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Excise duty is charged only if all the following four conditions are satisfied: <ol class="disc"> <li>Article must to be goods which are movable and marketable.</li> <li>Articles name should be included In the Central Excise Tariff Act, 1985 (CETA).</li> <li>Must be produced or manufactured (Where manufactured means a new and identifiable product known in the market must emerge).</li> <li>Manufacture or production must be in India.</li> </ol> </li> <li>Goods manufactured in SEZ units are specifically excluded from the levy of excise duty.</li> </ol> </li> <li><strong>What is manufacturing</strong> <ol> <li>Excise duty is a levy on ‘manufacture of goods’ and not on ‘goods’. Therefore the trigger point for levy of excise duty is manufacturing or production of goods. It is not levied upon the sales or proceeds of sales of goods i.e. trading of goods but on the manufacture of goods.</li> <li>The word manufacturing for excise purpose means a process involving the conversion of an input into a completely different output.</li> <li>Trading and other activities do not amount to manufacturing of goods. Therefore, excise duty is not levied in cases other than manufacturing.</li> </ol> </li> <li><strong>Rate of excise duty</strong> <ol> <li>There is no change in the general rate of excise duty i.e. 12.5%. The following table highlights the changes in the rate of Excise Duty in case of various excisable goods: <table> <thead> <tr> <th>Item</th> <th>Old rate</th> <th>New rate</th> </tr> </thead> <tbody> <tr> <td colspan="3"><strong>Jewellery</strong></td> </tr> <tr> <td>Articles of Jewellery [excluding silver jewellery, other than those studded with diamonds, ruby, emerald or sapphire]</td> <td>Nil</td> <td>Without CENVAT Credit – 1%<br> With CENVAT Credit – 12.5%</td> </tr> <tr> <td>Refined gold bars manufactured from gold dore bar, silver dore bar, gold ore or concentrate, silver ore or concentrate, copper ore or concentrate</td> <td>9%</td> <td>9.5%</td> </tr> <tr> <td>Refined silver manufactured from silver ore or concentrate, silver dore bar, or gold dore bar.</td> <td>8%</td> <td>8.5%</td> </tr> <tr> <td>Precious and semi- precious stones, synthetic stones and pearls</td> <td>NIL</td> <td>NIL</td> </tr> <tr> <td>Articles of goldsmiths or silversmiths wares of precious metal or of metal clad with precious metal, not bearing a brand name</td> <td>NIL</td> <td>NIL</td> </tr> </tbody> </table> </li> </ol> </li> <li><strong>Valuation procedure</strong> <ol> <li>The Valuation in excise law is generally as per Section 4 (1) (a) of the Central Excise Act, 1944, the Excise duty is to be paid on transaction value. If the transaction/assessable value cannot be determined u/s 4 (1) (a) then the same is to be determined as per Section 4 (1) (b) read with Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.</li> <li>The Valuation of Jewellery as per Finance Bill, 2016 is 1% (without Cenvat credit) & 12.5% (with Cenvat credit) on the transaction value of the articles of Jewellery.</li> <li>It is a normal practice in the industry of Jewellery to transfer their gems & jewels to the showroom from where the final customer buys the products. In such case where the goods are sent to showroom, the showroom shall be treated as Place of removal and required to be registered under excise law. The goods so removed from factory premises to such showroom are liable for payment of excise duty on the normal transaction value prevailing at or about the same the time at showroom as on the date of removal from factory.</li> <li>The value prevailing on the same date (i.e. the date on which goods are removed from factory) shall be treated as the transaction value in terms of Rule 7 of the Central Excise Valuation (determination of price of excisable goods) Rules, 2000.</li> <li>In some cases an artisan or goldsmith only manufactures jewellery on job-work basis. In such cases, an artisan or goldsmith is not required to register with the Central Excise, or to pay duty or to file returns, as all these obligations will be on the principal manufacturers i.e. the Jeweler’s on whose behalf the Jewellery is been made.</li> </ol> </li> <li><strong>Credit eligibility</strong> <ol> <li>The manufacturer paying excise duty at rate 1% on goods so removed from factory or warehouse will not be eligible for any Cenvat credit.</li> <li>However, if manufacturer is paying excise duty at rate 12.5% on goods so removed from factory or warehouse, then the Cenvat credit is eligible.