The Health Security Se National Security Cess Act, 2025

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The Health Security Se National Security

Cess Act, 2025

(ACT NO. 35 OF 2025)

[As on the 1st February, 2026]

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LIST OF ABBREVIATIONS USED

G.S.R. . . . . for General Statutory Rules.

S.O. . . . . ,, Statutory Order.

Notifn. . . . . ,, Notification.

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THE HEALTH SECURITY SE NATIONAL SECURITY CESS ACT, 2025

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ARRANGEMENT OF SECTIONS

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CHAPTER I

PRELIMINARY

SECTIONS

1. Short title, extent and commencement.

2. Definitions.

CHAPTER II

TAXABLE PERSON

3. Taxable person.

CHAPTER III

HEALTH SECURITY SE NATIONAL SECURITY CESS

4. Levy and collection of cess.

5. Manner of computation of cess.

6. Power of Central Government to increase amount of cess in special circumstances.

7. Purpose of levy of cess.

CHAPTER IV

REGISTRATION AND RETURNS

8. Registration, cancellation and revocation.

9. Declaration to be filed by taxable person.

10. Payment of cess and returns.

CHAPTER V

AUDIT AND ASSESSMENT

11. Scrutiny and assessments.

12. Audit.

13. Power to summon persons to give evidence and produce documents.

14. Access to business premises.

15. Officers to assist proper officers.

16. Determination of cess not paid or short paid or erroneously refunded.

17. Interest payable on delay in payment of cess.

CHAPTER VI

OFFENCES AND PENALTIES

18. Penalty for certain contraventions.

19. Punishment for certain contraventions.

20. Offences by companies.

21. Cognizance of offences.

22. Presumption of culpable mental state.

23. Compounding of offences.

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CHAPTER VII

INSPECTION, SEARCH AND SEIZURE

24. Power of inspection, search and seizure.

25. Confiscation of specified goods or machines.

26. Power to arrest.

27. Recovery of amount due and assistance of officers.

CHAPTER VIII

REVISION AND APPEALS

28. Revision.

29. Appeals to appellate authority.

30. Appeals to Appellate Tribunal.

31. Appearance by authorised representative.

32. Appeal to High Court.

33. Appeals to Supreme Court.

CHAPTER IX

MISCELLANEOUS

34. Power of Central Government to amend Schedule I.

35. Power to make rules.

36. Laying before Parliament.

37. Effect of amendments, etc., of rules, notifications or orders.

38. Protection of action taken in good faith.

39. Power to remove difficulties.

SCHEDULE I

SCHEDULE II

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THE HEALTH SECURITY SE NATIONAL SECURITY CESS ACT, 2025

ACT NO. 35 OF 2025

[15th December, 2025.]

An Act to augment the resources for meeting expenditure on national security and for public

health, and to *levy a cess for the said purposes on the machines installed or other processes

undertaken by which specified goods are manufactured or produced and for matters

connected therewith or incidental thereto.

BE it enacted by Parliament in the Seventy-sixth Year of the Republic of India as follows:–

CHAPTER I

PRELIMINARY

1. Short title, extent and commencement.—(1) This Act may be called the Health Security se

National Security Cess Act, 2025.

(2) It shall come into force on such date1 as the Central Government may, by notification in the

Official Gazette, appoint.

2. Definitions.—(1) In this Act, unless the context otherwise requires,—

(a) “adjudicating authority” means the concerned proper officer appointed or authorised under

the respective provisions to pass orders under this Act after adjudication, but does not include the

Board, the revisional authority and the appellate authority;

(b) “appellate authority” means an authority appointed or authorised to hear appeals under

section 29;

(c) “Appellate Tribunal” means the Customs, Excise and Service Tax Appellate Tribunal

constituted under section 129 of the Customs Act, 1962 (52 of 1962);—

(d) “Board” means the Central Board of Indirect Taxes and Customs constituted under section 3

of the Central Boards of Revenue Act, 1963 (54 of 1963);

(e) “cess” means the Health Security se National Security Cess levied under section 4;

(f) “factory” means any premises, including the precincts thereof, wherein or in any part of

which—

(i) the specified goods are manufactured; or

(ii)any manufacturing process connected with the production of the specified goods are being

carried on or is ordinarily carried on;

(g) “machine” for the purposes of manufacture or production of the specified goods includes all

types of Form, Fill and Seal Machines and Profile Pouch Making Machines, by whatever name

called, whether vertical or horizontal, with or without collar, single track or multi-track, and any

other type of packing machine used for packing of the specified goods in pouches, tins or other

containers;

(h) “manufacture” includes—

(i) any process incidental or ancillary to the completion of the specified goods; and

(ii) the process of packing or repacking of such goods in a pouch or tin or other container or

labelling or re-labelling thereof including the declaration or alteration of retail sale price on it or

1. 1st day of February, 2026, vide notification No. S.O. 6153 (E), dated 31st December, 2025, see Gazette of India,

Extraordinary, Part II, sec. 3 (ii).

