Central Excise on Jewellery

Excise Duty on

Jewellery

-by CA Pavan Kumar R S

March 7, 2016

What is Central Excise?

What is Manufacture?

Who is a Manufacturer?

Excise on Jewellery

Rates of Duty

SSI Exemption

Registration

INDEX

Compliances

Powers of Officer

Transitional Provisions

Clarifications

INDEX

What is Central Excise

What is Central Excise

The Central Excise Act, 1944 has been enacted to levy excise duty i.e duty on

“manufacture” of notified goods in India.

The Central Tariff Act, 1975 lists the goods on which excise duty is applicable.

To summarise, following are the essentials which attract Excise Duty:

There must be Manufacture;

Manufacture must be in India;

The manufacture must result into goods;

The resultant goods must be notified.

Articles of Jewellery is notified in Chapter 7113 of the Central Excise Tariff Act.

By CA Pavan Kumar R S 5

What is Manufacture

What is Manufacture

In simple terms, “Manufacture” means any process:

Which brings any goods into existence; or

Which changes the character, name and use of any goods; or

Which results into commercially different commodity; or

And includes such processes which are deemed as “Manufacture”.

The activity of carrying out repairs would amount to Manufacture in case if the

repaired goods have a distinct character, use and identity after the activity of repair.

Manufacturing activity is a process, but it is not necessary that all processes result

into a manufacture.


Who is a Manufacturer

Who is a Manufacturer

Any person who is engaged in “Manufacture” is a “Manufacturer” and also

includes a person who is deemed to be a “Manufacturer”

Deemed manufacturer in case of Jewellery:

Under the Central Excise Laws any person who gets articles falling under Chapter

7113 or 7114 manufactured on Job Work basis shall deemed to be “Manufacturer”.

The above shall not apply to persons who are 100% EOU or SEZ Unit.


Excise on Jewellery

Excise on Jewellery

Chapter 7113 of Central Excise Tariff Act covers the following:

Particulars HSN

Reference Description under Central Excise Tariff

Articles of

Jewellery and

parts thereof, of

precious metal or

of metal clad with

precious metal.

7113 11 -- Of silver, whether or not plated or clad with other precious metal

7113 11 10 --- Jewellery with filigree work

7113 11 20 --- Jewellery studded with gems

7113 11 30 --- Other articles of Jewellery

7113 11 90 --- Parts

7113 19 -- Of other precious metal, whether or not plated or clad with precious metal

7113 19 10 --- Of gold or un-studded

7113 19 20 ---Of gold, set with pearls.

7113 19 30 ---Of gold set with diamonds

7113 19 40 ---Of gold, set with other precious and semi-precious stones

7113 19 50 ---Of platinum, un-studded

7113 19 60 ---Parts

7113 19 90 ---Others

7113 20 00 - Of base metal clad with precious metal


Excise on Jewellery

The Notification granting exemption from payment of Excise on Jewellery is

withdrawn with effect from March 01, 2016.

The following Jewellery Articles attract excise duty:

Articles of Jewellery made of Precious Metals or Metal Clad with Precious

Metals;

Articles of Silver Jewellery studded with precious stones;

Parts of above.

Articles of Jewellery covers following:

Small Objects of Personal Adornment. (Eg: Rings, Bracelet, Necklace, Brooches,

Ear-rings, Watch Chain, Fobs, Pendants, Tie-pins, Cuff-Links, Dress-studs,

Religious or Other Medals);

Articles for personal use normally carried in pocket, handbag or on the person

(Eg: Cigar/Cigarette Cases, Snuff Boxes, Pill Boxes, Powder Boxes, Chain Purses

or Prayer Beads).


Excise on Jewellery

Precious Metals covers following:

Gold

Silver

Platinum (including iridium, osmium, palladium, rhodium & ruthenium)

Alloys of above containing 2% or more, by weight, of above.

(Exception: Alloy of less than 2% of platinum, by weight, will still be

considered as alloy of Gold – hence precious metal).


Rates of Duty

Rates of Duty

A Manufacturer of Jewellery has two options:

To pay Excise Duty at 12.5% under normal provision with CENVAT eligibility.

To pay Excise Duty at 1% subject to the following conditions:

If the said goods are manufactured from inputs or capital goods on which

appropriate Basic Excise Duty or appropriate Countervailing Duty has been

paid;

And no credit of such Basic Excise Duty or Countervailing Duty on inputs or

capital goods has been taken by manufacturer of such goods (and not the

buyer of such goods) under CENVAT Credit Rules, 2004.

Explanation Inserted: For the purposes of this condition, appropriate Basic

Excise Duty or Countervailing Duty includes NIL or Concessional Duty,

whether or not read with any relevant exemption notification for the time

being in force.


SSI Exemption

SSI Exemption

A manufacturer of Jewellery Articles is eligible for availing exemption under

Notification 08/2003 – CE as a Small Scale Industry (“SSI”) as described below:

A manufacturer is exempt from payment of excise if the value of first clearances

does not exceed Rs. 6 Crore in current Financial Year;

A manufacturer is eligible for above stated exemption provided his clearances in

the previous Financial Year had not exceeded Rs. 12 Crores;

The above turnover of clearances has to certified by a Chartered Accountant;

The above exemption is an option given and hence a manufacturer has an option

not avail SSI exemption, provided the said option is exercised throughout FY and

the jurisdictional excise officers are duly informed.


SSI Exemption

Some of the conditions for availing the Exemption are as follows:

Cannot avail the CENVAT Credit on inputs used for clearance of goods upto a value

of Rs. 6 Crores.

Cannot utilize the CENVAT Credit of capital goods for clearances of goods upto a

value of Rs. 6 Crores.