</li> <li>In cases like, goods removed on approval basis or for exhibition in India, there might be a case where the goods are return back in the factory. In such cases, the manufacturer paying excise duty at rate 1% will not be eligible to claim Cenvat credit on such goods return. However, while removing such returned goods if no processing is done on the said goods then the same can be without paying duty at rate 1% since once already excise duty is been paid on such goods and no Cenvat credit was taken on goods so returned.</li> <li>In case manufacturer paying excise duty at rate 12.5% and received goods returned on account of non-approval or non- sale in exhibition, then such manufacturer can claim Cenvat credit on such goods received as per Rule 16 of Central Excise Rules, 2002. While removing the said returned goods, if no process amounting to manufacturing is done then the said goods will be removed on the same excise duty as was claim earlier when good where returned, or else the applicable excise duty on assessable value as on that date will be applied.</li> </ol> </li> <li><strong>Exemption</strong> <ol> <li><strong>For the month of March, 2016</strong> <table> <thead> <tr> <th>Turnover in 2014-15</th> <th>Turnover in March, 2016</th> <th>Excise duty implication</th> </tr> </thead> <tbody> <tr> <td>At or Below 12 crores</td> <td>At or below 50 lakhs</td> <td>Exempt</td> </tr> <tr> <td>At or Below 12 crores</td> <td>Above 50 lakhs</td> <td>Amount above 50 lakhs will be liable for excise duty</td> </tr> <tr> <td>Above 12 crores</td> <td>Any amount</td> <td>Full amount liable to excise duty.</td> </tr> </tbody> </table> </li> <li><strong>For the Financial Year 2016-17</strong> <table> <thead> <tr> <th>Turnover in 2015-16</th> <th>Turnover in 2016-17</th> <th>Excise duty implication</th> </tr> </thead> <tbody> <tr> <td>At or Below 12 crores</td> <td>At or below 6 crores</td> <td>Exempt</td> </tr> <tr> <td>At or Below 12 crores</td> <td>Above 6 crores</td> <td>Amount above 6 lakhs will be liable for excise duty</td> </tr> <tr> <td>Above 12 crores</td> <td>Any amount</td> <td>Full amount liable to excise duty.</td> </tr> </tbody> </table> </li> </ol> </li> <li><strong>Registration clarification</strong> <ol> <li>Registration once applied for shall be granted within two working days, along with simplified registration procedure as prescribed under Notification No. 35/2001-CE(NT) as amended by Notification 7/2015 – CE (NT).</li> <li>Further, the requirement of post registration physical verification of the premises has been also done away with in this case. Necessary amendments have been made to Notification No. 35/2001-CE for this purpose.</li> <li>Moreover, documents being maintained by the jewellery manufacturers for State VAT or Bureau of Indian Standards (in the case of hallmarked jewellery) shall suffice for Excise purposes also.</li> <li>The private records of the jewellery manufacturers, giving details of daily stock for his own purposes, shall be accepted for the purposes of Rule 10 of the Central Excise Rules 2002.</li> <li>A notification, providing for an optional centralized central excise registration for jewellery manufacturers with centralized billing or accounting system is being issued under Rule 9 (2) of the Central Excise Rules, 2002.</li> <li>Rule 12AA of the Central Excise Rules, 2002 provides that in case of goods falling under chapter heading 7113, every person (not being an EOU or SEZ unit) who gets jewellery made from any other person, and supplies the raw materials such as gold/silver/gemstones to the job-worker for such manufacture, the duty liability would be on such person who gets articles of jewellery made from the job worker. In such cases, the principal manufacturer (and not job worker) will be required to get Central Excise registered, pay duty and follow other compliance requirements. This will ensure that small artisans/goldsmiths are not required to take any excise registration.</li> </ol> </li> <li><strong>Special cases</strong> <ol> <li><strong>Goods sent for exhibition</strong> <ol class="disc"> <li>By notification no. 35/2001-CE, the goods sent abroad as exhibits for exhibition in international Trade Fair or for demonstration or carrying out tests or trails are exempt from whole of duty of excise subject to condition that procedure prescribed under Rule 19 of Central Excise Rules, 2002 is followed in respect of such goods.</li> <li>If the goods are removed for exhibition in India, then the said goods shall be removed after paying Excise Duty as applicable on it.