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Circular No. 1041/29/2016 - CX

F. No. 354/25/2016 — TRU (Pt.-D
Government of India
Ministry of Finance
(Department of Revenue)
Tax Research Unit
RERKEK
New Delhi, the 26" July, 2016
To,
Principal Chief Commissioners / Chief Commissioners of Central Excise (AI]);
Principal Chief Commissioners / Chief Commissioners of Customs & Central Excise (All);
All Director Generals of Customs, Central Excise & Service Tax
Madam / Sir,
Subject: Guidelines for Excise Audit of Manufacturers / Principal Manufacturers of
articles of jewellery or parts of articles of jewellery - regarding.
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.
2s 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

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iv.
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;
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;
Manufacturers/principal manufacturers of articles of jewellery whose duty payment
(cash plus credit) is above Rs. 3 crore may be audited every year.
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.
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.
Except as herein provided, all existing circulars/instructions relating to central excise
audit may also apply mutatis mutandis to the manufacturers/principal manufacturers of
articles of jewellery or parts of articles of jewellery, as the case may be.
4,
lines.
5.
notice of the Board.
Hindi version will follow. Trade Notice/Public Notice may be issued on the above
Difficulties faced, if any, in implementation of this Circular may be brought to the
(Anurag Sehgal)
Under Secretary to the Government of India