In order to check excise evasion, the revenue department has proposed a formula based on an IIT-Delhi study for calculating more accurately the number of pan masala or gutkha pouches produced by a machine. The maximum packing speed at which a machine can be operated for packing pan masala, gutkha and chewing tobacco of various retail prices was made a factor for determining deemed production by Finance Minister Arun Jaitley in Union Budget. Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules 2008 and Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) 2009 were amended in Budget 2015-16.
The draft norms were issued following representations from trade regarding “lack of guidelines to verify the maximum speed of packing machines” leading to disputes and litigation, the department has come out with guidelines. The study conducted by the Directorate General of Central Excise Intelligence (DGCEI) in collaboration with IIT-Delhi has suggested a formula to calculate the maximum packing speed based on three factors – RPM of the rotary motor, number of funnels and overall gear ratio.
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Funnels are conical inlets on the rotating plate of the machine where pan masala falls from the hopper and then filled in the pouches and packed. The Central Board of Excise and Customs (CBEC) has invited comments on the draft guidelines for measuring maximum speed of packing machines by October 20.
The Budget 2015-16 made maximum speed of packing machine as a factor relevant to production for determining excise duty payable under the Compounded Levy Scheme applicable to pan masala, gutkha and chewing tobacco. The deemed production and duty payable per machine per month were notified with reference to the speed range in which the maximum speed of a packing machine falls.