, within two working days of submission of the registration application. Further, there will be no post registration physical verification of the premises [online registration – https://www.aces.gov.in/].
x) Jeweler’s private records or records for State VAT or records for Bureau of Indian Standards (in the case of hallmarked jewellery) will be accepted for all Central Excise purposes. Also, there is no requirement to file a stock declaration to the jurisdictional central excise authorities.
xi) Excise duty is to be paid on monthly basis and not on each clearance, with first installment of duty payment for the month of March, 2016 to be paid by 31st March for March, 2016.
xii) A simplified quarterly return has also been prescribed, for duty paying jewelers [ER-8].
xiii) Moreover, simplified export procedure is available for exempted units [Part III of chapter 7 of CBEC’s Central Excise Manual].