Guide to Excise Duty on Jewellery - Presented by INMACS

Taxmann's Guide to Excise Duty on Jewellers by INMACS

TAXMANN’S

Practical Guide to Excise Duty on Jewellers

Making Compliances Easy

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 Taxmann's Guide to Excise Duty on Jewellers by INMACS

PREFACE

INMACS has been rendering highly professional and practical services to Indian and International businesses, Manufacturing and Trading houses, exporters as well as service providers. A solution to all complex issues is the unique selling point of Inmacs.

The jeweller community is being subjected to excise law and now excise registrations are to be obtained before 31^st July, 2016. I have participated in several meetings with jewellers from all over India and have also interacted informally at various levels of government to enable smooth implementation of proposed law without any harassment to genuine jewellers.

We have addressed various issues brought out during our interaction with the jewellers, excise authorities, senior professionals and businessmen.

Sh. Arun Jaitley, Finance minister had proactively set up a committee to examine practical issues and problems likely to be faced by the Jewellers. The committee is headed by Dr. Ashok Lahiri, Sh. Gautam Roy   and representatives of jewellers and other stakeholders. The committee has made very practical and detailed recommendations. National Economic Forum, a leading NGO had also provided their detailed research report to the Government. The Government of India has accepted most of the recommendations of National Economic Forum and the Lahiri committee. The initiative taken by the Government is reflected in large number of notifications, circulars and amendments to rules.

I must acknowledge support and guidance provided by CA Piyush Goyal, Minister of Power, coal, mines and Non-conventional energy to my various initiatives. The leadership of Sh. Narender Modi, Hon’ble Prime Minister of India has changed approach of the revenue officials to highly positive and continuous process of liberalisation and simplification has timely began.

Let us together “Make in India” and “Start-up India, Stand up India” a great success.

I wish growth and success to jewellers in India as well as in international markets.

New Delhi                                                               VINOD JAIN       

10^th August, 2016                                                   LLB, FCA, FCS, FCMA, DISA

                                                                                Chairman - INMACS - +91-9811040004
ABOUT AUTHOR

ABOUT AUTHOR - INMACS Management Services Limited

INMACS Management Services Limited (INMACS, India) is a member of “INMACS Global, Hong Kong” an international network of Chartered Accountants, Company Secretaries, Lawyers and Management Consultants.

INMACS Management Services Ltd. (INMACS) was started by a Group of highly qualified and experienced professionals in April, 1984, to offer a full range of services that embrace in its ambit Excise, Service Tax, VAT Income Tax and International taxation of more than 100 countries. Besides, Management consulting, corporate finance, Management Audit, Internal Audit, taxation, Business Agreements, Private Equity, Real Estate and legal advisory services, risk management, projects, start-ups, etc. Each step in its corporate association has taken it a step closer to the fulfilment of its goal.

In the last 32 years, INMACS’ capabilities and performances have won the utmost trust and confidence of a richly varied and strong client base ranging through small & medium enterprises and big league corporate and multinational Business Houses, both in India and abroad.

INMACS team members, while sharing a common vision, belong to diverse technical, business and legal backgrounds. We deploy specialized and multidisciplinary teams to serve assignments requiring specific skills. This enables us to work proactively and closely with clients and respond effectively to their needs in a highly focused manner, which in today’s fast changing business environment is quite crucial to a client’s success.

Our Offices:

New Delhi: 4696 Brij Bhawan, 21 A Ansari Road, Darya Ganj, New Delhi -110002.  Tel: +91 11 23288101 909, Chiranjiv Tower, 43, Nehru Place, New Delhi – 110019.  Tel: + 91 011 26223712, 6933, 8410

Gurgaon: Global Business Square, Plot No. 32, Sector   44 Institutional Area Gurgaon 122002 Tel: +91 124 4786200 www.inmacsindia.com www.vinodjainca.com

Associate Offices in India:

Bhubaneswar	Mumbai	Hyderabad	Jaipur	Kolkata	Indore	Chandigarh
Ahmedabad	Bengaluru	Chennai	Trichy	Ranchi	Kanpur	Pune

Associate Offices outside India:                                                                                                                                                           

New Jersey (USA)	Tanzania	Mauritius	Nigeria	Hong Kong	St. Lucia
British Virgin Island	Dubai	Singapore	Kenya	Canada	London

BRIEF PROFILE OF OUR EXPERTS

CA VINOD JAIN, a commerce graduate from Shri Ram College of Commerce (1976) is a qualified Chartered Accountant (1979), Company Secretary (1979), Cost Accountant (1983), DISA (2004) and a Law Graduate (1979), has been an elected member of Central Council of The Institute of Chartered Accountants of India for 12 years (1998-2004, 2007-13).He has been past Chairman of NIRC (1983-84), Board of Studies of the ICAI. He is chairman of INMACS group in India and a senior partner of Vinod Kumar and Associates, Chartered Accountants. A Member of High Powered Tax Simplification committee setup by Government of India and Director in Coal India Limited. He is Fellow Member of all the three professional bodies – ICAI, ICSI and ICWAI. Mr. Jain is the Founder of All India Chartered Accountants Society. Mr. Jain is Convener of National Economic Forum, a NGO undertaking research in micro and macro-economic development of the country. Email ID - vinodjain@inmacs.com, vinodjainca@gmail.com . 

