Special GST Rules for Manufacturers of Tobacco Products & Pan Masala

Special procedures for Manufacturers of tobacco products and pan masala are now subject to additional reporting requirements under the GST law. This change aims to bring about greater transparency and streamline operational practices. Let's dive into the key details. 

Introduction to CGST Notification No. 30/2023 dated 31st July 2023

The Central Board of Indirect Taxes and Customs (CBIC) released Notification No. 30/2023 on 31st July 2023, heralding a new era for the tobacco and pan masala manufacturing industry. This directive outlines:

• Packing Machines Details: Registered manufacturers are now mandated to submit exhaustive details of their packing machines used for packaging tobacco products and pan masala into sealed pouches or containers for retail sale. The directive requires manufacturers to provide data points such as make, model number, date of purchase, installation address, packing capacity, and electricity consumption. All this information will be documented in Form SRM-I.
• Submission Deadlines: Existing manufacturers are given a 30-day window from the notification's release date to provide the necessary details. Conversely, newly registered manufacturers post the notification date have a time of fifteen days from their registration grant date to comply.
• Operational Record-Keeping: A comprehensive daily record-keeping system has been introduced. Manufacturers are encouraged to document daily inputs, waste generation, electricity and generator metre readings, and production specifics. For this, designated formats Forms SRM-IIIA and SRM-IIIB have been prescribed.
• Monthly Reporting: Furthering the push for transparency, manufacturers must submit a special monthly statement capturing essential operational metrics. To be filled out in Form SRM-IV, this statement must be uploaded to the GST portal by the tenth day of the subsequent month.

Through these provisions, the government aims to enhance the oversight of a sector with immense economic and health implications. The overarching goal remains to ensure transparent operations and accurate reporting and instill responsible practices among manufacturers.

Who are the notified registered manufacturers of goods? 

The notified registered manufacturers of goods, as mentioned in the Schedule, include those producing:

• Tobacco Products:
  • Pan-masala.
  • Unmanufactured tobacco (both with and without lime tube) bearing a brand name.
  • Tobacco refuse with a brand name.
  • 'Hookah' or 'gudakhu' tobacco, both bearing and not bearing a brand name.
  • Other water pipes smoke tobacco without a brand name.
  • Smoking mixtures for pipes and cigarettes.
  • Other types of smoking tobacco, both with and without brand names.
• Homogenised or Reconstituted Tobacco Products:
  • "Homogenised" or "reconstituted" tobacco bearing a brand name.
• Chewing Tobacco and Similar Products:
  • Chewing tobacco, both with and without lime tube.
  • Filter khaini.
  • Preparations containing chewing tobacco.
  • Jarda scented tobacco.
• Snuff and Extracts:
  • Snuff.
  • Preparations containing snuff.
  • Tobacco extracts and essence, both with and without a brand name.
• Miscellaneous:
  • Cut tobacco.
  • Pan masala containing tobacco 'Gutkha'.
  • All other goods, excluding pan masala with tobacco 'gutkha', both with and without a brand name.

Clarifications on Terminology and Interpretation:

1. Within the context of this Schedule, terms like "tariff item", "heading", "subheading", and "Chapter" refer to their respective designations as detailed in the First Schedule of the Customs Tariff Act, 1975 (Act No. 51 of 1975).
2. For clarity, the interpretation of this notification will align with the guidelines from the First Schedule of the Customs Tariff Act, 1975. It includes adhering to the Section and Chapter Notes, as well as the General Explanatory Notes of the First Schedule, wherever applicable.
3. For this notification's intentions and purposes, "brand name" encompasses brand and trade names, irrespective of their registered status. Essentially, it is any name, symbol, monogram, label, signature, or coined term that signifies a connection in the trade between certain goods and an individual or entity using such a descriptor, even if the exact identity of that person or entity is not indicated.

Time Limit for Submission of Documents:

For Existing Registered Manufacturers:

• Manufacturers already registered before the introduction of CGST Notification No. 30/2023 are mandated to submit the necessary details within 30 days from the date of this notification.

For Newly Registered Manufacturers under GST:

• Manufacturers who have secured their GST registration after the release of this notification must ensure that they provide the required details within 15 days of their registration grant.

List of Documents Required for Submission

Details of Packing Machines:

Manufacturers are required to provide exhaustive information regarding their packing machines. It includes the make, model number, purchase date, installation address, packing capacity, and the machine's hourly electricity consumption.

FORM SRM- 1 

Fetching details: These details can be sourced from purchase invoices, machine manuals, and internal inventory logs.

1. Installation of Additional Machines

If any additional filling and packing machine is installed in the business premises post the initial declaration, its details must be submitted. It will allow for the generation of a unique ID for each new machine.

FORM SRM-IIA

Fetching details: Details can be fetched from recent purchase records, installation receipts, and internal asset tracking systems.

2. Removal of Existing Machines

Any registered manufacturer must record the removal of an existing filling and packing machine from their business premises. The recording should be done within a 24-hour time limit, specifying the reasons for the removal.

FORM SRM-IIB

Fetching details: Details can be sourced from asset disposal logs, decommissioning reports, and internal inventory adjustments.

3. Daily Records of Operations

A comprehensive day-to-day record is required, encompassing details of inputs procured, waste generated, readings of electricity metres, generator metres, and shift-wise production details.

FORM SRM-IIIA

FORM SMR-IIIB

Fetching details: These records should be meticulously maintained daily, and manufacturers can refer to procurement logs, production sheets, and utility metre readings. 

4. Special Monthly Statement

A dedicated monthly report capturing vital data points associated with the manufacturer's operations should be prepared and submitted.

FORM SRM-IV

PART B

Fetching details: Manufacturers should gather data from daily records, consolidate them, and use the aggregated data for this monthly submission.

Manufacturers must adhere to the stipulated guidelines, guaranteeing accurate and timely submissions. Proper document management practices can ease this process and ensure seamless compliance.