Tobacco product manufacturers must install CCTV, preserve footage for 24 months

Manufacturers of chewing tobacco, gutkha, and related products must install fully operational closed-circuit television systems covering all packing machines by February 1. They are required to preserve the footage for at least 24 months, as per a directive issued by the finance ministry to improve oversight of tobacco product manufacturing.

In addition to surveillance, manufacturers must disclose to excise authorities the number and capacity of packing machines, along with detailed specifications and retail sale prices for products packed in pouches. The new rules also require manufacturers to pay excise duty for the entire month in which machines are installed.

However, manufacturers may claim abatement in excise duty if a machine remains non-functional for at least 15 consecutive days. This is subject to informing the department at least three working days in advance and the excise department sealing the machine. Removal or de-sealing of machines also requires prior notice to excise authorities.

The finance ministry has confirmed that additional excise duties will be imposed on chewing tobacco, jarda scented tobacco, and gutkha, supplementing the existing 40 per cent goods and services tax. From February 1, chewing and jarda scented tobacco will attract an 82 per cent excise duty, while gutkha will be taxed at 91 per cent.

Manufacturers producing tobacco products in other forms, such as tins, will continue to be subject to excise duty based on assessable value rather than the new machine-based rules.

According to the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, the annual production capacity will be determined by the jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise after physical inspection and verification of technical specifications.

The directive states that the annual capacity of production shall be calculated by multiplying the quantity of notified goods produced in a month by 12. A fresh determination of production capacity will only be made if there are changes to relevant production factors, such as the number of packing machines or their maximum rated capacity.

The excise rules also emphasise that abatement in duty for machine non-operation is not limited to periods within the same calendar month. Manufacturers must maintain regular communication with excise authorities to ensure compliance with all new operational and reporting requirements.