The Finance Bill 2012 has imposed Excise Duty on Branded as well as unbranded Jewellery. Hitherto, only branded jewellery were brought into excise net with effect from 1st March, 2011.
The scheme of levy of excise duty on precious metal jewellery has been revamped. Hitherto excise duty of 1% ad valorem was applicable to precious metal jewellery manufactured or sold under a brand name. The levy would now apply to both branded and unbranded goods (except silver jewellery) at rate of duty of 1%. The important features of the scheme are as under:
- Duty would be chargeable on tariff value which is being prescribed under section 3 of the Central Excise Act.
- Tariff value would be equal to 30% of the “transaction value” declared on the invoice and transaction value shall have the same meaning as assigned to it under section 4 of the Central Excise Act. [S.No. 199 of Notification no.12 /2012-CE dated 17.03.2012 and Notification no 09/2012-CE(N.T.) dated 17.03.2012 refers].
Example:
- Suppose Jewellery is sold to the customer at INR 30,000. Its Tariff Value will become INR 9,000 (30% of 30,000). The Excise Duty applicable thereon will be Rs 92.70 (1% of 9,000 = Rs 90 + E Cess @ 2% on 90 = Rs 1.8 and SHE Cess @ 1% on 90 = Rs 0.9).
- The duty will be paid without availing benefit of cenvat credit. Further, the rate of duty paid on above goods will not be available as a credit to the buyer.
SSI Exemption
- The benefit of SSI exemption would be available to manufacturers of precious metal jewellery and the aggregate value of clearances (both for the purpose of eligibility and exemption) would be computed on the basis of tariff value.
- The SSI Exemption will also be available to the manufacturers manufacturing jewellery, whether branded or unbranded. The manufacturers whose turnover is less than 4 crores in the previous year can claim exemption upto the turnover of 1.5 crores in the current year as per Norification No 8/2003-CE.
- Suitable provisions are being incorporated in notification no.8/2003-CE dated 1st March, 2003 so that for the purpose of determining eligibility of a manufacturer/ factory for SSI exemption for the year 2012-13, the computation of aggregate value of clearances of Rs. 4 crore for the year 2011-12 is made on the basis of the tariff value i.e. taking 30% of the transaction value and not full transaction value.
- It may be noted that the exemption limit for the remaining part of 2011-12 i.e. between 17th March, 2012 and 31st March, 2012 is not being curtailed for manufacturers of unbranded jewellery who would come into the tax net afresh. In other words, eligible manufacturers/ factories would be entitled to exemption for the full threshold limit of Rs.1.50 crore for this period.
- Example: If ‘A Jewellers’ manufacturers unbranded jewellery, then the upto the turnover of INR 1.5 Crore for the period of 17th March, 2012 and 31st March, 2012, excise duty is not required to be paid. For the turnover above 1.5 Crore, the excise duty will be payable.
- The turnover of 1.5 Crores will be computed at tariff values. i.e., if the turnover calculated at 30% of invoice value (assessable value) exceeds INR 1.5 Crores, then only the excise duty is required to be paid.
- However, if the turnover calculated as stated supra exceeds INR 90 lakhs, then intimation is required to be given to be department about the said turnover.
Question:
Is excise duty payable on the stock lying in our factory / unit on 17-3-2012?
Answer:-
The jewellery were ‘excisable goods’ though exempt upto 16-3-2012.If finished products were cleared on 16-3-2012, there is no excise duty liability. However, if such goods are cleared on or after 17-3-2012 from the factory, excise duty will become payable (Duty will not be payable if you are eligible for SSI exemption, as explained supra).
- For manufacturers who are already availing of the SSI exemption during 2011-12 also the computation of the exemption limit would have to be made on the basis of tariff value of clearances effected during the period from 17th March, 2012 to 31st March, 2012 by virtue of Explanation (C)(ii) of notification no.8/2003-CE dated 1.3.2003.
Illustration- If a manufacturer X clears goods of value 1.4 crore till 16th March 2012, and from 17th March to 31st March 2012 manufacturer X clears goods of transaction value 30 lacs, the total value of clearances for SSI exemption in financial year 2011-12 shall be calculated as follows:-
Value of clearances from 1st April 2011 to 16th March 2012=Rs. 1.4 crore
Value of clearances from 17th March to 31st March 2012=Rs. 9 lacs(30% of transaction value 30 lacs)
Total value of clearances financial year 2011-12=Rs. 1.49 crore
Registration is not required to be taken by manufactures artisans or goldsmiths who only manufacture jewellery for others on job-work
- Rule 12AA of the Central Excise Rules has been amended to provide that every person who gets articles of jewellery of heading no.7113 produced or manufactured on job-work shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with the procedural requirements, as if he is the manufacturer.
- In other words, those artisans or goldsmiths who only manufacture jewellery for others on job-work need not obtain registration. The option to the job-worker to register, if he so desires, has been deleted.
- It may kindly be ensured that the implementation of this scheme happens in a smooth, trade-friendly manner and no harassment is caused to assessees.
Exceptions
- Unbranded jewellery is currently exempt. Full exemption from excise duty is being provided to branded silver jewellery.
- It may also be noted that in respect of articles of precious metals, the levy would continue to apply only to those articles that are manufactured or sold under a brand name. [S. No.192 of notification No. 12/2012-CE dated 17.03.12 refers].
- Thus, if the jewellery is manufactured, whether branded or unbranded, the excise is payable on the same. However, if articles are made from precious metals, then the excise will be applicable only if it bears brand name.
- In this regard, it is pertinent to analyse the meaning of the term ‘brand name’.
- It is clarified that the excise duty leviable on precious metal jewellery, manufactured or sold under a brand name, is attracted only on such jewellery on which the trade/brand name or any such mark or symbol or even a number which is cross referred with such trade/brand name ((not being a house mark used by jewellers for identification of jewellery at the time of exchange/resale) is indelibly marked or embossed.
- o If such brand name is not affixed or embossed on the jewellery or article itself but appears on the packing such as the jewellery box or pouch or even on the warranty card or certificate of quality, such goods will not be treated as branded jewellery and thus will not be liable to excise duty. [F.No.354/38/2011 –TRU dated 02-03-2012].
- A chapter note is being inserted in chapter 71 to provide that for the purposes of headings 7113 and 7114, the processes of affixing or embossing trade name or brand name on articles of jewellery or on articles of goldsmiths‟ or silversmiths‟ wares of precious metal or of metal clad with precious metal, shall amount to “manufacture”. [Clause 141 read with the Seventh schedule refers]
- Full exemption from excise duty has been provided to gold coins of purity 99.5% and above and silver coins of purity 99.9% and above when manufactured from gold or silver on which the appropriate duty of customs or excise has been paid. [S. No. 200 of notification No.12/2012-CE dated 17.03.12 refers].
Rates on refined Gold and Silver
- Excise duty on refined gold manufactured starting from the stage of ore, concentrate or dore bars has been increased from 1.5% to 3%. The same rate has been prescribed for refined gold produced from the smelting of copper. [S. No. 189 of notification No.12/2012-CE dated 17.03.12 refers]
- Excise duty is being increased on serially numbered gold bars , other than tola bars and gold coin of purity not below 99.5% manufactured during the process of copper smelting from “2%” to “3%” [S. No. 191 of notification No.12/2012-CE dated 17.03.12 refers].
- Refined silver obtained from the smelting of copper shall henceforth attract excise duty of 4%.
- Excise duty on gold jewellery sold from EOUs into DTA has been increased from 5% to 10%.
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