No Excise Audit
for First Two Years of Production
[CBEC
Circular No. 1041 dated 26th July 2016]
Subject: Guidelines for Excise Audit of Manufacturers /
Principal Manufacturers of articles of jewellery or parts of articles of
jewellery.
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 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 applymutatis mutandis to the manufacturers/principal manufacturers
of articles of jewellery or parts of articles of jewellery, as the case may be.
4. 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.
F. No. 354/25/2016 – TRU
(Pt.-I)