Jewellers continue to feel pressured by Delhi customs; taxes on goods brought back as unsold, sent as consignment remains a huge bottleneck

Ease of doing business in the jewellery biz is still a far-fetched dream. A month ago, the Delhi customs had issued show cause notices to 160 companies that had shipped goods for exhibition purposes during the period of 2017-2020.

Approximately, 700 crores has been demanded by the Delhi customs as IGST 3% and Basic Custum Duty (BCD) 3% on goods brought back as unsold. Whereas, this move goes against the GST department’s directions based on the notice issued by the Ministry of Finance on 24th July 2019.

Jewellers are perturbed as they feel that Delhi customs is being unreasonable, when the Ministry of Finance, Department of Revenue itself had issued notice that IGST won’t be applicable on jewellery taken out of India on a consignment basis for export promotion, being brought back as unsold, as it clearly means sales has not happened.

If it is new goods, then apart from IGST, Import Duty on jewellery will also be applicable which is as high as 16%. Most of all, these show cause notices are coming during an extremely difficult time when the industry is already grappling with the challenges caused by Covid, as businesses have hit an all time low.  Such show cause notices have not been issued by Jaipur or Mumbai customs, but only Delhi customs. 

One of the jewellers disagreed and said that this is the right time for all jewellers to unite and fight to eliminate these bottlenecks permanently as there are no exhibitions for the next 6 months, so fear of parcel not getting cleared or getting delayed by Delhi customs is not there.