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In this year’s Budget 2005-06, an excise duty of 2% has been imposed on branded articles of jewellery of heading 7113 of the Central Excise Tariff. The duty is leviable only if the brand name or the trade name, as defined, is indelibly affixed or embossed on the article of jewellery itself.
The duty is leviable only if the jewellery is manufactured and sold under brand names. For attracting this levy, the article of jewellery must be marketed and sold under a brand name. Despite this, there have been some misgivings among a section of the trade about the scope of this levy. Government have issued instructions about the scope of levy on branded jewellery.
Generally, a jeweler gets the jewellery made by gold smiths/job-workers who put a mark/sign/initials, etc. on the article of jewellery. This marking is only to identify that the article of jewellery was received from a particular goldsmith, etc. Such jewellery cannot be considered as branded jewellery, and no tax is leviable thereon.
When a jeweler sells jewellery to customers, he puts a distinctive sign/mark/initials etc. on the jewellery. This is again for the purpose of identification so that when the jewellery is returned, the jeweler can recognize the jewellery as his own. Here also, there is no sale of jewellery under a brand name. Such jewellery will not attract tax.
However, if a jeweller advertises and sells its products under a brand name and also puts the same brand name or an abbreviation thereof or a mark which has a connection with such brand name on the article of jewellery, such jewellery will be branded jewellery and will be liable to the tax.
As regards ‘hallmarked’ gold jewellery, ‘hallmarking’ is in the context of accurate determination and official recording of the proportionate content of precious metal in gold. Hallmarks are thus only official marks used as a guarantee of purity or fineness of gold jewellery, and cannot be treated as ‘branding’ for the purposes of the excise levy.
BSC/BY/DT/GN-128/05
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