Pan masala makers under scanner for possible excise duty

Pan masala manufacturers have come under the scanner of the central revenue department for possible excise duty evasion.
Officials in central excise commissionerates and financial intelligence agency are keeping an eye on manufacturers of pan masala, especially those having smaller units, to check leakage of any government's revenue, sources said.
Pan masala industry is among the top 100 contributors of excise duty to the government's kitty, they said.
Excise officials are assessing the duty being paid by pan masala manufacturers. Records are also being verified for any default by the manufacturers, the sources said.
The government's tariff on pan masala is calculated through a compounded levy scheme. Under this, excise duty is charged with respect to production capacity of a manufacturing machine and retail sale price of the product.

The excise duty is charged under 'Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, modified in 2010, ranges from Rs 14 lakh to Rs 77 lakh depending upon the price of per packet of pan masala (non-tobacco) and production capacity of machines, they said.

A common modus operandi adopted by some of the evaders is to show less number of production by a manufacturing machine.
"There have been instances where pan masala companies have shown wrong-end use of manufacturing machines. A recent case registered by the central revenue intelligence agency found that a firm was manufacturing pan masala on machines declared for producing flavoured supari," an excise official said.

Excise duty on pan masala is higher than flavoured supari. For flavoured supari, the tariff is charged on the basis of maximum retail price. The duty is calculated at the rate of 2.36 per cent per packet, excluding 35 per cent of abatement given on it.
Most pan masala units operates from Uttar Pradesh, Gujarat, Bihar, Haryana and Madhya Pradesh among others. "Special watch is being kept on units in these areas," the official said.
The Finance Ministry had recently increased excise duty on pan masala and tobacco products, including gutka, chewing tobacco, unmanufactured tobacco and filter khaini packed in pouches with the aid of packaging machines under the compounded levy scheme.