The tussle between jewellers and the ministry of finance (MoF) is likely to intensify in the first week of May over the new excise duty. The latter seems in no mood to roll it back, despite the review assurance given by finance minister Pranab Mukherjee to it early this month.
A senior official argued the proposed excise on unbranded jewellery was minimal and the ministry had already addressed the concerns of jewellers by issuing a clarification. The Union Budget has proposed extended the one per cent duty on branded ornaments to unbranded jewellery.
Jewellers across the country had protested at the ministry’s move with a 21-day strike from the day after the Budget announcement. They lost business worth Rs 20,000 crore and the exchequer lost an estimated Rs 700 crore in taxes. The jewellers returned to work only after an assurance from the finance minister last week.
“The ministry is divided. One group is supporting Mukherjee’s observations, who was convinced with the (case for) excise duty roll back. The second group, largely of bureaucrats, is lobbying for the government to levy excise duty to nab jewellers even of good repute. We only know the minister was convinced with our views and assured us roll back through the parliamentary process in the Finance Bill,” said Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation.
Adding: “Jewellers will wait until the Finance Bill. In case of no rollback in excise duty, the protest would start again. We have instructed jewellers to execute maximum sales till passing of the Bill and be ready for a long agitation next month.”
Officials said adequate safeguards had been provided to protect traders from any harassment by tax officials and the proposal would affect only a handful of big traders.
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“Small traders won’t get affected. We are telling them to keep the turnover for excise duty at the same level it is for Value Added Tax. The idea is just to complete the chain as we move towards the Goods & Services Tax,” said one.
The clarification (yet to be notified) said all manufacturing units with a turnover of more than the small scale industry limit of Rs 5 crore or more will have to pay one per cent excise duty on unbranded jewellery, based on their own assessment of annual sales. The rate has been fixed for such jewellery at 30 per cent of invoice value. Thus, the duty incidence is only 0.3 per cent of the transaction value of the jewellery.
Jewellers with annual turnover of Rs 5 crore and above, however, need to register themselves with the excise department. Companies whose turnover do not cross this limit in any financial year are fully exempt and do not need to register. If the turnover in the preceding year is not more than Rs 13.3 crore, the unit is not required to be registered with the excise department.
The official added since the clarification was issued, the ministry had not got any query or representation from jewellers.
Rajiv Jain, chairman of the Gems & Jewellery Export Promotion Council, is optimistic about the minister’s assurance. He said, “The finance minister himself promised in a recent meeting with 22 industry organisations that he would look into the matter through the proper process.”
The ministry also clarified that all goods transported out of the manufacturing unit at ‘zero’ excise duty and in private storages/warehouses would attract no such duty.
However, jewellers have to file a self-declaration mentioning the stock of such goods during financial year 2011-12. The ministry also re-affirmed its earlier stand that no field officer would visit a jeweller’s premise without written permission of the jurisdictional commissioner of central excise.