CA Aastha Jain, a commerce graduate from Delhi University, is a qualified Chartered Accountant (2011), Company Secretary (2012), and Masters in Business Finance (2013). She is an Associate Director with Inmacs Management Services Limited, a consulting company, Gurgaon since August, 2011, Partner at Vinod Kumar & Associates. She has worked for 3 years in Audit & Assurance of Deloitte Haskins & Sells from 2007-2010.She has also done Certificate Course in Indirect Taxes from ICAI in 2015. She specializes in the field of Direct and International Taxation and Risk Advisory. She is also co-founder of an e commerce start up named Gocompany.in. Email-ID aasthajain@inmacs.com,    aasthajain@vinodjainca.com

CA Ganesh Kanodia, a commerce graduate from IGNOU (2014) and a qualified Chartered Accountant (2014), possesses rich experience in Taxation and Auditing. He has good exposure on matters related to indirect taxation consisting of Service Tax, Central Excise and GST. Currently he is working with Inmacs Management Services Limited a Gurgaon based consultancy firm as Deputy Manager. Email-ID ganeshkanodia@inmacs.com,

 

CA Sharad Maheshwari, a commerce graduate from University of Rajasthan (2012) is a qualified Chartered Accountant (2014), possesses rich experience in Direct Taxation, VAT, Excise, GST and Transaction advisory services. Currently he is working with Inmacs Management Services Limited a Gurgaon based consultancy firm as Deputy Manager. Email-ID sharadmaheshwari@inmacs.com,

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 Taxmann's Guide to Excise Duty on Jewellers by INMACS

