Confusion reigns on the Rs 200,000-crore domestic jewellery industry over the reintroduction of one per cent excise duty on branded jewelry.
Industry bodies have demanded a roll back on the same saying the new duty will burden the industry enormously and hamper its growth. This, despite a circular from the government clarifying the move by the finance ministry.
“The biggest confusion is over the the definition of brands which is nearly 50 years old. Under this definition, all jewelry with a mark, whether a house mark or trade mark or brand mark, will be considered as branded and could be excisable. The definition empowers excise officials to categorise jewellery under brand and seek duty,” said Bachhraj Bamalwa, chairman of the premier domestic trade body All India Gems and Jewellery Trade Federation (GJF).
The existing definition is in sharp contrast with the reality. The jewellery industry considers brand as items that fetch premium over non-branded items. Understandably, many jewellery producers introduce a certain type of jewellery collection with a separate mark on it.
The primary difference between a branded and unbranded product is its design, art and service, where manufacturers use symbols that is necessarily not the name of the company. Branded products have distinctive brand image, alluring value and high premium over the same type of unbranded products, explained Vinod Hayagriv, a Bangaluru-based jewellery retailer.
Jewellery retailers mandatorily put an identification mark on each item for easy resale acceptance. Hence, all acronyms or identification marks cannot be categorised as a brand. In 2005, the government had levied two per cent excise duty on branded jewellery and accrued merely Rs 16 crore till 2008. The amount collected by the government was less than one-tenth of the cost of excise duty collection in this section. Hence, the government was forced to withdraw the excise duty in 2009.