* CORRIGENDA dated 16th December, 2025

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adoption of any other treatment on the goods to render the specified goods marketable to the

consumer,

whether or not such process is the only process undertaken;

(i) “notification” means a notification published in the Gazette of India and the expression

“notify” with its grammatical variation and cognate expressions shall be construed accordingly—

(j) “pan masala” means goods falling under tariff item 2106 90 20 of the First Schedule to the

Customs Tariff Act, 1975 (51 of 1975);

(k) “prescribed” means prescribed by rules made under this Act.

(l) “proper officer” means any officer of the Central Government entrusted with such

powers or assigned with specific functions under the provisions of this Act by the Board;

(m) “process” means any manual, mechanical, electrical, electronic, automated or hybrid

operation, or any other activity by which the specified goods are manufactured or produced,

whether wholly or in part;

(n) “revisional authority” means an authority appointed or authorised under section 28

for revision of an order of the adjudicating authority;

(o) “Schedule” means a Schedule annexed to this Act;

(p) “specified goods” means the goods as specified in Schedule I to this Act or such other

goods as the Central Government may, by notification, specify;

(q) “State” includes a Union territory with Legislature;

(r) “taxable person” shall mean a person referred to in section 3; and

(s) “weight” means the maximum weight of the specified goods that is capable of being

packaged in each pouch, tin or other container by the relevant machine or process.

CHAPTER II

TAXABLE PERSON

3. Recognition and promotion of e-sport.—(1) For the purposes of this Act, “taxable person”

means any person who owns, possesses, operates, manages, or is otherwise in control of the machine

or undertakes any process by which specified goods are manufactured or produced, whether directly or

through job-workers, employees, hired labour, or through any other person acting on his behalf under

any arrangement.

(2) A person shall be treated as a taxable person under this section irrespective of whether he has

opted for, or is availing of, any composition scheme, concessional levy, or any other alternate scheme

of taxation applicable to the specified goods, under any law for the time being in force.

(3) For the purposes of this section,—

(a) the ownership, possession, or control over the machine or processes shall be sufficient to

constitute a person as a taxable person, irrespective of the actual quantity manufactured;

(b) where a machine or process, is owned, possessed, leased, hired or otherwise placed at the

disposal of one or more persons manufacturing or producing the specified goods, every such person

shall be regarded as a taxable person; and

(c) where the production or manufacture of the specified goods are divided into stages or

processes carried out by different persons, such person undertaking the final process that results in

the completion or rendering of the specified goods marketable, shall be deemed to be the taxable

person.

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CHAPTER III

HEALTH SECURITY SE NATIONAL SECURITY CESS

4. Levy and collection of cess.—(1) There shall be levied and collected a cess, to be called Health

Security se National Security Cess, from every taxable person, on the machines installed or other

processes undertaken by him for the manufacture or production of the specified goods referred to in

Schedule I, at the amount specified in Schedule II and computed in the manner provided in section 5.

(2) The cess leviable under sub-section (1) shall be in addition to any other duties or taxes chargeable

on the specified goods under any law for the time being in force—

(3) If the Central Government is satisfied that it is necessary in the public interest so to do, it may,

by notification, exempt any taxable person or a class of taxable persons, unconditionally or subject to

such conditions, from the whole or any part of the cess leviable under this section for such period as

may be specified in the said notification.

5. Manner of computation of cess.—(1) The cess referred to in section 4 shall be computed in

accordance with the provisions of this section based on the relevant process, speed of the machine or

capacity of other processes and the weight of the specified goods packed in pouch, tin or other container,

as the case may be, as declared by the taxable person and, where applicable, as verified or calibrated by

the proper officer under section 9, and on the amount specified in Schedule II for such combination of

process, speed or capacity and weight.

(2) Where the specified goods are manufactured or produced wholly or partly with the aid of a

machine, the cess shall be levied and collected from the taxable person—

(a) with reference to the maximum rated speed of the machine measured in number of pouches,

tins or containers per minute;

(b) for the corresponding weight of the specified goods packed in a pouch, tin or container;

(c) at the monthly amount of cess specified in column (4) in Table 1 of Schedule II against such

rated speed and weight provided therein.

(3) The cess payable under section 4 shall be the aggregate of cess calculated under

sub-section (2) for each of the machines installed in a factory of the taxable person and where such

taxable person owns, possesses, leases or otherwise controls machines installed in more than one

factory, the cess shall be computed separately for each such factory.

(4) Where the specified goods are manufactured or produced by a taxable person wholly by manual

process without the aid of a machine, the cess shall be levied and collected from the taxable person for

each factory at the monthly amount specified in column (4) in Table 2 of Schedule II, irrespective of

the capacity of such manual process or the weight of the specified goods packed in a pouch, tin or

container.

