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Government of India
Ministry of Finance
(Department of Revenue)
Tax Research Unit
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Circular No. 1041/29/2016-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: Guidelines for Excise Audit of Manufacturers / Principal Manufacturers
of articles of jewellery or parts of articles of jewellery – 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 23.06.201 6, which has
been accepted by the Government.
2. In the context of Excise Audit of 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, the following
guidelines for conduct of excise audit of manufacturers/principal manufacturers
of articles of jewellery or parts of articles of jewellery, falling under
heading 7113 may be followed scrumptiously,-
i. No excise audit will be carried out for the first two years for
manufacturers/principal manufacturers of articles of jewellery whose duty
payment (cash plus credit) is less than Rs. 1 crore. However, after expiry of
first two year period,-
a) Manufacturers/principal manufacturers of articles of jewellery paying duty
below Rs. 50 lakh [cash plus credit], the proportion of units to be audited
every year shall not exceed 5 per cent of total number of registered
manufacturers/principal manufacturers of articles of jewellery, and selection of
such assessees shall be done with the approval of Commissioner or an equivalent
rank officer.
b) Manufacturers / principal manufacturers of articles of jewellery whose duty
payment (cash plus credit) is more than Rs. 50 lakh and less than Rs. 1 crore
may be audited once in every five years;
ii. Manufacturers / principal manufacturers of articles of jewellery whose duty
payment (cash plus credit) is more than Rs. 1 crore and less than Rs. 3 crore
may be audited once in every two years;
iii. Manufacturers/principal manufacturers of articles of jewellery whose duty
payment (cash plus credit) is above Rs. 3 crore may be audited every year.
iv. Excise audit of manufacturers/ principal manufacturers of articles of
jewellery will be desk audit that is audit done in the office of jurisdictional
central excise audit commissionerate. Moreover, such audit will under no
circumstances involve any physical verification of stocks in the premises.
v. Any show cause notice to be issued pursuant to such excise audit,
irrespective of the quantum of duty demanded, shall be issued and adjudicated by
an officer of the rank of Commissioner.
3. Except as herein provided, all existing circulars/instructions relating to
central excise audit may also apply mutatis mutandis to the manufacturers /
principal manufacturers of articles of jewellery or parts of articles of
jewellery, as the case may be.
4. Hindi version will follow. Trade Notice/ Public Notice may be issued on the
above lines.
5. 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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