EXCISE LEVY ON JEWELLERY SECTOR

by g. natarajan & p. dwarakanathswamy 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.50000Value of old jewellery given : Rs.10000Net Amount paid : Rs.40000Transaction 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.

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.

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