(5) For the purposes of sub-section (4), a taxable person shall be deemed to be engaged in the

manufacture or production of the specified goods wholly by manual process without the aid of a

machine only where no machine capable of performing, assisting, or completing any part of the process

of manufacture or production of the specified goods is installed in the factory of the taxable person.

(6) The cess determined under sub-section (2) or sub-section (4) shall be payable for each month

or part thereof and shall be subject to such abatement or other conditions, as may be prescribed.

(7) Where any machine or manual process unit remains inoperative for a continuous period of

fifteen days or more, the cess computed under this section shall, subject to such conditions, as may be

prescribed, be abated proportionately for the period of such non-operation.

6. Power of Central Government to increase amount of cess in special circumstances.— Where

the Central Government is satisfied that it is necessary in the public interest so to do, it may, by

notification, direct in respect of such specified goods that the amount of cess specified in column (4) in

Table 1 of Schedule II and in column (4) in Table 2 of the said Schedule, shall be increased to such

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amount, not exceeding twice the amount so specified, for such period as may be specified in the

notification.

(2) The provisions of this Act shall apply to the cess, as increased under this section, as they apply

to the cess specified in Schedule II.

7. Purpose of levy of cess.—(1) The cess shall be levied for the purposes of meeting expenditure

on the national security of India and for public health.

(2) The proceeds of the cess levied under section 4 shall first be credited to the Consolidated Fund

of India and the Central Government may, after due appropriation made by Parliament by law in this

behalf, utilise such sums of money of the cess for the purposes specified in sub-section (1), as it may

consider necessary.

(3) For the purposes of utilisation of the cess, the Central Government may specify such activities,

schemes and programmes for national security or, as the case may be, for public health, as may be

prescribed.

CHAPTER IV

REGISTRATION AND RETURNS

8. Registration, cancellation and revocation.—(1) Every taxable person who owns, possesses,

leases or otherwise controls a machine installed or a process undertaken in a factory, shall register

himself with the jurisdictional proper officer in such manner as may be prescribed.

(2) The proper officer may, either on his own motion or on an application filed by the registered

person, or by his legal heirs in case of death of such person, cancel the registration, in such manner and

within such period, as may be prescribed, having regard to the circumstances where,—

(a) the business has been discontinued, or transferred fully for any reason including death of the

proprietor, or amalgamated with other legal entity, or demerged, or otherwise disposed of; or

(b) there is any change in the constitution of the business; or

(c) the taxable person is no longer liable to be registered under this section.

(3) The proper officer may, after giving a reasonable opportunity of being heard, cancel the

registration of a taxable person from such date, as he may deem fit, where,—

(a) a registered person has contravened any of the provisions specified in section 18; or

(b) a registered person has not furnished returns for six consecutive calendar months; or

(c) registration has been obtained by means of fraud, wilful misstatement or suppression of facts.

(4) The cancellation of registration under sub-section (2) or sub-section (3) shall not affect the

liability of the person to pay cess and other dues under this Act or to discharge any other obligation

under this Act or the rules made thereunder, for any period prior to the date of such cancellation, whether

or not such cess and other dues are determined before or after the date of the cancellation.

(5) Subject to such conditions as may be prescribed, any taxable person, whose registration is

cancelled by the proper officer on his own motion, may apply to such officer for revocation of

cancellation of the registration in such form and manner, as may be prescribed, within a period of thirty

days from the date of service of the cancellation order and upon receiving such application, the proper

officer may, in such manner and within such period, as may be prescribed, and after giving a reasonable

opportunity of being heard, by order, either revoke the cancellation of registration or reject the

application.

9. Declaration to be filed by taxable person.—(1) Every taxable person shall, in respect of machine

installed or process undertaken in such factory, furnish a self-declaration in such form, manner and

within such time, as may be prescribed, containing the particulars of the machines installed or processes

undertaken for the manufacture or production of the specified goods, together with the parameters

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relevant for computation of the cess, including the maximum rated speed, weight of packing, nature of

packing and such other technical or operational particulars, as may be prescribed.

(2) Where any parameter relevant for the computation of the cess undergoes any change, the taxable

person shall furnish a fresh self-declaration under sub-section (1) within such time, form and manner,

as may be prescribed.

(3) In case of installation, addition or commencement of operation of any machine or process, the

taxable person shall furnish the self-declaration referred to in sub-section (2) within fifteen days of such

installation, addition or commencement.

(4) The declaration in sub-section (1) shall be subject to calibration, verification and confirmation

by the proper officer, with the approval of an officer not below the rank of Joint Commissioner, in such

form, manner and within such time, as may be prescribed and the parameters so verified and confirmed

shall be considered for the computation of cess under section 5.

(5) No calibration, verification or confirmation under sub-section (4) shall be made by the proper

officer without giving the taxable person a reasonable opportunity of being heard.

(6) Every taxable person shall comply with such oversight, monitoring or verification mechanisms,

whether technological, operational or audit-based, as may be prescribed, to ensure the integrity and

accuracy of reporting in relation to the manufacture or production of the specified goods.

