The Central Government proposed to impose excise duty on manufacturing of jewellery except silver jewellery (other than studded with diamond and precious stones) in the Union Budget. However, the jewellers protested against such levy of excise duty. They went on strike across the Country demanding withdrawal of excise duty levy on jewellery. Finally the Govt. did not change its stance and retained such levy in the Finance Act, 2016.
Now the rate of excise duty on jewellery is 1% if assessee does not avail of any credit on inputs and capital goods. However, the rate of excise duty will be raised to 12.5% if assessee avails of credit on inputs and capital goods. Recently the CBEC has issued set of Circulars and Notifications with regard to excise duty on
Jewellery. Key takeaways from such Circulars/Notifications are given here under:
1. All persons engaged in manufacturing jewellery should take Excise registration before July 31, 2016. Even if jewellery is manufactured via job-worker then also only Principal manufacturer is required to take Excise registration.
2. Jewellers exporting 100% of jewellery are not required to take Excise registration. But they will have to furnish a bank guarantee.
3. On recommendation of Sub-Committee constituted to interact with Trade & Industry, the Central Government has increased the higher threshold exemption limit from Rs.6 Crore to Rs.10 Crore and eligibility limit from Rs.12 Crore to Rs.15 Crore for jewellery manufacturers.
Earlier, higher threshold limit of Rs.6 crore for SSI exemption was prescribed with eligibility limit of Rs.12 crores for jewellers.