Excise waiver for tobacco firms in NE

Sop extended to infrastructure projects

The central government has decided to exempt tobacco and pan masala companies, based in the North-eastern states, from excise duty, provided they make a similar quantum of investment in their units for 10 years, prospectively.

The Central Board of Excise and Customs (CBEC) notification has doubled the 50 per cent relief on excise duty, given to them in August 2003.

It has also relaxed the conditions for availing the benefits by saying the investment, to be made by these companies, need not be restricted to plant and machinery only. It can be made for any infrastructure, civil or even social projects in the region.

It is part of a series of excise and Customs duty sops, announced by Finance Minister Jaswant Singh in the run-up to the general elections in March. It will benefit, among others GTC Industries and DS Group, which have made investment in tobacco companies in north-east.

According to the notification, tobacco manufacturing companies, which have set up base in the region between December 24, 1997 and February 28, 2001, will be allowed a 100 per cent waiver on their total taxes including basic, additional and special excise duty, if they invest an equivalent amount in their units for the next 10 years.

It also says if the investment are withdrawn within 10 years, the duty will have to be made good by the companies to the department.

Budget 2003 had withdrawn the incentives for tobacco and pan masala companies, which were enjoying refund of excise duty for tobacco products manufactured in the North-eastern region.

The CBEC said these benefits under Section 154 of the Finance Act were being misused as many tobacco and pan masala companies had only opened front offices without any worthwhile investment in the region. The Centre had accordingly raised a demand of Rs 204.12 crore on these tobacco companies.

The 18 firms on whom notices were served, had however, secured an ad interim stay from the Guwahati High Court against the recovery of the dues.

But, while restoring the benefits partially in August, the government had said the notification would not impact the recovery of dues.

Promoting growth

• The Central Board of Excise and Customs notification has doubled the 50 per cent relief on excise duty, given to them in August 2003
• It is part of a series of excise and Customs duty sops, announced by Finance Minister Jaswant Singh in the run-up to the general elections in March
• It will benefit, among others GTC Industries and DS Group, which have made investment in tobacco firms in NE
• Budget 2003 had withdrawn the incentives to tobacco and pan masala companies