30 December 2011

Ahmedabad jewellers, excise dept fight over 'branded jewellery'

Smaller jewellers, excise dept fight over 'branded jewellery'
AHMEDABAD: Smaller jewellers and the excise department are at loggerheads over the interpretation of an announcement made in Budget 2011.

The unorganised sector commands 90% of the jewellery market in India. An excise duty of 1% was imposed on jewellery (of gold, silver, platinum, palladium, rhodium, iridium, osmium or ruthenium) manufactured or sold under a brand name during this year's budget.
Family jewellers and regional players say they don't fall into the category of branded players. With the Central Board of Excise and Customs sending notices to jewellers especially across Gujarat and Maharashtra, jewellers are looking at legal options. A Surat-based family jeweller who didn't want to named said, "It is a major concern... with notices being sent in the past few days. They have told us that if we put any mark or sell in a jewellery box or pouch or bag containing shop name, then they will consider it as branded."

Jewellers rued that this move was in stark contrast to an earlier move by government to ensure jewellers register their companies and make only hallmarked jewellery.

"The government tried to implement such a policy in 2005-06 but discontinued it, thereby promoting regional family jewellers. We intend to start an agitation, after taking a legal opinion," he said. An excise department official in Ahmedabad said, "the process of sending notification has begun and we are asking them details like how much branded jewellery are they selling and in which segment?"

Jewellers who are maintaining websites, giving regular advertisements, making stylised initial marks similar to the company logo on their jewellery are being sent the notices, he added. Ahmedabad-based Zaveri & Co jewellers director Zaveribhai Zaveri said jewellers were concerned.

"At this stage, we don't know if we have to pay the 1% excise duty as we are not branded jewellers but family jewellers. Incidences of family jewellers being asked to pay the excise duty have been reported in other states too," he said.

But Gem and Jewellery Export Promotion Council vice-chairman Sanjay Kothari said the issue had been discussed earlier with the authorities and it had been made clear that family jewellers were not part of the branded segment.
Source: http://articles.economictimes.indiatimes.com/2011-12-27/news/30561527_1_jewellers-excise-duty-sanjay-kothari

Excise duty on Jewellery

Excise duty on Jewellery and other articles of precious metals bearing or sold under a brand name :

A. Liability to pay excise duty

1. In respect of levy of excise duty @ 1% on jewellery and other articles of precious metals which bear or are sold under a brand name, the provisions of Rule 12AA of the Central Excise Rules and Rules 2 & 4 of the Cenvat Credit Rules as amended by Notification Nos. 8/2011-Central Excise (N.T.) and 9/2011-Central Excise (N.T.) both, dated 24th March, 2011 may kindly be referred to. As in the case of branded garments, in case of goods falling nder Chapter heading 7113 and 7114 also, where a brand owner gets jewellery or articles other than jewellery made from any other person, and supplies the raw materials such as gold/ silver/ gemstones etc. (of Chapter 71) to the job-worker for such manufacture, the duty liability would be on such person who gets jewellery or articles made from the job worker, unless the job worker opts to discharge the duty liability. However, a person manufacturing jewellery of heading 7113 or articles of heading 7114 bearing a brand name or sold under a brand name on his own account will be liable to pay excise duty unless he claims benefit of the SSI exemption.

B. What constitutes a Brand name for the purposes of this exemption

2.1 It has been prescribed in respect of jewellery and other articles, “brand name” means a brand name or trade name, whether registered or not, that is to say, a name or a mark, such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating, or so to indicate, a connection in the course of trade between the product and some person using such name or mark with or without any indication of the identity of that person. Only such jewellery or other articles of precious metals which either bear or are marketed and sold under a brand name attract this levy. Whether a particular name or mark or symbol etc. is a brand name or not is a matter of fact, and can be ascertained from the manner in which it is understood in commercial or trade parlance. The test of goods being branded would be if the buyer seeks to buy the goods because they bear or are sold under a particular brand. As such, a mere mark of identity put by a jeweller or the job worker, commonly known as a ‘house-mark’ shall not be considered a brand name. Some illustrations are given below to explain the scope of the term “brand name”:

(i) A manufacturer, say “ABC Jewellers”, getting jewellery or other articles manufactured on his behalf from gold smiths/job-workers who put a mark/sign/initials, etc. on the jewellery/article. This is only to identify that the article or jewellery was received from a particular goldsmith, etc. This is not branded jewellery and will not attract duty.

(ii) “ABC Jewellers”, when it sells articles of jewellery to customers, puts a distinctive sign/mark/initials etc. on the jewellery- very often a simple acronym of his name e.g.; ABC. It may be noted that mere alphabets or numerals (unless stylized) cannot be registered as a brand name or trademark. This is again for the purpose of identification when the customer re-sells or returns the jewellery or article and goods bearing it would not attract the levy.

(iii) “ABC Jewellers” advertises and sells its products under the brand “Star” or puts a logo like ABC or ABC i.e., in a stylized manner. It also puts the same brand name or an abbreviation thereof or a mark which has a connection with such brand name either on the jewellery or article itself or on the packing such as the jewellery box or pouch or even on the warranty card or certificate of quality. Such goods will clearly be treated as branded and will be liable to duty.

2.2. Hallmarking of the jewellery, which is an accurate determination and official recording of the proportionate content of precious metal in gold and is thus only official marks used as a guarantee of purity or fineness of gold jewellery, cannot be treated as ‘branding’ for the purposes of the excise levy.

Source- LETTER D.O.F.NO. B-1/3/2011-TRU, DATED 25-3-2011
http://taxguru.in/excise-duty/excise-duty-jewellery-articles-precious-metals-bearing-sold-brand.html

06 December 2011