Pradeep Jain - Chartered Accountant

R Sir M/s. A Pvt Ltd, M/s. B Pvt Ltd, M/s. C Pvt Ltd and M/s. D (Partnership firm) are engaged in the business of Jewellery. All concerns are engaged in trading of Gold, Silver, Diamond and Diamond studded jewellery (goods). All concerns also undertake the manufacturing of jewellery either from own premise and or through job worker (Karagir) on contract basis. The turnover of all concerns is above Rs 100 crores. Queries Please clarify 1. The applicability of Excise duty on clearance of goods which are readymade purchased (ornament) from outside parties and from sister concerns. 2. The procedure to be followed of sale return and documentation to be maintained thereof. 3. The re-selling of old ornament which are purchased from customers after cleaning, and minor repairing but without changing its original shape, design and appearance. 4. The applicability of Excise duty on the goods which are sold intra group companies i.e. within M/s. A Pvt Ltd, M/s. B Pvt Ltd, M/s. C Pvt Ltd and M/s. D (Partnership firm), before 29th Feb 2016 and after 29th Feb 2016. Thanks

1.Excise duty is not applicable on trading of goods therefore excise duty will not be levied on purchase and sale of readymade ornaments. 2. In case of Sales Return, Rule 16 of Central Excise Rules will apply. This procedure is mainly applied to the jewellery manufacturer opting to pay duty @12.5% and taking Cenvat Credit. He can take credit on returned goods on basis of such duty paying document. If the same is sold after repairing then credit is to be reversed and if the same is sold after manufacturing process then duty is to be paid. 3. In our opinion excise duty will not be levied on cleaning and repairing of old ornaments. 4. In case of sale to sister concern, appropriate excise duty is required to paid on value determined in accordance with the Rule 9 of Central Excise Valuation Rules:- When goods are sold by the sister concern – Value will be the transaction value at which goods are sold be the related party When goods are consumed by the sister concern – Value will be 110% of cost of production

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