10. Payment of cess and returns.—(1) The cess levied under section 4 shall be collected from

every taxable person at the beginning of each month, but not later than the 7th day of that month, in

such manner as may be prescribed.

(2) Every taxable person shall, for every calendar month or part thereof, self-assess the cess payable

under section 4 and furnish a return, in such form, manner, within such time, and subject to such

conditions and restrictions, as may be prescribed.

(3) The Board may, for reasons to be recorded in writing, by notification, extend the time limit for

furnishing the returns under this section for such class of taxable persons as may be specified therein.

(4) Where any taxable person, after furnishing a return under sub-section (2), discovers any omission

or incorrect particulars therein, other than as a result of any action in this behalf by the proper officer,

he shall rectify such omission or incorrect particulars in such form and manner, as may be prescribed,

subject to payment of interest, if any, under this Act.

(5) Where a taxable person fails to furnish a return under sub-section (2), a notice shall be issued by

the proper officer requiring him to furnish such return within fifteen days in such form and manner, as

may be prescribed.

(6) No taxable person shall furnish a return for any calendar month after the expiry of a period of

two years from the due date for furnishing such return.

CHAPTER V

AUDIT AND ASSESSMENT

11. Scrutiny and assessments.—(1) The proper officer may scrutinise the return and related

particulars furnished by the registered taxable person to verify the correctness of the return and inform

him of the discrepancies noticed, if any, in such manner, as may be prescribed, and seek his explanation

thereto and in case—

(a) the explanation so given is found acceptable, the taxable person shall be informed accordingly

and no further action shall be taken in this regard;

(b) no satisfactory explanation is furnished within a period of thirty days of being informed by

the proper officer or such further period, as may be permitted by him, or where the taxable person,

after accepting the discrepancies, fails to take the corrective measure in his return for the month in

which the discrepancy is accepted, the proper officer may initiate appropriate action in accordance

with the provisions of this Act.

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(2) Where a taxable person fails to furnish the return under section 10, either on his own motion or

in response to a notice issued, the proper officer may proceed to assess the liability of cess of the said

person to the best of his judgement, taking into account all the relevant material which is available or

which he has gathered and issue an assessment order within a period of five years from the end of the

month to which the cess not paid relates.

(3) Where a taxable person fails to obtain registration, or whose registration has been cancelled but

who was liable to pay cess, the proper officer may proceed to assess the liability of the cess payable by

such taxable person to the best of his judgment for the relevant calendar month and issue an assessment

order within a period of five years from the end of the month to which the cess not paid relates.

(4) No assessment order shall be passed under sub-section (2) or sub-section (3) by the proper officer

without giving the taxable person a reasonable opportunity of being heard.

12. Audit.—(1) The proper officer not below the rank of a Commissioner or any other officer

authorised by him may, by way of a general or special order, undertake audit of any registered taxable

person for such period, at such frequency and in such manner, as may be prescribed.

(2) The officers referred to in sub-section (1) may conduct audit in their office or at the place of

business of the registered taxable person.

(3) The registered taxable person shall be informed by way of a notice not less than fifteen working

days prior to the conduct of audit in such manner as may be prescribed.

(4) The audit under sub-section (1) shall be completed within a period of three months from the date

of commencement of such audit.

(5) Where the proper officer referred to in sub-section (1) is satisfied that the audit in respect of such

registered taxable person cannot be completed within the period of three months, he may, for the reasons

to be recorded in writing, extend the said period by a further period not exceeding six months.

(6) For the purposes of this sub-section, the expression, “commencement of audit” shall mean the

date on which the records and other documents called for by the proper officer, are made available by

the registered taxable person or the actual institution of audit at the office of the proper officer or at the

place of business of such registered taxable person, whichever is later.

(7) During the course of audit, the proper officer may require the registered taxable person—

(a) to afford him the necessary facility to verify the books of account or other documents as he

may require; and

(b) to furnish such information as he may require and render necessary assistance for timely

completion of the audit.

(8) On conclusion of audit, the proper officer shall, within thirty days, inform the registered taxable

person, whose records are audited, about the findings, his rights and obligations and the reasons for

such findings.

(9) Where the audit conducted under sub-section (1) results in detection of cess not paid or short

paid or erroneously refunded, the proper officer may initiate action under section 16.

13. Power to summon persons to give evidence and produce documents.—(1) The proper officer

under this Act shall have power to summon any person whose attendance he considers necessary, either

to give evidence or to produce a document or any other thing, in any inquiry in the same manner, as

provided in the case of a Civil Court under the provisions of the Code of Civil Procedure, 1908.

(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a “judicial proceeding”

within the meaning of section 193 and section 267 of the Bharatiya Nyaya Sanhita, 2023 (45 of 2023).

