EXCISE LEVY ON JEWELLERY SECTOR by g natarajan

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

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

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

Central Excise Ø Affixing brand name on articles – deemed as manufacture. (Clause 141 of the Finance Bill) Ø Excise duty on serially numbered gold bars – 3 %. No restriction on cenvat credit. (S. No. 189 of 12/2012 C. Ex) Ø 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) Ø Branded articles also to attract 1 % excise duty. (S. No. 200 of 12/2012 C. Ex)

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

Value Ø 30 % of Transaction value declared as tariff value for articles of jewellery. Ø For branded articles (other than jewellery) – Tariff value not applicable. Transaction value is relevant. Ø This will not apply for the jewellery “manufactured from” precious metal or old jewellery provided by the retail customer. Ø 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 Value of old jewellery given Net Amount paid Transaction value (Rule 6 of Valuation Rules) Tariff Value Duty @ 1 % : Rs. 50000 : Rs. 10000 : Rs. 40000 : Rs. 50000 : 30 % of Rs. 50000, i. e. Rs. 15000. : 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 Ø Job worker cannot opt to pay duty. Ø 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.

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