Pan Masala - Duty distribution Needs a Re-look
DUTY on Pan Masala is payable as per the Annual Capacity determined under the Provisions of "The Pan Masala Packing Machines (Capacity Determination And Collection Of Duty) Rules, 2008", Notified under CE(NT) No 30/2008 dated 1.7.2008, read with Notification No 42/2008-Central Excise, dated 1.7.2008. The total duty payable computed as per the above Notifications is to be distributed according to the Formula given under Notification No 30/2008 CE(NT). At present, the duty ratio is as under:
Duty | Duty ratio for pan masala |
The duty leviable under the Central Excise Act, 1944 | 0.3161 |
The additional duty of excise leviable under section 85 of the Finance Act, 2005 | 0.1355 |
National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001 | 0.5193 |
Education Cess leviable under section 91 of the Finance Act, 2004 | 0.0194 |
Secondary and Higher Education Cess leviable under section 136 of the Finance Act, 2007 | 0.0097 |
The above ratio is determined as per the effective duty rate of Basic Excise duty at 14%, Additional duty of excise as 6% NCCD at 23%, Education Cess at 2% and Secondary Education Cess at 1% as detailed under:
Let the Assessable value be Rs 100
Ratio to the Total duty | |||
BED | 14 | 14/44.29 | 0.3161 |
Addl excise duty | 6 | 6/44.29 | 0.1355 |
NCCD | 23 | 23/44.29 | 0.5193 |
Ed.Cess ( 2% on 43) | 0.86 | 0.86/44.29 | 0.0194 |
SHE Cess (1% on 43) | 0.43 | 0.43/44.29 | 0.0097 |
Total Duty | 44.29 | 44.29/44.29 | 1 |
The duty on Pan Masala under Notification No 12/2012 CE dated 17.3.2012 is 12% (Entry No 35)
So, the above duty distribution ratio needs to be modified as under:
Ratio to the Total duty | |||
BED | 12 | 12/42.23 | 0.2842 |
Addl excise duty | 6 | 6/42.23 | 0.1421 |
NCCD | 23 | 23/42.23 | 0.5446 |
Ed.Cess ( 2% on 41) | 0.82 | 0.82/42.23 | 0.0194 |
SHE Cess (1% on 41) | 0.41 | 0.41/42.23 | 0.0097 |
Total Duty | 42.23 | 42.23/42.23 | 1 |
Similarly, in respect of Pan Masala containing tobacco, the present duty ratio in Notification No 30/2008 CE(NT) was computed by taking the duty rate at 50%. But, vide Finance Act, 2010, in tariff item 2403 99 90, duty rate has been enhanced to 60% and accordingly, the duty ratio needs to be revised as under:
Ratio to the Total duty | |||
BED | 60 | 60/78.28 | 0.7665 |
Addl excise duty | 6 | 6/78.28 | 0.0766 |
NCCD | 10 | 10/78.28 | 0.1277 |
Ed.Cess ( 2% on 76) | 1.52 | 1.52/78.28 | 0.0194 |
SHE Cess (1% on 76) | 0.76 | 0.76/78.28 | 0.0097 |
Total Duty | 78.28 | 78.28/78.28 | 1 |