Excise sops for tobacco firms in Northeast

 The Central Board of Excise and Customs (CBEC) has issued orders saying all companies based in the seven states of the region will be entitled to this benefit. The order will benefit among others GTC Industries and the D S group, which have invested in tobacco companies in the Northeast.

 Under the notification, tobacco manufacturing companies that have set up base in the region between December 24, 1997, and February 28, 2001, will be allowed to waive 50 per cent of 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 It further says if the investments are withdrawn within the 10-year period, the duty will have to be made good by the companies to the department.

 The order comes in the backdrop of withdrawal of incentives in the Budget for 2003-04 to tobacco companies enjoying excise duty waiver on products manufactured in the Northeast. The incentives were available for August-December 1999 and January 2000 to January 2001.

 But the CBEC withdrew these benefits under Section 154 of the Finance Act on the plea that they were being misused by many tobacco and pan masala companies, which had simply opened front offices in the region and not made any worthwhile investments.

 The Centre has, accordingly, demanded Rs 204.12 crore from these companies. The 18 companies on whom notices were served have secured an ad-interim stay from the Guwahati High Court against payment of these arrears.

 However, government officials said the recent notification would not come in the way of recovery of these dues. By linking excise duty benefits to proposed investments, the CBEC has blocked the possible misuse of the fresh exemption clause.

 The department of Northeast had also represented to the finance ministry to have a relook into the issue, after making provisions for punishment of duty evaders.