~~ \i011G ~~.~ Wrr Cf>X 3Tnl<fff <f>T <pJ<Tf(>f<T~. 1, ~ Rrclll JOt! ~~, cp;=cl-;pfc, Rt '{)fl=q "0IIIRrcl - 620 001.

OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE & SERVICE TAXNO.1 WILLIAMS ROAD, CANTONMENT, TIRUCHIRAPPALU - 620 001.

TRADE NOTICE No. 02/2014 Dated: O?-02-2014.

Sub: Divergent practices of assessment with respect to compounded levy schemeapplicable for smokeless tobacco products - Communication of Ministry'S circularreg.

-000-

CoPy of Ministry;s Circular No. 980104/2014-CX dated 24-01-2014issued from fileF.No. 3541l~/2011-TRU is communicated herewith. The contehtsaf the Trade Notice may bebrought to the knowledge of all constituent members of Trade Associations 1 Chamber ofCommerce.

~ Ene! :<T~ As above.(Issued from file C.No. IV/16101l2014-Cx.Pol.)

C\N.~ II{urr: 0 t,YJ')--\f)fl

\If. ~ 1. JAYABHARATHIfi((llICf) ~ ASSISTANT COMMISSIONER

Th 1~~~As per Mailing List IIll/III and all Sections in H.Qrs. Trichy.

"

F.No.3S4/120/20ll-TRUGovernment of IndiaMinistry of Finance

Department of RevenueTax Research Unit

*****

Circular No.980/04/2014-CX

Madam/Sir,

Subject: Divergent-practices of assessment with respect to compounded levy scheme applicablefor smokeless tobacc; products - Regarding. ,. _...

Representations have been received from trade and industry that the field formations arefollowing divergent practice of assessment with respect to compounded levy scheme applicablefor various tobacco products. Certain field formations have also sought clarification on the exciseduty leviable under the said compounded levy scheme.

2. Under the compounded levy scheme, excise duty is chargeable with respect to deemedproduction based on the number of packing machines in the factory of the manufacturer. Theissue raised is whether excise duty can be re-determined based on the speed of the packingmachine and actual production thereof, which may be higher than the deemed production.

'lJ, Presently, the !Y.:?::1-i?i>:'ry compounded levy scheme is applicable to Pan Masala, Gutkhaand chewing tobacco manufactured with the aid of packing machine & packed in pouches. Thefactor relevant to the production on which excise duty is leviable has been notified to be thenumber of packing machines in the factory of the manufacturer under the Pan Masala PackingMachines (Capacity Determination and Collection of Duty) Rules, 2008 and the ChewingTobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination andCollection 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 onthe 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.16/20 IO-CE, dated27.02.2010 refer). In order to minimize the element of subjectivity and' to ensure certainty andobjectivity, the number of packing machines installed in the factory has been notified to be theonly factor relevant to the production of the notified goods under the said rules.

5. Accordingly, it is clarified that the duty payable under notification No.42/2008-CE dated01.07.2008 and notification No.16/2010-CE, dated 27.02.2010 may be determined based ondeemed production with respect to the number of operating packing machines in the factoryduring the month and the Retail Sale Price printed on the pouches and not on the basis of actualproduction by a unit.

6. Trade Notice/Public Notice may be issued to the field formations and taxpayers.

7. Difficulties faced, if any, in implementation of this Circular may be brought to the noticeof the Board.

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Hindi version.follows. _ ..

~~.(RajkUl~arDigvijay)

Under Secretary (TRU)