Exemption not available for clearances made under other’s brand name or trade

name, subject to certain exceptions.

In case of multiple factories of same manufacturer, the limit of turnover shall be

aggregate of clearances under all factories and not for each factory separately.

In case of multiple manufacturers in same factory, the limit of turnover shall be

aggregate of clearances from the said factory and not for each manufacturer

separately.


SSI Exemption

The clearances of Rs. 6 Crore shall not include the following:

Clearances exempt from whole of ED (other than value or quantity based clearance)

or clearances on which no excise duty is payable for any other reason.

Clearances bearing trade or brand name on which SSI exemption is not available.

Clearances of specified goods which are used as inputs for further manufacturing

of specified goods.


SSI Exemption

The clearances of Rs. 12 Crore shall not include the following:

Goods cleared to SEZ, STPI, FTZ, 100% EoU, EHTP, UNO or any international

organization without payment of duty.

Clearances bearing trade or brand name on which SSI exemption is not available.

Clearances of specified goods which are used as inputs for further manufacturing

of specified goods.

Clearances of goods under Job Work basis.


SSI Exemption

Case 1

Sl.

No. Particulars

FY 2015-16

(First Year) FY 2016-17 FY 2017-18

1 Turnover Rs. 13 Crore Rs. 8 Crore Rs. 10 Crore

2 Exemption under SSI Notification Transition Provisions No Exemption Upto Rs. 6 Crore

Sl.

No. Particulars

FY 2015-16

(First Year) FY 2016-17 FY 2017-18

1 Turnover Rs. 11 Crore Rs. 13 Crore Rs. 7 Crore

2 Exemption under SSI Notification Transition Provisions Upto Rs. 6 Crore No Exemption

Case 2


Registration

Registration

Simplified procedure notified for obtaining registration for Jewellers.

An option for obtaining Centralized Registration of factory or premises where

centralized accounting, billing and record keeping is kept is available.

The manufacturer availing the above option shall give details of all premises from

where such specified goods are removed for domestic clearances.

However, the details with regard to the Job Worker’s premises would not be

required to be included for the above purpose.


Compliances

Compliances

Maintenance of Records

As per the Circular issued – for a Jewellery manufacturer, documents and records

maintained for the purpose of VAT or Bureau of Indian Standards shall hold good

for Central Excise purpose.

However, some of the documents / records prescribed generally for all

manufacturers are as follows::

The Manufacturer would be required to maintain details with regard to goods

purchased, manufactured and removed during the month/quarter.

Details with regard to daily stock account can be maintained in any format for

the purpose of Central Excise Laws.

Removal of goods shall be required to be done under the cover of an Excise

Invoice which are serially numbered.

Since the levy is based on self-assessment, the Central Excise Officers are not

required to visit the premises of the Jewellery Manufacturers in the normal course.

(As per Circular)


Compliances

Filing of Returns-For Assesses paying duty @ 1%

Return for assesses availing the option of paying 1% Excise Duty to be filed on a

quarterly basis within 10 days from the date of closure of a quarter.

The details to be disclosed in the returns are as follows:

Description of goods manufactured during the quarter;

Opening Balance & Closing of goods as on the first day & last day of the

quarter;

Quantity of goods Manufactured during the relevant quarter;

Quantity of goods cleared during the relevant quarter;

Value of Goods cleared during the relevant quarter;

The amount of Excise Duty payable and details with regard to payment of

Excise Duty during the relevant quarter.


Compliances

Filing of Returns-For Assesses paying duty @ 12.5%

Assesses not availing the option of paying Excise Duty @ 1% would be required to

file Excise Returns on a monthly basis within 10 days from the date of closure of the

particular month.

The details with regard to CENVAT Credit availed and utilsed shall be required to be

disclosed in the monthly returns filed by the assesse.

Payment of Excise Duty

The amount of Excise Duty would be required to be remitted on a monthly basis.

However, in case of assesses making payment of Excise Duty inspite of being

eligible for exemption under SSI Notification, may pay the Excise Duty on a

quarterly basis.


Powers of Officer

Powers of Officer

The Central Excise Officer shall have the rights to confiscate the goods for non-

compliance with the provisions of Central Excise Laws.

The Central Excise Officer with the approval of the proper officer shall have the

powers to search & seize the premises of a manufacturer.

The Central Excise Officers have power to arrest the manufacturer in case of non-

payment of Excise Duty exceeding Rs.50lakh.

The Central Excise Officers have powers to summon any other person to give

evidence or produce documents in connection with proceedings of the

manufacturer.

The Central Excise Officer shall have the rights to direct the manufacturer to get

their records audited by a Chartered Accountant/ Cost Accountant appointed by

him.



The levy of excise duty on Jewellery Articles has been made effective from March

01, 2016 for which the following transition provisions will apply:

The SSI Exemption can be availed for the month of March 2016, upto

clearances of Rs. 50 Lakhs provided the clearances in previous FY has not

exceeded Rs. 12 Crores.

The manufacturer can take CENVAT Credit of inputs, capital goods in stock as

on February 29, 2016, if eligible.

The manufacturer can take CENVAT Credit of inputs, capital goods, input

services used in the production of final goods lying in stock as on February

29, 2016, if eligible.

The above stock of goods is not required to be declared with Central Excise

officers for availing CENVAT Credit.


This material and the information contained herein has been prepared by ValuFocus Corporate Services Private Limited (ValuFocus) is intended for its clients to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. Copying and sharing of the material without prior permission is restricted.

Address: #43/2, | Subbarama Chetty Road | Basavanagudi | Bangalore | Karnataka | INDIA – 560 004

Office Board: +91 80 2661 2944 / 945

Mail: [email protected]

Central Excise on Jewellery

Business

Transcript of Central Excise on Jewellery