Sub-committee set up under high-level panel to review excise duty on jewellery

The government has constituted a sub-committee under the aegis of the High Level Committee (HLC) on issues related to excise duty on different articles of jewellery proposed in the Union Budget 2016-17. The committee has been asked to submit its report within sixty days.

The Union Budget 2016-17 has proposed a 1 per cent central excise duty (without input tax credit) and 12.5 per cent (with input tax credit) on all articles of jewellery (except silver jewellery, other than those studded with diamond, ruby, emerald or sapphire).

The sub-committee constituted under the high level committee will interact with trade and industry on tax laws. The sub-committee will be chaired by Ashok Lahiri and will consist of   three representatives of the trade (to be decided by the government), one legal expert (to be decided by the government) officer concerned from the ministry of commerce and industry (to be nominated by the ministry) and high level officials from the central excise department to be nominated by the Central Board of Excise and Customs (CBEC).

The composition of the sub-committee will be circulated once the names of its members are finalised.

All associations will be given an opportunity to submit representation before the sub-committee in writing and the all India associations to state their case in person.

Terms of reference of the sub-committee will include the issues related to compliance procedure for the excise duty, including records to be maintained, forms to be filled including Form 12AA, operating procedures and any other issued that may be relevant. The sub-committee will submit its report within 60 days of its constitution.

Till the recommendations of the sub-committee are finalised, all payments of central excise duty will be based on first sale invoice value.

The central excise authorities will not challenge the valuation given in the invoice provided the caratage / purity and weight of the gold/silver with precious stones and carats of diamond/precious stones are mentioned on the invoice. 

Excise officers will not visit the manufacturing units / shops / place of business / residence of the jewelers and no arrest or criminal prosecution of any jeweler will be done.

No search or seizure of stocks by any central excise official will also be effected

Exporters will be allowed to export on self-declaration and submission of LUT to customs without the need to get LUT ratified by central excise. Prevailing system will continue.

The registration of the establishment with the central excise department can be taken within 60 days from 1 March 2016. However, the liability for payment of central excise duty will be with effect from 1 March 2016, and as a special case for the month of March 2016, the assessee jewelers will be permitted to make payment of excise duty along with the payment of excise duty for the month of April 2016.