Ministry gets glittery eyed over excise evasion

Shishir Sinha New Delhi | Updated on March 12, 2018 Published on January 09, 2012


To tighten loopholes on duty collection in branded jewellery

Don't be surprised if the next piece of fancy jewellery that you buy is handed over in a plain paper bag.

That's because any piece of jewellery which is sold to you in a box or pouch with a brand name on it is now liable to be taxed.

In a bid to tighten the loopholes in collection of the one per cent excise duty on branded jewellery introduced last Budget, the Finance Ministry is planning to officially clarify what exactly will count as a brand in the jewellery business.

Confirming the move, a senior Government official told Business Line, “Various branded jewellery makers are playing all sorts of tricks to avoid the one per cent central excise duty imposed in the budget last year. So, we are working on ways to spoil their game plan.”

This will be done “as early as possible,” or might be included in the Budget for 2012-13, the official added.

The ‘clarifications' on what exactly constitutes jewellery promise to be comprehensive. “Any small objects of personal adornment such as, rings, bracelets, necklaces, brooches, ear-rings, watch-chains, fobs, pendants, tie-pins, cuff-links, dress-studs, religious or other medals and insignia, articles of personal use of a kind normally carried in the pocket, in the handbag or on person such as cigar or cigarette cases, snuff boxes, cachou or pill boxes, powder boxes, chain purses or prayer beads” to what will count as a brand or trademark.”

The official alleged that in order to avoid the duty, some branded jewellery makers are simply putting a serial number on the jewellery item and mentioning that number in the certificate to be handed over to the customer. Others use a simple hallmark, while the “branding” is actually done on the box or pouch in which the piece is sold.

Now, a brand will be defined to include “a brand name or trade name, whether registered or not, such as 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 as to indicate, a connection in the course of trade between the product and some person using such a name or mark with or without any indication of the identity of that person.”

In other words, if for example, a jeweller named Agarwal (which is also a common caste name) puts his name on the bag/box in which he ships pieces, he cannot now claim that Agarwal is not a brand – at least for tax purposes!

It has already been clarified that hallmarking or an identity put by a jeweller or the job worker, commonly known as house-mark, will not be considered as brand name.

Branded players such as Tanishq have welcomed the move. Said Mr Sandeep Kulhalli, Vice-President, Retail and Marketing, Tanishq, “We welcome the move, as we have been paying the excise duty from day one. It makes a level playing field for us, as now other jewellers, who have been avoiding the duty, will have to pay.”

(with additional inputs by Heena Khan)

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Published on January 09, 2012
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