30 December 2011

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
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