Excise duty on tobacco: Manufacturers to install CCTV, preserve footage for 24 months from February 1

New Delhi: Manufacturers of chewing tobacco, gutkha and similar products will have to install a functional CCTV system from February 1, covering all packing machines and preserve the footage for at least 24 months, according to a government notification.

Such manufacturers will also have to disclose to excise authorities the number of machines and their capacities, and can also claim abatement in excise duty in case a machine is non-functional for a minimum of 15 consecutive days, according to the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules notified by the Finance Ministry.

The Rules will apply to manufacturers who pack such goods in pouches.

"Those manufacturing in other forms (such as tins) have to pay the applicable duty on assessable value," an FAQ released by the Ministry said.

The Ministry, on December 31, 2025, notified the additional excise duties that would be levied on chewing tobacco and related products, in addition to the 40 per cent Goods and Services Tax (GST) rate, from February 1.

Chewing and jarda scented tobacco, and gutkha will attract an excise duty of 82 per cent, and 91 per cent respectively.

The FAQ further said that every manufacturer operating a packing machine is required to install a functional CCTV system covering all packing machine areas and to preserve the footage for a minimum period of 24 months.

Manufacturers of such tobacco products packed in pouches will have to disclose the number of machines, the specifications of the machines, such as maximum rated capacity and gearbox ratios, and the details of retail sale prices to the excise tax authorities.

The jurisdictional Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, will determine the annual production capacity after conducting a physical inspection of the factory and verifying the technical specifications of the machines.

The annual production capacity shall be determined by multiplying the quantity of notified goods deemed to be produced in a month by 12, the FAQ said.

A fresh determination will be done only if there is a change in the relevant factors of production affecting the annual capacity of production, i.e., the number of packing machines and the maximum rated capacity of production of machines, it added.

The manufacturer has to pay the full duty for the entire month in which the machines were installed.

The Rules provide that a manufacturer can claim abatement for the non-operation of any machine for a continuous period of 15 days, regardless of whether this period falls within the same calendar month. To claim abatement, the manufacturer must notify the department at least three working days in advance, and the excise department must seal the machine.

For de-sealing the machine, the manufacturer must inform the jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise at least 3 working days before the date from which the operations are intended to be resumed. The machines will be de-sealed in the presence of the jurisdictional Superintendent of Central Excise, the FAQ said.

For removal of machines from the factory for sale or disposal, the manufacturer has to inform the jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise at least 3 working days in advance from the date so intended for uninstallation, the FAQ said.