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INDIA BUSINESS WORLD - 1st March - TO - 15th March - 2009
PAN MASALA, GUTKHA EXPORTERS MUST PAY EXCISE DUTY, CLARIFIES THE CENTRAL BOARD OF EXCISE AND CUSTOMS
EXPORTERS of Pan masala and gutkha manufacturers will now have to pay excise duty on the basis of the number of packaging machines installed in a factory. It can be claimed as a refund after exports are made.
According to a notification issued by Central Board of Excise and Customs, pan masala cannot be exported without payment of excise duty. The notification comes after the CBEC received several representations from the industry to seek clarity on the issue. The notification makes it clear that the duty-free export option is not available to the sector. Usually, exporters can either opt for duty-free exports or claim duty refund after exporting the goods.
It may be recalled that in December 2007, pan masala and gutkha sector was placed under a capacity-based levy scheme, after reports of rampant tax evasion. Under the capacity-based levy scheme, duty is levied on the basis of number of packaging machines installed in a factory. Since a single machine can be used to make both for domestic as well as international markets, the industry had written to the CBEC seeking clarity on whether it could export without payment of duty.
"No notified goods (pan masala and gutkha) shall be exported without payment of duty and no material shall be removed without payment of duty from a factory or warehouse or any other premises for use in the manufacture or processing of notified goods which are exported out of India,” the CBEC notification said.
Excise duty rates per machine range from Rs 9.25 lakh per month to Rs 70 lakh per month, depending on the retail sales price of pouch. Moreover, excise duty rates are higher for pan masala containing tobacco.
The production-based levy was introduced after the excise department detected rampant evasion in the sector, which has an estimated annual turnover of Rs 25,000 crore. Monthly tax collections from the sector grew five fold to Rs 250 crore after the introduction of this levy.
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