Govt notifies simplified central excise norms for jewellery trade

The government has issued a new notification which seeks to amend an earlier notification of the central excise so as to prescribe 1 per cent 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 (5 of 1986), and to prescribe a criteria for classification of articles of jewellery or part of articles of jewellery or both as that of a particular precious metal.

The new notification seeks to partially exempt central excise duty on re-conversion of jewellery given by the retail customer, or mounting of precious stone given by the retail customer.

The amended rules also raises  the exemption limit for of articles of jewellery or parts of articles of jewellery or both in case of SSIs from Rs6 crore to Rs10 crore while raising the SSI eligibility limit from Rs12 crore to Rs15 crore.

However, the amended central excise tariff Act excludes handicrafts from the purview of duty exemption.

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) will be excluded from the purview of central excise. For this, 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, will be taken as the tariff value.

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 the cost of additional materials used by the manufacturer or principal manufacturer, as the case may be, for making such articles of jewellery; the labour charges charged by the manufacturer or principal manufacturer, as the case may be, from the retail customer; and the value of precious metal provided by the retail customer will be taken as the tariff value.

The new rules, inter-alia, provide the 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.

According to the amended Central Excise Rules, 2002, the quarterly return will also apply to the manufacturers or principal manufacturers of parts of articles of jewellery, 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, for quarter ending on 31 March 2016, and quarter ending on 30 June 2016, shall be the 10 August 2016.

It also provides for a modified format for quarterly return, ER-8, for return of excisable goods cleared at the central excise duty rate of 1 per cent (including articles of jewellery or parts of articles of jewellery or both, falling under heading 7113) or 2 per cent.

It seeks to exempt a person engaged in the manufacture of articles of jewellery or parts of articles of jewellery or both, from the requirement of submitting plan of the factory premises under simplified registration procedure.

For manufacturer or principal manufacturer of articles of jewellery or parts of articles of jewellery or both, the limit for exemption from central excise registration has been raised to Rs10 crore.

In this year's union budget, finance minister Arun Jaitley had , proposed central excise duty of 1 per cent without input and capital goods tax credit or 12.5 per cent with credit on articles of jewellery falling under heading 7113 of the First Schedule to the Central Excise Tariff 1985.

Subsequent to that, the government had set up a sub-committee of the high level committee, headed by Ashok Lahiri to interact with trade and industry on issues relating to procedure and compliance relating to excise duty of articles of jewellery.

The sub-committee has given its report on 23 June, which has been accepted by the government.