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Protest against excise levy on branded jewellery

By Our Special Correspondent

The imposition of 2 per cent excise levy will demotivate the jewellers from making fresh investments for improving purity, says trade.

NEW DELHI, MARCH 3. If the first two days after the presentation of the budget were for the corporate honchos to raise a hue and cry against the Fringe Benefits Tax (FBT), it is now the turn of the gold jewellery trade to raise the banner of protest.

Irked at the 2 per cent excise duty on `branded jewellery,' the gold jewellery trade, under the banner of the World Gold Council (India wing), has urged the Finance Minister, P. Chidambaram, to reconsider the levy as it militates against the principles of "purity'' and hallmarking and will play havoc with the fragmented Indian jewellery market.

Over the last couple of years, the Centre made sustained efforts to improve the quality of Indian gold jewellery in terms of purity and in this exercise, the Ministry of Consumer Affairs played a major part. As a collective result, there has been a tremendous improvement in the quality of gold jewellery in that the trade is now veering towards hallmarking and branding their products to ensure purity of the yellow metal to their consumers.

The sudden imposition of 2 per cent excise levy, as revenue-raising measure or otherwise, has come as a major setback as it tends to demotivate the jewellers from making fresh investments for improving the quality and purity standards. In particular, the duty will have the effect of discouraging the hallmarking process, which the Bureau of Indian Standards (BIS) had introduced in the year 2000. The end result is that the fresh levy thwarts the Government's own efforts towards improving the quality of gold jewellery so that the consumers are not cheated by way of lower carat value.

The concept of hallmarking requires the jeweller to emboss his logo or trademark on each gold jewellery product. Since it is not clear as to whether this is defined as a "branded'' product as contained in the budget for the purposes of imposing the excise levy, sections of the trade may discontinue the hallmarking process. In that event, unscrupulous gold jewellery traders will be able to pass on lower carat gold items to their customers as 22-carat products and thereby mint money. This practice is already rampant in the unbranded unorganised sector.

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