Simplified Norms for Excise Duty on Jewellery Sector notified by CBEC

Simplified Norms for Excise Duty on Jewellery Sector Notified by CBEC to implement Recommendations of Sub-Committee on Levy of Excise Duty for Articles of Jewellery

Central Excise duty has been imposed (1% without input credit or 12.5% with credit) on certain articles of jewellery, falling under heading 7113 of the First Schedule to the Central Excise Tariff 1985, in the Budget 2016-17. This resulted into conflicts with trade and industry on the implementation & procedural issues relating to levy of excise duty on articles of jewellery. Therefore, it was decided to constitute a Sub-Committee of the High Level Committee to Interact with Trade & Industry on procedures & compliances applicable to Jewellers under excise laws, chaired by Dr. Ashok Lahiri, which has recently submitted it’s recommendations after consultations with the stakeholders in due course.

Accordingly, the CBEC has simplified norms for Excise Duty on Jewellery Sector and has issued 18 Nos. Notifications / Circulars (dt. 26 July, 2016)  for requisite Guidelines, Clarifications, Procedures, etc. relating to levy of excise duty on articles of jewellery for implementation of recommendations of the Sub Committee on Jewellery headed by Dr. Lahiri, as under:

A. Excise Notifications issued by CBEC reg. Levy of Excise Duty on Articles of Jewellery for implementation as per recommendations of Sub committee

i) Seeks to amend notification No. 12/2012-Central Excise dt. 17th March, 2012, 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, 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:

CBEC Notification No. 26/2016 Central Excise dt 26 July, 2016

ii) Seeks to partially exempt articles of jewellery manufactured

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

(b) 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:

CBEC Notification No. 27/2016 Central Excise dt 26 July, 2016

iii)  Seeks to amend notification No. 8/2003-Central Excise dt. 1 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;

(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:

CBEC Notification No. 28/2016 Central Excise dt 26 July, 2016

iv) Seeks to amend notification No. 17/2011-Central Excise, dt. 1 March, 2011 so as to exclude handicrafts falling under heading 7113 of the Central Excise Tariff Act, 1985, from the purview of excise duty exemption for “handicrafts”:

CBEC Notification No. 29/2016 Central Excise dt 26 July, 2016

v) 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

(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

CBEC Notification No. 33/2016 Central Excise (NT) dt 26 July, 2016

vi) 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. 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:

CBEC Notification No. 34/2016 Central Excise (NT) dt 26 July, 2016

vii) 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, 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:

CBEC Notification No. 35/2016 Central Excise (NT) dt 26 July, 2016

viii) 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, 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

CBEC Notification No. 36/2016 Central Excise (NT) dt 26 July, 2016

ix) 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%:

CBEC Notification No. 37/2016 Central Excise (NT) dt 26 July, 2016

x) Seeks to amend notification No. 35/2001-Central Excise (N.T.) so as to:

a) 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 may get himself registered by 31st day of July, 2016;

b) 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 from the requirement to submit plan of the factory premises under simplified registration procedure.

CBEC Notification No. 38/2016 Central Excise (NT) dt 26 July, 2016

xi) Seeks to amend notification No. 17/2006-Central Excise (N.T) dt. 1 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 from filing of annual return:

CBEC Notification No. 39/2016 Central Excise (NT) dt 26 July, 2016

xii) 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 from taking central excise registration upto the full exemption limit, which is being increased to Rs. 10 Crore.

CBEC Notification No. 40/2016 Central Excise (NT) dt 26 July, 2016

B. Excise Circulars issued by CBEC reg. Levy of Excise Duty on Articles of Jewellery for implementation as per recommendations of Sub committee

i) 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 dt. 1 March 2003 in respect manufacturer or principal manufacturer of articles of jewellery or parts of articles of jewellery or both:

CBEC Circular No. 1040/28/2016 CX dt 26 July, 2016

ii) Guidelines for Excise Audit of Manufacturers / Principal Manufacturers of articles of jewellery or parts of articles of jewellery:

CBEC Circular No. 1041/20/2016 CX dt 26 July, 2016

iii) Export related procedural simplifications – excise duty on articles of jewellery falling under heading 7113:

CBEC Circular No. 1042/30/2016 CX dt 26 July, 2016

iv) General procedures regarding excise duty on articles of jewellery or parts of articles of jewellery or both falling under heading 7113:

CBEC Circular No. 1043/31/2016 CX dt 26 July, 2016

v) 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-

CBEC Circular No. 1044/32/2016 CX dt 26 July, 2016

vi) Taxability of stock on 29 Feb. 2016- Excise duty imposition on articles of jewellery in the Budget 2016-17:

CBEC Circular No. 1045/33/2016 CX dt 26 July, 2016

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