14. Access to business premises.—(1) Any officer under this Act, authorised by the proper officer

not below the rank of a Joint Commissioner, shall have access to any place of business of a taxable

person to inspect books of account, documents, computers, computer programs, computer software,

whether installed in a computer or otherwise, and such other things as he may require and which may

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be available at such place, for the purposes of carrying out any audit, scrutiny, verification and checks,

as may be necessary to safeguard the interest of revenue.

(2) Every person in charge of the place referred to in sub-section (1) shall, on demand, make

available to the officer authorised under sub-section (1), or the audit party deputed by the proper

officer,—

(a) such records as prepared or maintained by the taxable person and declared to the proper officer

in such manner as may be prescribed;

(b) trial balance or its equivalent;

(c) statements of annual financial accounts, duly audited, wherever required;

(d) cost audit report, if any, under section 148 of the Companies Act, 2013 (18 of 2013);

(e) the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961

(43 of 1961); and

(f) any other relevant record, for the scrutiny by such officer or audit party, within a period not

exceeding fifteen working days from the day when such demand is made, or such further period as

may be allowed by the said officer or the audit party.

15. Officers to assist proper officers.—(1) All officers of police, railways, customs and those

officers engaged in the collection of land revenue, including village officers, officers of the State

Governments and Union territory Administrations shall assist the proper officer in the implementation

of this Act.

(2) The Central Government may, by notification, empower and require any other class of officers

to assist the proper officers in the implementation of this Act when called upon to do so.

16. Determination of cess not paid or short paid or erroneously refunded.—(1) Where it

appears to the proper officer that any cess has not been paid or short paid or erroneously refunded, he

shall serve notice on the taxable person chargeable with cess which has not been so paid or which has

been so short paid or to whom the refund has erroneously been made due to any lapse on the part of the

taxable person, requiring him to show cause as to why he should not pay the amount specified in the

notice along with interest payable thereon under section 17 and a penalty leviable under the provisions

of this Act or the rules made thereunder.

(2) No notice under sub-section (1) shall be issued, if the cess which has not been paid or short paid

or erroneously refunded in a financial year is less than one thousand rupees.

(3) The proper officer shall issue the notice under sub-section (1) within a period of twenty-four

months from the due date for furnishing of return for the month to which the cess not paid or short paid

relates to or within a period of twenty-four months from the date of erroneous refund.

(4) Where a notice has been issued for any calendar month under sub-section (1), the proper officer

may serve a statement, containing the details of cess not paid or short paid or erroneously refunded for

such periods other than those covered under the said sub-section, on the taxable person chargeable with

cess.

(5) The service of the statement referred to in sub-section (4) shall be deemed to be the service of

notice on the taxable person under sub-section (1), subject to the condition that the grounds relied upon

for such month other than those covered under sub-section (1) are the same as are mentioned in the

earlier notice.

(6) In case of the cess which has not been paid or short paid or erroneously refunded, the penalty–

(a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of

facts to evade tax, shall be equivalent to ten per cent. of the cess due from such taxable person or ten

thousand rupees, whichever is higher;

(b) for the reason of fraud or any wilful misstatement or suppression of facts to evade cess, shall

be equivalent to the cess due from such person.

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(7) The proper officer shall, after considering the representation, if any, made by the taxable person

chargeable with cess, determine the amount of cess, interest and penalty due from such person and issue

an order within a period of twelve months from the date of issuance of notice specified in

sub-section (4).

(8) Where the proper officer referred to in sub-section (7) is not able to issue the order within the

period specified in the said sub-section, another proper officer, not below the rank of Commissioner or

an officer, not below the rank of a Joint Commissioner, authorised by him, may, having regard to the

reasons to be recorded in writing for delay in issuance of the order under the said sub-section before the

expiry of the specified period, extend the said period for a further period not exceeding six months.

(9) Where any cess has not been paid or short paid or erroneously refunded, other than the reason of

fraud or any wilful misstatement or suppression of facts to evade cess, the taxable person chargeable

with cess may,–

(a) before service of notice under sub-section (1), pay the amount of cess along with interest

payable under section 17 of such cess on the basis of his own ascertainment of such cess or the cess

as ascertained by the proper officer and inform the proper officer in writing of such payment, who

shall, on receipt of such information, not serve any notice under sub-section (1) or the statement

under sub-section (4), as the case may be, in respect of the cess so paid or any penalty payable under

the provisions of this Act or the rules made thereunder;

(b) pay the said cess along with interest payable under section 17 within a period of sixty days

from the date of receipt of show cause notice by him, and on doing so, no penalty shall be payable

and all proceedings in respect of the said notice shall be deemed to be concluded.

