Excise on Jewellery – A Brief Overview

From last 35 days All over the country all jewelers are on Strike against the Excise duty imposed in the Union Budget 2016. Holi, Gudi Padwa, etc. all festival are passed or in upcoming days but still they are on STRIKE and also government also not accepting the demand as the Imposition of excise in line with GST.

The scheme of levy and collection of Central Excise duty on articles of Jewellery is as under:

(a) The levy and collection of Central Excise Duty is on the manufacture of Jewellery (excluding silver Jewellery, not studded with diamonds, ruby, emerald or sapphire).

(b) It is applicable to both branded as well as unbranded Jewellery.

(c) The rate of duty on the Jewellery are as follows: (i) 1% on transaction value [without Cenvat credit on inputs and capital goods. However credit on input services is eligible] or  (ii) 12.5% with Cenvat credit of inputs, input services and capital goods.

(d) The benefit of SSI exemption (exemption based on value of clearance) is available if the value of manufactured goods (on own or through job worker) cleared domestically has not crossed Rs. 12 Crores (all goods manufactured including silver Jewellery) in the financial year 2014-15. The benefit for March 2016 is 50 lakhs.

(e) Similarly if the domestic value of clearance has not crossed 12 (all goods manufactured including silver Jewellery) crores in the financial year 2015-16, for the financial year 2016-17, exemption upto 6 crores of value of clearances can be availed.

(f) The said exemption based on value of clearance is not available if manufacturer affixes the brand name of another person.

(g) For determining the eligibility for availing SSI exemption based on previous financial year as explained above, a certificate from a chartered accountant, based on books of account shall suffice and does not require any verification from the departmental officers’ side.

(h) While computing the above said value of clearances, the value of Exports or the value of traded goods i.e. purchased and sold or the goods manufactured with the brand name of others (on which duty has to be paid) should not be counted.

SOME OTHER IMPORTANT CLARIFICATION

1. Whether the duty is restricted only for the gold Jewellery or it also extends to all articles of gold?

The duty has been imposed in Budget 2016-17 on articles of Jewellery falling under headings 7113. Article of Jewellery as per chapter notes means any small objects of personal adornment (for example, rings, bracelets, necklaces) and also includes articles of personal use of a kind normally carried in the pocket, in the handbag or on the person (e.g. cigar, snuff boxes etc.). The duty is imposed upon Jewellery item only and not on all the items. Hence, duty is not applicable on all articles of gold. As far as other articles of gold it depends upon the nature of goods and many have been exempted. Articles of Articles of goldsmiths’ or silversmiths’ wares of precious metal or of metal clad with precious metal, brand name is liable to duty of 1%;

2. Whether there is any concession for silver Jewellery?

Yes. The excise duty levy would not be applicable to branded or unbranded silver Jewellery, which are fully exempted from excise duty, however if such silver Jewellery is studded with diamonds, ruby, emerald or sapphire then the same shall suffer excise duty irrespective of the fact whether it is branded or not. 23. Whether the change in purity has any impact on dutiability? No. Change in purity of gold i.e. it may be 18K, 22K will not impact the duty liability.

3. From which date the duty of excise is liable to be paid?

For all the clearances from the place of manufacture on or after 1st March 2016, duty is liable to be paid. Excisable goods which were produced on or before 29.2.2016 but lying in stock at the place of manufacture and are not removed as on 29.2.2016 shall attract excise duty upon clearance.

4. What is the taxability of stock as on 29.02.2016

All excisable goods which were produced or manufactured on or before 29.2.2016 but lying in stock at the place of manufactureas on 29.2.2016 are liable to excise duty upon clearance. However if the goods were already cleared from the place of manufacture and are lying in stock in any other place like showroom, warehouse, stocking  place, etc., are not liable for duty as goods were already cleared form the place of manufacture. This is for the reason that point of collection of duty is the point of clearance of goods from the place of manufacture. Since this event would have been already completed in these cases, there cannot be duty liability.

5. Whether any declaration has to be made as to stock as on 29.02.2016?

No. There is no requirement of declaration of any stock to as on 29.02.2016 to be made to department. However it is suggested to have a certification from Chartered Accountant as to stocks lying at different places since duty liability differs depending upon where the stocks were situated as on 29.02.2016.

6. When the excise duty has to be paid?

Excise Duty has to be paid on removal of the goods from the place of manufacture, in case the place of manufacture and sale is one and the same, then in such case excise duty can be paid on sale to customer. In case the place of manufacture and the place of removal are different, then  the excise duty has to be paid on removal of goods from place of manufacture (workshop) to place of sale (showroom). Even though liability arises at the time of removal, account of liability has to be kept and payment has to be made once a month/quarter.

7. What is the periodicity of payment of duty?

Duty needs to be paid on monthly basis on or before 6th of the succeeding month. In case of month of March, duty needs to be paid by 31st March. SSI units are permitted to make payment on quarterly basis.

8. What is the manner of calculating SSI exemption benefit?

SSI exemption calculation could be understood with the help of following example: Presuming domestic clearance of all the goods manufactured for FY 2014-15 is Rs.10Crs. The table hereunder gives some clarity on the subject:

Year	Value of clearance (in Rs.)	Previous clearance Less than Rs. 12 cr	Exemption (In Rs.)	Dutiable (In Rs.)
I (2015 – 2016)	60 Lakhs in march 2016. Entire year – 4crores	Yes	50 Lacs	10 Lacs
II (2016-17)	9 crores	Yes	6 crores	3 crores
III	14 Crores	Yes	6 Crores	8 Crores
IV	3 Crores	No	Nil	3 Crores
V	11 Crores	Yes	6 Crores	5 Crores

For Details Refer :- ICAI BOOK on Central Excise Law and Procedure for Jewellery Industry (Including 105 FAQ’s)