Madras HC grant status quo to local jewellers on excise

The Madras High Court has issued an interim status quo order on the central government's plan to impose excise duty on jewellery items, following a petition filed by the Coimbatore Jewellery Manufacturers Association (CJMA). The status quo has to be maintained till the next hearing, which is to be held on June 3, 2016, according to sources close to the litigation. This means excise duty imposed on gold jewellery imposed by notification issued on 29 February may not be enforced on the member firm till 3 June.

The Association has moved the court challenging the centre's decision to impose excise duty on jewellery items, on the grounds that Jewellery is a handicraft item, and excise duty cannot be levied on it as per the prevailing regulations.

"Gold jewellery is made by hand and thus it comes under the handicraft items. These are exempted from excise duty and it is against the law to levy excise duty on Jewellery and this is what we submitted in our petition," said B Muthu Venkatraman, president of CJMA.

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According to the Supreme Court order in the case of Collector of Central Excise, New Delhi vs Louis Shoppe, it was observed that an item could be qualified as a handicraft if it is predominantly made by hand, though there are some machinery usage in the process. This is applicable to the gold kewellery also, they argued.

Additional Solicitor General of India G Rajagopalan questioned the maintainability of the petition and said that the government needs time to respond.

Justice M Duraiswamy, last week, allowed four weeks' time for centre to respond and issued an interim status quo till June 3, 2016. The status quo is applicable only to the members of the association, said the counsel appeared for CJMA. The court also added that the order shall not obstruct the authorities from claiming excise duty from the association members if the authorities succeed in the writ petition.

According to the jewellers, while the centre has issued a notification levying excise duty on gold jewellery, in March, it has given time till June 30, for the jewellers to register their name with the authority.