EXCISE DUTY ON ARTICLES OF JEWELLERY Impact Analysis and Procedures to be followed
Excise duty on following Jewellery w.e.f. 1 st March 2016 Gold Jewellery studded with pearls, diamonds, other precious / semi-precious stones falling under ITCHS 7113 19 Gold Jewellery unstudded falling under ITCHS 7113 1910 Platinum Jewellery unstudded falling under ITCHS 7113 1950 Silver Jewellery those studded with diamond, ruby, emerald or sapphire falling under ITCHS 7113 11. Jewellery of other base metals falling under ITCHS 7113 2000 Parts of above falling under ITCHS 7113 1960.
Option available to Manufacturer.. Option 1 : Pay Excise duty @ 1% subject to condition. Option 2 : Pay Excise duty @ 12.5% (Tariff Rate)
Condition for duty @ 1% Non availment of Cenvat Credit on, Capital Goods (as defined under Cenvat Credit Rules, 2004) Inputs (as defined under Cenvat Credit Rules, 2004) However Cenvat Credit of Service Tax paid on input services can be availed by the manufacturer.
Comments Duty Rate @ 12.5% This option is good only in cases where the value addition is less than 10% of the inputs and all the inputs are purchased by full rate of duty i.e. 12.5% Central Excise duty. In other words, even if one person in the chain charges 1% then it will not be feasible to opt for 12.5% option.
SSI Exemption Eligibility criteria for claiming SSI Exemption Previous year turnover not more than 12 Cr. Certificate from Chartered Accountant to be submitted for specifying turnover of the year 2014-15 for claiming exemption for the month for March 2016. No duty on clearances upto 6 Cr from FY 2016-17. For March 2016, the eligible turnover for exemption is 50 Lacs. Regular Excise duty @ 1% or 12.5% as the case may be for turnover in excess of 6 Cr / 50 Lacs (for March 16). Notification 8/2003-CE as amended time to time.
Valuation of Goods Duty payable on Transaction Value of the goods if sold from manufactured goods. Duty needs to be paid based on clearances from the factory and not sales. Valuation at the time and place of removal is important. In case transaction value not available then Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 will be applicable.
Procedural Requirements Location wise Central Excise Registration needs to be obtained. Option of Centralized Registration subject to centralized billing / accounting system. In case turnover within SSI Limit no requirement of registration. However intimation needs to be given in prescribed format after crossing turnover of 90 Lacs. (There is no change in this turnover for Jewellary Units which is required to be amended) Preparation of Excise Invoice under Rule 11 of the Central Excise Rules, 2002.
Procedural Requirements Payment of Duty by 6 th of the following month for non-ssi Units 6 th of the following month of the quarter for SSI units 31 st March for duty payment for month of March or for the quarter Jan to March. Quarterly return for all units in Form ER-8. ER-8 do not provide for reporting of Cenvat Credit and it s utilization.
Issues faced by Jewellery Industry at large Manufacturing through Job-worker Sales to related parties and its valuation. Fluctuation in the prices leading to complication into valuation of goods. - Generally prices are fixed on Gold purchased and sales price + making charges). It varies day to day and time to time. Therefore fixing the valuation at different branches / shops and maintaining its records will be more critical. Valuation at the time of clearance from the manufacturing location. Manufacture and sales goods other than Jewellery and its related records leading to reversal of Cenvat Credit under Rule 6.
Issues faced by Jewellery Industry at large Impact on cash flow. Billing Pattern and different schemes a) New jewellery as against purchase of old Jewellery b) New design, repairs & modification of old Jewellery done after melting c) Schemes of discount in making charges Audit and Assessment by the Central Excise Authority.
HOW BIZSOL CAN ASSIST YOU? Strategizing the move from tax free regime to taxable regime in best possible way. Transaction structuring for better and hassle free tax compliances. Assistance in Valuation of goods and transfer of goods from one location to another. Reliable partner to you for Compliances under Central Excise Act & Rules made thereunder. Assistance in representation to Central Excise Department.
Bizsolindia Services Private Limited Contact : 020-40702000 / 01 corporate@bizsolindia.com Visit us @ www.bizsolindia.com