"Health Security Se National Security" Cess On Pan Masala, Tobacco Manufacturing Enforceable From Feb 01

The Ministry of Finance, Department of Revenue has notified February 01, 2026, as the date for enforcement of the Health Security Se National Security Cess Act, 2025 levying a Health Security se National Security Cess on machines used in manufacture of pan masala and similar items. The Health Security Se National Security Cess Act, 2025 (the Act) requires a manufacturer to self-declare all machines or processes for each factory or premises. It mandates verification of declarations by the Proper Officer through inspection-based monitoring. The Act stipulates a minimum penalty of Rs. 10,000 or an amount equal to the cess evaded or fraudulently claimed, whichever is higher. It also states that Persons aiding or abetting such offences may face penalties up to Rs. 1,00,000. Earlier this month, the Lok Sabha, lower house of the Parliament passed the Health Security Se National Security Cess Act, 2025 (the Act). During the Winter Parliament, Union Finance Minister Smt. Nirmala Sitharaman explained that with the advent of GST in 2017, tax on tobacco and tobacco related products and cess could not reach the benchmark set by the World Health Organization every year. As a result, the affordability index of tobacco products remained high, undermining public health goals. The Health Security Se National Security Cess Act, 2025 has twin proposed purposes of enabling targeted utilisation for public health and national security. It levies a cess on the machines installed or processes undertaken by which pan masala is manufactured or produced, manually or through hybrid processes. The Act having 39 clauses, with Clause 2 as the 'Definition' clause states that “pan masala” is goods falling under tariff item 21069020 of the First Schedule to the Customs Tariff Act, 1975. Further, the term 'Manufacture' encompasses activities such as production, packing, repacking, labelling, re-labelling, price declaration, or any process making goods marketable. Also, 'Taxable Person' is anyone owning, possessing, operating, or controlling machines/processes for specified goods and 'Machine' includes all types of packing machines (Form, Fill & Seal, Profile Pouch, etc.). The Act also elaborates the Registration & Returns Process, Audit & Assessment, Offences & Penalty, Enforcement Powers like Inspection, Search, Seizure, Confiscation of Goods, Power to Arrest. During the deliberations in the Lok Sabha regarding the Acts, the Union Finance Minister Smt. Nirmala Sitharaman about the distribution of cess clarified that allocation of funds will be outlined by the Rules. The Ministry of Consumer Affairs, Food and Public Distribution has mandated display of Retail Sale Price from February 01 206, on all pan masala packs of every size and weight Click here to read the Notification.Click here to read copy of the HealthSecurity SE National Security Cess Act, 2025.

"Health Security Se National Security" Cess On Pan Masala, Tobacco Manufacturing Enforceable From Feb 01

Parul Bose

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