Central excise duty on gold: Maintain status quo, orders Madras HC

Chennai: The Madras high court has ordered maintenance of status quo till June 3 in the matter relating to imposing central excise duty on gold jewellery.

Justice M. Duraiswamy passed the interim order on a petition by Coimbatore Jewellery Manufacturers’ Association, which sought to quash a notification dated March 1, 2016 of the Union Finance Ministry, introducing a classification of manufacturers of jewellery for purposes of levy of central excise duty.

“Since it is submitted by senior counsel A. L. Somayaji that the notification has not been enforced so far, the respondents (authorities) are directed to maintain status quo till June 3. The order of status quo is granted subject to result of the writ petition and the order of status quo shall not stand in the way of the authorities claiming excise duty from the association in the case of the respondents succeeding in the writ petition,” the Judge said.

Petitioner’s counsel Narmadasampath submitted crafting of jewellery has been exempted from central excise since the legislature was of the mind that craftsmanship of jewellery was one that required dexterity and  expertise. In 1986, by a notification dated February 10, the department of revenue, exempted handicraft from “the whole of the duty of excise leviable thereon under the Tariff Act”. In other words, manufacturers of handicraft were entirely exempt from imposition of central excise. On January 28, 2015, the Ministry of Textiles had issued an office memorandum including jewellery in the list of handicraft. While so, the Ministry of Finance issued the impugned notification.

As a result, certain demarcations were introduced whereby manufacturers of jewellery were required to pay excise duty of varying rates that depended on their annual turnover. Articles of jewellery, which were previously exempt from central excise were now subject to levy, despite jewellery falling within the category of handicraft.