Mandatory Compounded levy of Excise on Pan Masala and Gutkha notified

The Government has notified mandatory scheme of payment of excise duty based on capacity of production for pan masala, whether or not containing tobacco, manufactured with the aid of packing machine and put up in pouches, effective from 1st July 2008.

  • For a Pan Masala Pouch of up to Rs 1 RSP; excise duty of Rs 9.25 Lakh per packing machine per month has been notifiedFor a Pan Masala containing Tobacco Pouch of up to Rs 1 RSP; excise duty of Rs 12.50 Lakh per packing machine per month has been notified vide Central Excise Tariff Notification No.42.
  • For pouches of above Rs 1 RSP; higher rate of excise duty ranging from Rs 14 Lakh per packing machine per month to Rs 70 Lakh per packing machine has been prescribed.
  • Pan Masala & Gutkha have been notified under Section 3A of Central Excise Act vide Central Excise Non-Tariff Notification No.29   
  • Hitherto, an optional scheme existed for payment of excise duty on the basis of compounded levy for Pan Masala and Gutkha was in force.
  • However, mandatory compounded levy scheme is not applicable to pan masala, not containing tobacco, with betel nut content not exceeding 15% and pan masala containing tobacco or gutkha, packed manually or put up in a form of packing other than pouches e.g. tin packs.
  • Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules have also been notified vide Central Excise Non-Tariff Notification No. 30
  • Pan Masala and Gutkha are considered to be most evasion prone commodity and ,therefore, the Government has tried to plug the evasion. Several Excise Officers have been found to be having nexus with pan Masala lobby. Chief Commissioner of Delhi Central Excise was arrested by CBI while accepting bribe of Rs 10 lakh in his office which was allegedly being paid on behalf of Pan Masala Lobby. An Inspector of Central Excise who remained posted in Anti-Evasion Branch of Delhi Central Excise Commissionerate for a decade thanks to his connection with Pan Masala lobby; resigned from Excise Department and floated his own Pan Masala Units and is now said to be worth Rs 100 Crore. Another Excise Officer who came into contact with Pan Masala Lobby during his long stint in Delhi Anti-Evasion; also resigned and has become Consultant of Pan Masala Units in Delhi. Even an Ex-Chairman of CBEC is now a Consultant for several Pan Masala Units.
  • Several Central Excise Preventive Officers including an Additional Commissioner were recently transferred on allegations of having nexus with Pan Masala Units located in Kundli falling under Rohtak Central Excise Commissionerate. Even Ranges having jurisdiction over Pan Masala Units are considered lucrative in excise department.

(Source:Allindiantaxes)

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13 Comments

  1. sandeep jain said,

    July 12, 2008 at 9:32 am

    please let me know the following topics:
    1. As i m a upgrowing guthka maker wants to know new updted excide duty secheme on panmasala contaning tobacoo.
    2.I have only 1 machine single track and paying tax according to rules whats the duty charges if i run machine up to 25 days in a month 1 hours or 2 hours.
    3.whats the levy chasrges.

    • Anonymous said,

      November 9, 2011 at 5:59 pm

      Dear Mr. Sandeep,

      This is abhijeet Kelkar from Pune,

      I just came across your query regarding pan masala through internet, we are involved in manufacturing of pan masala, Gutkha, Sweet Supari, & mukhwas compound.

      Let me know your contact details so that we can talk regarding the same in details.

      Regards,
      Abhijeet
      9730669977
      kelkarabhijeet@gmail.com

  2. sandeep jain said,

    July 12, 2008 at 9:39 am

    please let me know:
    1 If i not produce the notified goods during any continues period of 15 or more days then whats the duty charge in this circumtances.
    2.Is the duty charges are applicable in advance or after the sale of product or after a period of time.

  3. sandeep jain said,

    July 12, 2008 at 9:51 am

    I have already sealed my packing machine by excise department on dated 25 may 2008 now please let me know in this condirion m i applicacable to pay the duty or not?

  4. sandeep jain said,

    July 12, 2008 at 10:06 am

    please let me know according to Notification No.30/2008-Central Excise (NT) rule 16 explanation if i ceased my machine in only 1 or 2 shift then whats the maening of shift time is there 2 hours in a shift or other.

  5. yugal khetan said,

    October 22, 2008 at 10:56 pm

    i do have the same problem as all the peoples said as above
    i am having a new upgrowing company thats why thr is no scope of paying the tax as mentioned as per the no of macines, i a having a single machine that too i cannot run more the an hour a day so how can i start or countinue my business if this kind of tax structure exists, if the central excise dep. allow me to run my machine if i asked them to only unseal my machine for 10 hrs a month innitially,
    i had submitted my licence back to the department after the nortification came into force in july, plz help me.

  6. ARUN JINDAL said,

    July 16, 2009 at 3:59 pm

    plz let me know
    1. i want to make a plant of pan masla and guttak than what r the documents which i have to submit to excise department.
    2. what r the rules of excise department what is percentage of tax on these goods.the tax is on per unit or on machinery..
    3.There is tax on supari like kuber supari.

    • Anonymous said,

      November 9, 2011 at 6:00 pm

      Dear Mr. Arun,

      This is abhijeet Kelkar from Pune,

      I just came across your query regarding pan masala through internet, we are involved in manufacturing of pan masala, Gutkha, Sweet Supari, & mukhwas compound.

      Let me know your contact details so that we can talk regarding the same in details.

      Regards,
      Abhijeet
      9730669977
      kelkarabhijeet@gmail.com

  7. Sanjay Sharma said,

    July 25, 2009 at 10:40 am

    According to compound levy Duty per machine per month per shift is 12.5 lac for pouch Re.1

  8. ASHIRWAD RAI said,

    April 10, 2010 at 5:33 pm

    i want to establish a business of pan masala what are the do’s and dont’s ?

    • Anonymous said,

      November 9, 2011 at 6:01 pm

      Dear Mr. Ashirwad Rai,

      This is abhijeet Kelkar from Pune,

      I just came across your query regarding pan masala through internet, we are involved in manufacturing of pan masala, Gutkha, Sweet Supari, & mukhwas compound.

      Let me know your contact details so that we can talk regarding the same in details.

      Regards,
      Abhijeet
      9730669977
      kelkarabhijeet@gmail.com

  9. UBED A MIRZA said,

    March 24, 2011 at 4:35 pm

    please let me know that ;
    what is the penalty, if found, for not paying the duty on packaging machines.

  10. Laxman said,

    January 12, 2012 at 7:55 pm

    what is the rate of duty (compound leavy) in Gutkha per machine MRP-1,MRP-2,MRP-5,MRP-7,MRP-10,


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