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

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.

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)

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)

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.

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.

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

Miscellaneous  Job worker cannot opt to pay duty.  SSI exemption for Rs.1.50 Crores per annum. - For the period to 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.

Thank you g. natarajan p. dwarakanath –