Pan masala – lot of masala?
A netizen just sent me this by mail.
S.No. 20 of the Notification No. 2/06 NT specifies that pan masala and pan masala containing tobacco classifiable under CHSH No. 2106 90 20 and 2403 of CETA 1985 are assessable under Section 4A of Central Excise Act 1944 and the abatement given for arriving at the assessable value based on the RSP is 50%. Similarly S.No. 28 of this Notification notifies all goods falling under 2403 99 10, 2403 99 20 and 2403 99 30 as assessable under Section 4A of CEA ’44 with an abatement of 50% of the RSP. This Notification No. 2/06 CE (NT) is issued by the Government of India in terms of Section 4A (1) of CEA ’44.
Further Notification No. 3/06 CE (NT) dated 01.03.2006 superseding Notification No. 16/98 CE (NT) dated 02.06.1998, issued under Section 3(2) of the CEA ’44 fixes tariff value for goods falling under CHSH No. 2106 90 20 or 2403 of CETA ’85 (description annexed below the main text of the notification refers to pan masala in retail packages) based on net quantity of the goods in the retail packs and if RSP is declared then the tariff value is 50% of the RSP.
It may be noted that the goods falling under CHSH No. 2106 90 20 and 2403 of the CETA ’85 are liable for assessment under two different sections of the CEA ’44. However the basis of arriving at the value is more or less through a single source viz., RSP i.e. retail sale price. However Section 4A (2) of CEA ’44 states that “where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in Section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the official gazette”. Section 3 (2) of CEA ’44 states that “the Central Government may, by notification in the official gazette, fix, for the purpose of levying the said duties, tariff values of any articles enumerated, either specifically or under general headings, in the First Schedule and Second Schedule to the CETA 1985 as chargeable with duty advalorem and may alter any tariff values for the time being in force”.
It is clear that the non-obstante clause of Section 4A as reproduced above refers only to Section 4 of CEA ‘44 but not Section 3(2) there under thereby putting the valuation of the goods classifiable under CHSH No. 2106 90 20 under jeopardy. Moreover the Central Government is empowered to fix tariff values for certain categories of articles under CETA ’85. By virtue of this it has fixed tariff values for goods classifiable under 2106 90 20 and 2403 (pan masala with or without tobacco) and the basis for fixing the tariff value is incidentally the RSP printed on such packs. When the provisions of Section 4A (2) and Section 3 (2) of CEA ’44 are read together it can be inferred that the tariff value fixed under Section 3 (2) of CEA ’44 (i.e. 50% of RSP) shall be deemed to be the retail sale price for the purpose of Section 4A (2) and the abatement given under the notification for that product shall be on this RSP. To put this in simple terms with an illustration if a 10gm pack of pan masala has an RSP of Rs. 10/- then its tariff value is Rs. 5/- [in terms of Section 3 (2) read with Notification No. 3/06 CE (NT)] and for the purpose of Section 4A assessment of this product this Rs. 5/- shall be deemed to be the RSP. Therefore by virtue of Section 3(2) read with Section 4A (2) read with Notification Nos. 2/06 and 3/06 CE (NT) as amended, for the above illustration the assessable value for the purpose of paying excise duty shall be Rs. 2.50ps.
But is this the real intention of the Government of India is a question which only the Babus who have drafted these legislations and subordinates can answer. For the moment the pan masala industry can rejoice at such a huge bonanza doled out by the Ministry of Finance. Is CAG watching these columns of this portal? After all the Hon’ble President of India while inaugurating the new CAG office suggested them to go for online auditing. But before that let them get hooked to some interesting online information.