(10) Where any cess has not been paid or short paid or erroneously refunded by reason of fraud, or

any wilful misstatement or suppression of facts to evade cess, the taxable person chargeable with cess,

may,–

(a) before service of notice under sub-section (1), pay the amount of cess along with interest

payable under section 17 and a penalty equivalent to fifteen per cent. of such cess on the basis of his

own ascertainment of such cess, or the cess as ascertained by the proper officer, and inform the

proper officer in writing of such payment and the proper officer, on receipt of such information,

shall not serve any notice under the said sub-section, in respect of the cess so paid or any penalty

payable under the provisions of this Act or the rules made thereunder;

(b) pay the said cess along with interest payable under section 17 and a penalty equivalent to

twenty-five per cent. of such cess within a period of sixty days from the date of receipt of the notice,

and on doing so, all proceedings in respect of the said notice shall be deemed to be concluded;

(c) pay the cess along with interest payable thereon under section 17 and a penalty equivalent to

fifty per cent. of such cess within a period of sixty days of the date of receipt of the order, and on

doing so, all proceedings in respect of the said notice shall be deemed to be concluded.

(11) Where the proper officer is of the opinion that the amount paid under clause (a) of

sub-section (9) or clause (a) of sub-section (10) falls short of the amount actually payable, he shall

proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short

of the amount actually payable.

(12) Notwithstanding anything contained in clause (a) or clause (b) of sub-section (9), the penalty

under clause (a) of sub-section (6) shall be payable, where any amount of self-assessed tax or any

amount collected as cess has not been paid within a period of thirty days from the due date of payment

of such cess.

17. Interest payable on delay in payment of cess.—(1) Every person who is liable to pay cess in

accordance with the provisions of this Act or the rules made thereunder, but fails to pay the cess or any

part thereof to the Central Government within the specified period, shall, for the period for which the

cess or any part thereof remains unpaid, pay on his own, interest at the rate of fifteen per cent. Per

annum.

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(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from

the day succeeding the day on which such tax was due to be paid.

CHAPTER VI

OFFENCES ANDPENALTIES

18. Penalty for certain contravention.—(1) Where a taxable person who–

(a) owns, operates *or is in control of any machine or process for the purpose of manufacture or

production of the specified goods without declaring to the proper officer under this Act; or

(b) fails to pay the cess levied under section 4 beyond a period of three months from the date on

which such payment becomes due under section 10; or

(c) fails to furnish returns as required under section 10 or falsifies or substitutes financial records

or produces fake accounts or documents or furnishes any false information or declaration or return

with an intention to evade payment of cess due under the said section; or

(d) fraudulently obtains refund of cess; or

(e) obstructs or prevents any officer in discharge of his duties under this Act; or

(f) is liable to be registered under this Act but fails to obtain registration; or

(g) fails to furnish information or documents called for by an officer in accordance with the

provisions of this Act or the rules made thereunder, or furnishes false information or documents

during any proceedings under this Act; or

(h) tampers with, or destroys any material evidence or document; or

(i) disposes of or tampers with any goods that have been seized under this Act,

the proper officer may, after making such inquiry as he deems fit, impose on such taxable person in

addition to the cess leviable, a penalty of ten thousand rupees or an amount equivalent to the cess

payable or cess sought to be evaded, or the refund claimed fraudulently, whichever is higher.

(2) Any person who aids or abets any of the contraventions specified in clauses (a) to (i) of

sub-section (1) shall be liable to a penalty which may extend to one hundred thousand rupees.

(3) Any order imposing any such penalty shall be passed by the proper officer only after giving the

taxable person a reasonable opportunity of being heard.

19. Punishment for certain contraventions.—(1) Whoever commits or causes to commit and

retains any benefit arising out of contraventions specified in clause (a) or clause (b) or clause (c) or

clause (d) of sub-section (1) of section 18 shall be punishable in cases where the amount of cess evaded

or the amount of refund wrongly taken—

(a) exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five

years or with fine, or with both; or

(b) exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with

imprisonment for a term which may extend to three years or with fine, or with both; or

(c) exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with

imprisonment for a term which may extend to one year or with fine, or with both.

(2) Whoever commits or causes to commit and retains any benefit arising out of contraventions

specified in clause (f) or clause (i) of sub-section (1) of section 18, or abets the commission of an offence

specified in the said sub-section, shall be punishable with imprisonment for a term which may extend

to six months or with fine, or with both.

* CORRIGENDA dated 16th December, 2025

14

(3) Whoever, convicted for an offence under this section is again convicted for an offence under this

section, he shall be punishable for the second and for every subsequent offence with imprisonment for

a term which may extend to five years or with fine, or with both.

(4) The Court may, for special and adequate reasons to be recorded in the judgment, sentence any

person to imprisonment under sub-section (1) or sub-section (3), for a term less than six months.

(5) Notwithstanding anything contained in the Bharatiya Nagarik Suraksha Sanhita, 2023, all

offences under this Act, except the offences referred to in sub-section (6) shall be non-cognizable and

bailable.

(6) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of

section 18 shall be cognizable and non-bailable.

(7) No person shall be prosecuted for any offence under this section except with the previous

sanction of the proper officer, not below the rank of Commissioner..

