Pan Masala And Gutkha Put Up In Tin Packages – Applicability of Section 3A - Board corrects its earlier letter
Not making official letters, public, has its rewards! CBEC had by a letter F. No. 341/49/2008-TRU–dated 1.7.2008 issued a clarification as follows:-
"3. Levy under section 3A is not applicable to,-
( i ) pan masala , not containing tobacco, with betel nut content not exceeding 15%
(ii) pan masala containing tobacco or gutkha, packed manually or put up in a form of packing other than pouches such as, tin packs."
It seems some representations have been received that in view of the above clarification, a view is being taken that levy under section 3A is applicable to pan masala (tariff item 2106 9020) packed in tin packs.
Now the Board issues a revised detailed clarification. First the Statement of Facts:
1. Notification No.29/2008-CE(NT), dated 01.07.2008 specifies pan masala falling under tariff item 2106 90 20 and pan masala containing tobacco, commonly known as gutkha , falling under tariff item 2403 99 90, manufactured with the aid of packing machine and packed in pouches, as notified goods.
2. Further as per rule 11 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) rules, 2008, every manufacturer is required to declare the retail sale price of the notified goods on the package of such goods.
3. The Explanation 3 to the opening paragraph in the notification No.42/2008-CE., dated 01.07.2008, defines the "retail sale price" as the "maximum price at which the specified goods in packaged form may be sold to the ultimate consumer and includes all taxes.........."
4. These provisions, especially the use of expression "packed in pouches" in notification No.29/2008-CE (NT), dated 01.07.2008, make it clear that the intention is to cover only pan masala and pan masala containing tobacco if these are packed in pouches with the aid of a packing machine and cleared in that form.
5. Therefore, pan masala or pan masala containing tobacco cleared in tin packs cannot be considered as notified goods under Section 3A , and hence will be outside the scope of Section 3A levy.
6. Even where such goods packed in tin packs are wrapped in an inner packing of paper or plastic, so as to maintain the freshness of the product, these goods cannot be considered as notified goods because the goods are not being presented and sold to the ultimate consumer in the form of pouches.
7. The declaration of retail sale price under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, or other similar declarations concerning ingredients, health hazard, manufacturer's name, date, etc. under various other statutes are not printed on such inner wrapping.
8. This position was intended to be clarified vide F. No. 341/49/2008- TRU, dated 01.07.2008.
9. Inadvertently, however, para 3(ii) of the letter did not make a reference to "pan masala , not containing tobacco" but only to "pan masala containing tobacco or gutkha.
As the Board had inadvertently gave a an unintended clarification, it is now corrected. The Board letter F. No. 341/49/2008-TRU, dated 01.07.2008, is corrected and para 3 would now read as,
"3. Levy under section 3A is not applicable to,-
(i) pan masala , not containing tobacco, with betel nut content not exceeding 15%
(ii) pan masala or pan masala containing tobacco, commonly known as gutkha, packed manually or put up in a form of packing other than pouches such as, tin packs."
It requires courage to admit a mistake and correct it and the Board richly deserves praise for correcting the mistake before the field started its manufacturing of mass SCNs.
But what beats logic is why the Board is shy of public circulars – what is the point in hiding such vital information from the stake holders and sending such letters to Chief Commissioners which do not reach the field formations.
DDT spoke to several field officers who were blissfully ignorant about the Board's inadvertent mistake as well as the gracious correction.
CBEC F. No. F. No. 341/49/2008- TRU (Pt.I) Dated: August 04, 2008