Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
*****
Circular No.980/04/2014-CX
New Delhi, the 24th January, 2014
To,
Chief Commissioners of Central Excise (All),
Chief Commissioners of Central Excise and Customs (All),
Director General, Directorate General of Central Excise Intelligence,
Commissioners of Central Excise (All),
Commissioners of Central Excise and Customs (All).
Madam/Sir,
Subject: Divergent practices of assessment with respect to compounded levy
scheme applicable for smokeless tobacco products – Regarding.
Representations have been received from trade and industry that the field
formations are following divergent practice of assessment with respect to
compounded levy scheme applicable for various tobacco products. Certain field
formations have also sought clarification on the excise duty leviable under the
said compounded levy scheme.
- Under the compounded levy scheme, excise duty is chargeable with respect to
deemed production based on the number of packing machines in the factory of the
manufacturer. The issue raised is whether excise duty can be re-determined based
on the speed of the packing machine and actual production thereof, which may be
higher than the deemed production.
- Presently, the mandatory compounded levy scheme is applicable to Pan Masala,
Gutkha and chewing tobacco manufactured with the aid of packing machine & packed
in pouches. The factor relevant to the production on which excise duty is
leviable has been notified to be the number of packing machines in the factory
of the manufacturer under the Pan Masala Packing Machines (Capacity
Determination and Collection of Duty) Rules, 2008 and the Chewing Tobacco and
Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection
of Duty) Rules, 2010 read with section 3A (2) and (3) of the Central Excise Act,
1944. The monthly deemed production per operating machine per month is
prescribed based on the average speed of packing machines and average working
hours of a factory. Excise duty is chargeable at the rates notified on the basis
of Retail Sale Price (RSP) slabs on per machine basis (notification
No.42/2008-CE dated 01.07.2008 and
notification No.16/2010-CE, dated 27.02.2010
refer). In order to minimize the element of subjectivity and to ensure certainty
and objectivity, the number of packing machines installed in the factory has
been notified to be the only factor relevant to the production of the notified
goods under the said rules.
- Accordingly, it is clarified that the duty payable under
notification
No.42/2008-CE dated 01.07.2008 and
notification No.16/2010-CE, dated 27.02.2010
may be determined based on deemed production with respect to the number of
operating packing machines in the factory during the month and the Retail Sale
Price printed on the pouches and not on the basis of actual production by a
unit.
- Trade Notice/Public Notice may be issued to the field formations and
taxpayers.
- Difficulties faced, if any, in implementation of this Circular may be brought
to the notice of the Board.
- Hindi version follows.
F.No.354/120/2011-TRU
(Rajkumar Digvijay)
Under Secretary (TRU)