20. Offences by companies.—(1) Where an offence committed by a person under this Act is a

company, every person who, at the time the offence was committed was in charge of, and was

responsible to, the company for the conduct of business of the company, as well as the company, shall

be deemed to be guilty of the offence and shall be liable to be proceeded against and punished

accordingly.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been

committed by a company and it is proved that the offence has been committed with the consent or

connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or

other officer of the company, such director, manager, secretary or other officer shall also be deemed to

be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

(3) Where an offence under this Act has been committed by a taxable person being a partnership

firm or a limited liability partnership or a Hindu undivided family or a trust, the partner or kartaor

managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against

and punished accordingly and the provisions of sub-section (2) shall, mutatis mutandis, apply to such

persons.

(4) Nothing contained in this section shall render any such person liable to any punishment provided

in this Act, if he proves that the offence was committed without his knowledge or that he had exercised

all due diligence to prevent the commission of such offence.

Explanation.––For the purposes of this section,–

(a) “company” means a body corporate and includes a firm or other association of individuals;

and

(b) “director”, in relation to a firm, means a partner in the firm.

21. Cognizance of offences.—No Court shall take cognizance of any offence punishable under this

Act or the rules made thereunder except with the previous sanction of the proper officer, not below the

rank of Commissioner, and no court inferior to that of a Magistrate of the first class, shall try any such

offence.

22. Presumption of culpable mental state.—In any prosecution for an offence under this

Actwhich requires a culpable mental state on the part of the accused, the Court shall presume the

existence of such mental state but it shall be a defence for the accused to prove the fact that he had no

such mental state with respect to the act charged as an offence in that prosecution.

Explanation.—For the purposes of this section,—

(a) the expression “culpable mental state” includes intention, motive, knowledge of a fact, and

belief in, or reason to believe, a fact;

(b) a fact is said to be proved only when the court believes it to exist beyond reasonable doubt

and not merely when its existence is established by a preponderance of probability.

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23. Compounding of offences.— (1) Notwithstanding anything contained in the Bharatiya Nagarik

Suraksha Sanhita, 2023, any offence under this Act, not being an offence punishable with imprisonment

only, or with imprisonment and also with fine, may, either before or after the institution of prosecution,

be compounded by a proper officer, not below the rank of Commissioner, on payment, by the person

accused of the offence, to the Central Government of such compounding amount in such manner as

may be prescribed.

(2) The option of compounding shall not be available to a person—

(a) who has been allowed to compound once in respect of any of the offences specified in

clauses (a) to (f) of sub-section (1) of section 18 and the offences which are relatable to the said

specified offences;

(b) who has been allowed to compound once in respect of any offence, other than those in

clause (a), under this Act, the cess exceeding one crore rupees;

(c) a person who has been accused of committing an offence under this Act which is also an

offence under any other law for the time being in force;

(d) a person who has been convicted for an offence under this Act by a Court; and

(e) any other class of persons or offences, as may be prescribed.

(3) Any compounding shall be allowed only after making payment of cess, interest and penalty

involved in such offences and shall not affect the proceedings, if any, instituted under any other law for

the time being in force.

(4) The amount for compounding of offences under this section shall be such, as may be prescribed,

subject to the minimum amount not being less than ten thousand rupees or fifty per cent. of the cess

involved, whichever is higher, and the maximum amount not being less than thirty thousand rupees or

one hundred and fifty per cent. of the cess, whichever is higher.

(5) On payment of such compounding amount as may be determined by the proper officer, no

further proceedings shall be initiated under this Act against the accused person in respect of the same

offence and any criminal proceedings, if already initiated in respect of the said offence, shall stand

abated

CHAPTER VII

INSPECTION, SEARCH AND SEIZURE

24. Power of inspection, search and seizure.—(1) Where the proper officer, not below the rank

of Joint Commissioner, has reasons to believe that any taxable person is manufacturing or producing

the specified goods without complying with the provisions of this Act or the rules made thereunder, he

may authorise, in writing, any officer not below the rank of Assistant Commissioner subordinate to him

to inspect any places of business of the taxable person or warehouse or godown, where the specified

goods so manufactured or produced are stored.

(2) Where the proper officer referred to in sub-section (1), either pursuant to an inspection carried

out under sub-section (1) or otherwise, has reasons to believe that the specified goods or machines liable

to confiscation or any documents or books or things, which in his opinion, shall be useful for or relevant

to any proceedings under this Act, are secreted in any place, he may authorise, in writing, any other

proper officer to search and seize, or may himself search and seize such goods, machines, documents

or books or things.

(3) Where it is not practicable to seize any such goods or machine, the proper officer, or any officer

authorised by him, may serve on the owner or the custodian of such goods an order that he shall not

remove, part with, or otherwise deal with such goods except with the previous permission of such

officer.

(4) The documents or books or things so seized shall be retained by such officer only for so long as

may be necessary for their examination and for any inquiry or proceedings under this Act.

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(5) The documents, books or things referred to in sub-section (2) or any other documents, books or

things produced by a taxable person or any other person, which have not been relied upon for the issue

of notice under this Act or the rules made thereunder, shall be returned to such person within a period

not exceeding thirty days of the issue of the said notice.