</li> </ol> </li> <li><strong>Goods sent on approval basis</strong> <ol class="disc"> <li>The procedure for removal on approval basis is same as procedure for removal for home consumption. Therefore, goods on approval basis shall be removed from factory or warehouse or as the case may be, after paying Excise Duty as applicable on it.</li> </ol> </li> <li><strong>Goods Exported</strong> <ol class="disc"> <li>Generally exports to all except to Bhutan are exempt from Central Excise Duties. Exports to Bhutan do not qualify for export incentives as payment in received in Indian currency. There are generally two procedures for dispatching the final product out of India;</li> <li>In first procedure, duties are paid on final product and subsequently rebate (refund) is claimed. Alternatively, rebate is granted of duty paid on inputs used in exported final product and final product is exported without payment of excise duty. (Rule 18 of the Central Excise Rules, 2002)</li> <li>Another procedure is to export gods under bond without payment of excise duty. On actual exportation of goods and on presentation of necessary proofs regarding exports, the bond is released [Rule 19 (1) of the Central Excise Rules, 2002]. Rule 19(2) provides that inputs to be used for manufacture of final product to be exported can be obtained without payment of excise duty.</li> </ol> </li> </ol> </li> <li><strong>General procedures for return filing, due dates of payment</strong> <ol> <li>For registration easy online application is to be made.</li> <li>Duty is to be paid on a monthly base and not on each clearance.</li> <li>First installment of duty payment for the month of March 2016 should be done by 31st March, 2016.</li> <li>Returns are to be filed on a Quarterly basis in ER-8 by the manufacturers and producers.</li> <li>Returns are not to be filed by an artist or goldsmith who only manufactures on a job work basis</li> </ol> </li> <li><strong>Goods Returns</strong> <p>Return process to be defined by the dept, bow to adjust the already paid output, we should understand from department itself. Return should be under separate invoice. A separate register should be maintained for Good Return.</p> <p>This adjustment is not possible under the 1% Scheme. You may earmark the excise paid jewellery separately and when the same jewellery is again removed, you may not pay excise duty the second time. However, if there are some fundamental changes in the jewellery, the second time excise duty will also become applicable.</p> </li> <li><strong>Stock/ Branch Transfer from Corporate</strong> <p>What will be the assessable value?</p> <p>This has been answered in our earlier note. The assessable value will be the transaction value on that date at the retail counter.</p> </li> <li><strong>The intention of the government is to tax gold jewellery falling under Chapter heading 7311 of CETA 1985</strong> <p>However, there are certain items which is not falling under 7311 of CETA but they can be considered as jewellery also. For example, gold shirts, gold leafs, gold shoe, murals, gold buckles, gold spoon, gold tumblers , gold plate and gold idols etc. are falling under 7314 for which clear cut clarification is required that they are not excisable so that there could be no problem in future date.</p> <p>There is an exemption notification for items falling in Entry 7314. There is no excise duty on such items. Only jewellery is liable for excise duty.</p> </li> <li><strong>Method of valuation with regard to job worked goods by the Job Worker</strong> <p>The sales takes effect only at retail but the goods are cleared from the manufacturing unit – Is it sufficient to pay duty on the landed cost of the inputs, plus the cost of material added by the job worker and his profit - Alternatively if to be discharged on sale value can we wait till the sales takes place.</p> <p>This has been answered in our earlier note. The value will be the transaction value on that date at the retail counter. Duty has to be paid upfront at the time of removal and you cannot wait till the sales takes place.</p> </li> <li><strong>Repair is a common practice</strong> <p>How to avoid double taxation – Fix some percentage as in the case of branded garments which is at 10%</p> <p>There is no such provision as of now.</p> </li> <li><strong>Allow to file monthly return with the particulars of gold sold only</strong> <p>Returns are monthly only. Most jewellers will opt for 1% without CENVAT Credit, in that case, there are not too many additional details in the return.