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Government of India
Ministry of Finance
(Department of Revenue)
Tax Research Unit
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Circular No. 1040/28/2016-CX
New Delhi, the 26th July, 2016
To,
Principal Chief Commissioners / Chief Commissioners of Central Excise (All);
Principal Chief Commissioners / Chief Commissioners of Customs & Central Excise
(All);
All Director Generals of Customs, Central Excise & Service Tax
Madam / Sir,
Subject: Clarification on computation of exemption and eligibility and exemption
limits and other related issues for small scale industries [SSI] exemption under
Notification No. 8/2003-CE dated 1st March 2003 in respect manufacturer or
principal manufacturer of articles of jewellery or parts of articles of
jewellery or both -regarding.
In this year’s Budget, central excise duty of 1% without input and capital goods
tax credit or 12.5% with credit was imposed on articles of jewellery falling
under heading 7113 of the First Schedule to the Central Excise Tariff 1985.
Subsequent to that, the Government had set up a Sub-Committee of the High Level
Committee, headed by Dr. Ashok Lahiri to interact with Trade & Industry on
issues relating to procedure and compliance relating to excise duty of articles
of jewellery. The Sub-Committee has given its report on 23.06.2016, which has
been accepted by the Government.
2. In the context of computation of exemption and eligibility and exemption
limits and other related issues for small scale industries [SSI] exemption under
Notification no. 8/2003- CE dated 1st March 2003 and other SSI issues, relating
to manufacturers/principal manufacturers of articles of jewellery or parts of
articles of jewellery or both, falling under heading 7113 of the Central Excise
Tariff Act [hereinafter referred to as articles of jewellery] the Sub-Committee
has made certain recommendations, which have been accepted by the Government.
Accordingly, notwithstanding anything to the contrary provided in any other
circular/instructions, in respect of SSI exemption for manufacturers or
principal manufacturers of articles of jewellery the following may be followed
scrumptiously,-
i. Computation of Eligibility and Exemption limits for SSI exemption
[Notification no. 8/2003-CE dated 1st March 2003] is to be done individually for
each manufacturer or principal manufacturer, irrespective of the number of job
workers employed by such manufacturer or principal manufacturer or the number of
premises from which his job workers operate.
ii. For computation of Eligibility and Exemption limits for SSI exemption the
value of articles of jewellery exported [except those exported to Bhutan] will
not be counted.
iii. Similarly, for computation of Eligibility and Exemption limits for SSI
exemption the value of traded articles of jewellery [on which appropriate excise
duty, including nil duty, has already been paid] will not be included.
iv. Further, in respect of jewellery manufactured out of jewellery or precious
stones supplied by the individual retail customer, only the value addition [sum
of cost of additional material used and labour charges/making charges charged by
the manufacturer or principal manufacturer] shall be taken into consideration
for computation of such limits.
v. Multiple manufacturers or principal manufacturers, operating from the same
premises and individually registered under State VAT on or before February 29,
2016, may be allowed separate central excise registrations. However, in such
cases the value of clearances of all such manufacturers or principal
manufacturers shall be clubbed together for determining the
eligibility/exemption limits for the purposes of the small scale industries
[SSI] excise duty exemption. Thus, if the clubbed together aggregate value of
clearances of all such manufacturers or principal manufacturers during the
preceding year is more than Rs. 15 crore then none of such manufacturers or
principal manufacturers will be eligible for SSI exemption. Similarly, as and
when the clubbed together aggregate value of clearances of such manufacturers or
principal manufacturers in a financial year crosses Rs. 10 crore, all such
manufacturers or principal manufacturers will be liable to pay excise duty on
their clearances thereafter.
3. Hindi version will follow. Trade Notice/Public Notice may be issued on the
above lines.
4. Difficulties faced, if any, in implementation of this Circular may be brought
to the notice of the Board.
(Anurag Sehgal)
Under Secretary to the Government of India
F. No. 354/25/2016 – TRU (Pt.-I)
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