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EXCISE LEVY ON JEWELLERY SECTOR

Explore the implications of new excise duties and customs changes on the jewelry sector post-budget announcements. Understand the rates, exemptions, and modifications affecting the industry.

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EXCISE LEVY ON JEWELLERY SECTOR

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  1. EXCISE LEVY ON JEWELLERY SECTOR by g. natarajan & p. dwarakanath swamy associates

  2. Budget blues • Changes in Customs duty Structure. • Extension of 1 % excise duty (without cenvat credit) to unbranded articles of jewellery also. • Optional 5 % excise duty with cenvat credit has also been extended to unbranded jewellery with a rate hike to 6 %. • TCS (IT) on sale of jewellery in a single transaction for more than Rs.2 lakhs.

  3. Customs • CVD on Gold Dore bars increased to 2 %. BCD Nil. • For manufacture of serially numbered gold bars. • (S.No. 318 of 21/2012 Cus) • Basic Customs duty on gold bars bearing S.Nos. enhanced to 4 % • (S.Nos. 321 & 323 of 21/2012 Cus) • Gold in any other form, including tola bars / ornaments– Basic Customs duty - 10 %. CVD 12 %. • SAD of 1 % only for articles of jewellery. • (S.No. 77 & 78 of 21/2012 Cus)

  4. Central Excise • Affixing brand name on articles – deemed as manufacture. • (Clause 141 of the Finance Bill) • Excise duty on serially numbered gold bars – 3 %. No restriction • on cenvat credit. • (S.No. 189 of 12/2012 C.Ex) • 1 % Excise duty extended even to unbranded jewellery, subject to • not availing cenvat credit. If cenvat credit availed, rate would be • 6 %. • (S.No.199 of 18/2012 C.Ex) • Branded articles also to attract 1 % excise duty. • (S.No. 200 of 12/2012 C.Ex)

  5. Central Excise • Unbranded articles, other than jewellery – continue to be • exempted. • (S.No. 192 of 12/2012 C.Ex) • Coins branded (with specific purity) & unbranded – exempted. • (S.Nos. 192 & 200 of 12/2012 C.Ex) • Silver Jewellery exempted.

  6. Value • 30 % of Transaction value declared as tariff value for articles of jewellery. • For branded articles (other than jewellery) – Tariff value not applicable. • Transaction value is relevant. • This will not apply for the jewellery “manufactured from” precious metal or old jewellery provided by the retail customer. • The above restriction will not apply for “exchange” but only for new jewellery “manufactured by using” the old jewellery / precious metal provided.

  7. Illustration: • (a) • Value of new jewellery purchased : Rs.50000 • Value of old jewellery given : Rs.10000 • Net Amount paid : Rs.40000 • Transaction value : Rs.50000 • (Rule 6 of Valuation Rules) • Tariff Value : 30 % of Rs.50000, • i.e. Rs.15000. • Duty @ 1 % : Rs.150. • (b) • Old jewellery worth Rs.20000 given for conversion into new jewellery. Rs.10000 to be paid for conversion plus additional gold used. Duty to be paid @ 1 % / 6 % on Rs. 10000.

  8. Miscellaneous • Job worker cannot opt to pay duty. • SSI exemption for Rs.1.50 Crores per annum. • - For the period 17.03.2012 to 31.03.2012 - exemption upto • Rs. 1.5 Crores. • - Subject to Rs.4.00 Crores turnover during preceding financial • year. • - “turnover” to be computed with reference to Tariff value or • Transaction value as the case may be.

  9. Thank you g. natarajan - 93400 54477 p. dwarakanath – 93963 31929 mail@swamyassociates.com

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