</p> </li> <li><strong>Sales to Interconnected undertaking </strong> <p>Whether current market price will be the Assessable value or any other method</p> <p>There are separate Valuation Rules for this. The current market price will be taken as the base.</p> </li> <li><p><strong>We sell jewellery to a customer and after few months customer sell it back to us, and we melt that jewellery, then refine and again with same metal we manufacture new jewellery, This is causing double taxation?</strong></p> <p>Yes this is true. There will be double taxation.</p> </li> <li><p><strong>Is it applicable for the jewellery Retailers.?</strong></p> <p>No, unless they get the work done through job workers</p> </li> <li><p><strong>If we purchase old jewellery in bank auction And after refined it Nd sale to trader, Then Excise duty applicable?</strong></p> <p>Yes, this amounts to manufacture of new jewellery and therefore excise is applicable.</p> </li> </ol> <div class="clear"></div> </div> <div class="right_main"> <div class="query_form fade_anim"> <div class="tl">Query regarding Excise</div> <div class="error"></div> <div class="success"></div> <form class="myform" method="post" action=""> <div class="fieldbox"> <input type="text" name="uname" id="uname" Placeholder="Name" > <span>*</span> </div> <div class="fieldbox"> <input type="text" name="email" id="email" Placeholder="Email Id"> <span>*</span> </div> <div class="fieldbox"> <input type="text" name="contact" id="contact" Placeholder="Contact No."> <span>*</span> </div> <div class="fieldbox"> <textarea Placeholder="Type your Query" name="query" id="query"></textarea> <span>*</span> </div> <div class="fieldbox"> <input type="submit" value="Submit" name="submit" id="submit"> </div> </form> </div> </div> <div class="clear"></div> </div> <div class="clear"></div> </div>   <div class="footer_wrap fade_anim"> <div class="footer"> <div class="smart_card"> <iframe width="100%" height="150px" src="https://www.facebook.com/plugins/video.php?href=https%3A%2F%2Fwww.facebook.com%2FGJFPMI%2Fvideos%2F1999857130044046%2F&width=500&show_text=false&height=283&appId" frameborder="0" allowfullscreen></iframe> </div> <div class="footer_link"> <div class="foot_column"> <h3>Government & Legal</h3> <ul> <li><a href="circulars_notifications.html">Circulars & Notifications </a></li>  </ul> </div> <div class="foot_column" style="display:none;"> <h3>Statistics</h3> <ul> <li><a href="pdf/Why_India_Needs_a_Gold_Policy.pdf" target="_blank">Demand & Supply Data</a></li> </ul> </div> <div class="foot_column"> <h3>Publication</h3> <ul> <li><a href="G&J_times.html">Gems & Jewellery Times Magazines </a></li>  </ul> </div> <div class="foot_column"> <h3><a href="gjf_vacancies.html">Careers</a> </h3>  </div> <div class="clear"></div> </div> <div class="clear"></div> <div class="footer_bottom"> <div class="social_media"> <a href="https://www.facebook.com/GJF-INDIA-187770384898912/" target="_blank" title="Facebook"><img src="images/facebook_icon.png"></a> <a href="https://twitter.com/GjfPro" target="_blank" title="Twitter"><img src="images/twitter_icon.png"></a> <a href="https://www.youtube.com/channel/UCFWpyhoKRaMWkgvBLc3EaPw" target="_blank" title="YouTube"><img src="images/youtube_icon.png"></a> </div> <div class="copyright">© 2018 GJC. <a href="terms_of_use.html">Terms Of Use</a> | <a href="privacy_policy.html">Privacy Policy</a> </div> <div class="kweb"><a href="http://kwebmaker.com/" target="_blank">K Webmaker™</a></div> <div class="clear"></div> </div> </div> </div> <div class="side_socialmedia fade_anim">  <a href="https://www.facebook.com/GJF-INDIA-187770384898912/" target="_blank" style="background:#3B579D;"><img src="images/ic_fb.jpg"></a> <a href="https://twitter.com/GjfPro" target="_blank" style="background:#5BA5D9;"><img src="images/ic_tw.jpg"></a> <a href="https://www.youtube.com/channel/UCFWpyhoKRaMWkgvBLc3EaPw" target="_blank" style="background:#CF3427;"><img src="images/ic_yt.jpg"></a> </div>  <script type="text/javascript" src="js/sticky_menu.js"></script> <script> (function(i,s,o,g,r,a,m){i['GoogleAnalyticsObject']=r;i[r]=i[r]||function(){ (i[r].q=i[r].q||[]).push(arguments)},i[r].l=1*new Date();a=s.createElement(o), m=s.getElementsByTagName(o)[0];a.async=1;a.src=g;m.parentNode.insertBefore(a,m) })(window,document,'script','https://www.google-analytics.com/analytics.js','ga'); ga('create', 'UA-76816764-1', 'auto'); ga('send', 'pageview'); </script> </body> </html>