About the Author I-5 Preface I-7 Brief Profile of Our Experts I-9 CHAPTER 1 INTRODUCTION •                  Excise Duty Re-introduced-2016 •                  Simplified Procedures for Jewellery Manufacturers •                  Important modifications as interim arrangement •                  Constitution of sub-committee of high level committee •                  Excise Registration date extended to 1st July, 2016 •                  National Economic Forum (NEF) - Recommendations •                  Sub-Committee of High level committee recommendations 2 6 10 11 12 12 17 CHAPTER 2 BASIC CONCEPTS OF EXCISE DUTY •                  Law relating to Excise Duty •                  Excisable Goods •                  Manufacture and Production •                  Manufacturer •                  Principal Manufacturer •                  Factory Premises •                  CETA, 1985 - Classification of Articles of Jewellery •                  Precious Metal •                  Deemed Manufacture in CETA, 1985 •                  Effective rates on Articles of Jewellery •                  Brief Description of Precious Metals and Stones 22 24 24 26 27 27 29 30 31 32 36 CHAPTER 3 REGISTRATION •                  Registration of Factory/Warehouse •                  Procedure of getting registered •                  Identifying the limits for getting registered •                  Application for registration •                  No Physical Verification •                  Centralized Registration •                  Exemption from Registration •                  Alterations/Changes in Registration 39 40 40 42 45 45 46 48 CHAPTER 4 HOW TO WORK POST REGISTRATION •                  Applicability of Excise on opening Stock 50 •                  Rate of Duty to be charged 51 •                  Payment of Excise Duty 52 •                  Valuation for Excise Duty 54 •                  First sales invoice-Meaning 54 •                  Sale to Related Party 55 •                  Excise Invoicing 59 •                  Articles to be removed on “first sales invoice” 60 •                  Excise Department disclosures 63 •                  Invoicing to retail customer providing old jewellery 64 •                  Invoicing by unregistered Exempted manufacturer 65 •                  Records to be maintained 65 •                  Returns to be filed 70 •                  Simplified Quarterly return 70 50 51 52 54 54 55 59 60 63 64 65 65 70 70 CHAPTER 5 SELLING THE JEWELLERY FROM SHOWROOM •                  No Registration of Showroom Business •                  Maintaining Separate premises •                  Procedures for separating the Showroom from Excise purview •                  Challenges if manufacturer and the seller are virtually the same person •                  Precautions by Jewellers Showroom •                  Maintaining owned workshop 74 75 76 77 79 82 CHAPTER 6 MANUFACTURING JEWELLERY ON JOB WORK BASIS •                  Meaning of Job Work •                  Meaning of Job Worker •                  Records by Job Worker •                  Suggested Methodology •                  Disposal of scrap and wastages generated at Job workers place •                  Procedure for sending goods to job worker •                  Procedure for sending finished goods by job worker •                  Alternate Option to get Job worker registered as Manufacturer or Principal Manufacturer 84 85 85 86 87 87 88 89 CHAPTER 7 EXCISE BENEFITS FOR SMALL SCALE INDUSTRIES (SSI) •                  Exemptions to small units 90 •                  Exemption Limit for Jewellers 91 •                  Computing Exemption limits for SSI 92 •                  Work/process not amounting to manufacture 96 •                  Other procedural benefits to SSI 96 •                  SSI Exemption using Brand of others 97 •                  Clubbing of Clearances of SSI 99 90 91 92 96 96 97 99 CHAPTER 8 COLLECTION RULES – 2016 •                  Introduction to Collection Rules 2016 •                  Procedure of Discharging Central Excise Duty liability •                  Removal of inputs or semi-finished articles or finished articles •                  Manner of payment of duty •                  SSI to pay duty on quarterly basis •                  Mandatory E-payment of Excise duty •                  Consequences of late payment of Excise Duty •                  Invoice for selling Articles of Jewellery •                  Records to be maintained •                  Daily Stock Account of manufactured Goods •                  Daily Stock Account of Traded Goods •                  Removal of inputs or semi-finished articles or finished articles •                  Receipt of Duty paid articles •                  Preserving books of Account •                  Job work in Articles of Jewellery •                  Work Procedure for Job Work •                  Optional Scheme for Manufacturers and Traders •                  Other provisions of Central Excise Rules, 2002 to apply mutatis mutandis 101 102 102 103 103 104 105 105 106 107 107 108 109 109 109 110 111 115 CHAPTER 9 JEWELLERS - TREATMENT OF SPECIAL CASES •                  Branding at Showroom location •                  Jewellery received for Service or repair •                  Provision for Returned Goods •                  Excise Duty on Export •                  Treatment of wastage, making charges and stone charges •                  Excise Duty on sale of scrap •                  Excise Duty liability on movement of Jewellery •                  Duty payable in case Jewellery sold on EMI basis •                  Applicability of CVD on importation of Jewellery 116 118 120 121 121 121 121 122 123 CHAPTER 10 CENVAT CREDIT RULES •                  Introduction to CENVAT •                  Eligible Input Service •                  Conditions for availing CENVAT credit 124 125 126 CHAPTER 11 EXCISE AUDIT •                  Section 14A - Special audit in certain cases •                  Section 14AA - Special audit - Credit of duty availed or utilize is not within Limits •                  Audit by excise officer •                  Legal Backing •                  Audit Requirement - Jewellers •                  Desk Audit •                  No Physical verification •                  Show cause notice •                  Existing circular/instruction •                  Decision of Delhi High Court - Declaring departmental audit under Service tax illegal 127 127 128 128 129 129 129 129 130 131 CHAPTER 12 CONSEQUENCES OF NON-COMPLIANCES •                  Interest for delayed payment •                  Penalties for contravention of Excise laws •                  Personal Penalty on Directors, Manager or Officer of the Company •                  Other Miscellaneous penalties •                  Classification of committing Offences •                  Imposition of Fine and Imprisonment •                  Cognizable and Non-Bailable Offences •                  Power of Central Excise Officers •                  Power to Summon, Visit or Search and Seizure •                  Provisional release of seized goods •                  Power to Confiscate the Goods •                  Guidelines for Manufacturers of Articles of Jewellery •                  Clear Reason to Believe of evasion •                  Not to visit, summoned, search and seizure for procedure related matter •                  Visit, Summon, Search and Seizure only where substantial duty evaded •                  No visit or Search against Karigars/Artisans •                  Summons only on approval of Commissioner •                  Visits only on approval of Commissioner •                  Visit, search and Seizure above expected evasion Rs. 75 Lakhs •                  Release of Seized Goods under Supratnama •                  Power to Arrest and Prosecute •                  Clear Reason to Believe of evasion before arrest •                  Not to Arrest and prosecute for procedure related matter •                  Arrest only where substantial duty evaded - Minimum Rs. 200 lakhs •                  Vexatious Search 133 134 135 135 136 137 138 138 138 139 140 140 141 141 141 141 142 142 142 142 143 143 143 144 144 ANNEXURES ANNEXURE 1 - Stock Certificate from CA ANNEXURE 2 - Draft Format of Excise Invoice ANNEXURE 3 - List of records to be maintained Guide to relevant Notifications, Circulars & Press Release 145 146 147 151

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 Taxmann's Guide to Excise Duty on Jewellers by INMACS