(6) The officer authorised under sub-section (2) shall have the power to seal or break open the door

of any factory or to break open any almirah, electronic device, box, receptacle in which the specified

goods, accounts, registers or documents of the person are suspected to be concealed, where access to

such factory, almirah, electronic devices, box or receptacle is denied.

(7) The person from whose custody any documents are seized under sub-section (2) shall be entitled

to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place

and time as such officer may indicate in this behalf except where making such copies or taking such

extracts may, in the opinion of the proper officer, prejudicially affect the investigation.

(8) The goods or machines so seized under sub-section (2) shall be released, on a provisional basis,

upon execution of a bond and furnishing of a security, in such manner and of such quantum,

respectively, as may be prescribed, or on payment of applicable cess, interest and penalty payable, as

the case may be.

(9) Where any goods or machines are seized under sub-section (2) and no notice in respect thereof

is given within six months of the seizure of such goods, such goods shall be returned to the person from

whose possession they were seized.

(10) The period of six months specified in sub-section (7) may, on sufficient cause being shown,

be extended by the proper officer for a further period not exceeding six months.

(11) The proper officer may, with the prior permission of the Board, having regard to the perishable

nature of the specified goods, depreciation in its value or machines with the passage of time, constraints

of storage space for such goods or machines or any other relevant considerations, may, as soon as may

be after its seizure under sub-section (2), dispose of such goods or machines in such manner as may be

prescribed.

(12) Where the specified goods or machines, being items specified under sub-section (11), have

been seized by a proper officer, or any officer authorised by him under sub-section (2), he shall prepare

an inventory of such goods or machines in such manner as may be prescribed.

(13) The provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (46 of 2023), relating to

search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the

modification that sub-section (5) of section 185 of the said Sanhita shall have effect as if for the word

“Magistrate”, wherever it occurs, the word “Commissioner” were substituted.

(14) Where the proper officer has reasons to believe that any person has evaded or is attempting to

evade the payment of any cess, he may, for reasons to be recorded in writing, seize the accounts,

registers or documents of such person produced before him and shall grant a receipt for the same, and

shall retain the same for so long as may be necessary in connection with any proceedings under this Act

or the rules made thereunder for prosecution.

25. Confiscation of specified goods or machine.—(1) Where any taxable person–

(a) owns, operates or controls any machine installed or undertakes any process for the

manufacture or production of the specified goods in contravention of any of the provisions of this

Act or the rules made thereunder with intent to evade payment of cess; or

(b) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade

payment of *cess,

then, all such goods or machines shall be liable to confiscation and the person shall be liable to penalty

under section 18.

* CORRIGENDA dated 16th December, 2025

17

then, all such goods or machines shall be liable to confiscation and the person shall be liable to penalty

under section 18.

(2) Whenever confiscation of any such goods or machines are authorised by this Act, the officer

adjudging it shall give to the owner of such goods or machines an option to pay in lieu of confiscation,

such penalty as specified under sub-section (3) as the said officer thinks fit.

(3) The penalty leviable under sub-section (2) shall not exceed the market value of the specified

goods or the machines confiscated, less the cess chargeable thereon.

(4) The aggregate of penalty under sub-section (2) and penalty leviable shall not be less than the

penalty equal to two hundred per cent. of the cess payable on such goods.

(5) No order for confiscation of the specified goods or machines for imposition of penalty shall be

issued without giving the person a reasonable opportunity of being heard.

(6) Where the specified goods or machines are confiscated under this Act, the title of such goods or

machines shall thereupon vest in the Central Government.

(7) The proper officer who confiscates any goods or machine under this section shall take and hold

possession of the things confiscated and every officer of police, on the requisition of such proper officer,

shall assist him in taking and holding such possession.

(8) The proper officer may, after satisfying himself that the confiscated goods or machines are not

required in any other proceedings under this Act and after giving reasonable time not exceeding a period

of three months to pay the fine in lieu of such confiscation, dispose of such goods or conveyance and

deposit the sale proceeds thereof with the Central Government.

26. Power to arrest.—(1) Where a proper officer, not below the rank of Commissioner, has reasons

to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or

clause (d) of sub-section (1) of section 18 which is punishable under the said sub-section or

*sub-section (2) of the said section, he may, by order, authorise any other proper officer below him to

arrest such person.

(2) Where a person is arrested under sub-section (1) for an offence specified under sub-section (5)

of section 19, the officer authorised to arrest the person shall inform such person of the grounds of arrest

and produce him before a Magistrate within twenty-four hours.

(3) Subject to the provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023,–

(a) where a person is arrested under sub-section (1) for any offence specified under

sub-section (5) of section 19, he shall be admitted to bail or in default of bail, be forwarded to the

custody of the Magistrate;

(b) in the case of a non-cognizable and bailable offence, the proper officer not below the rank of

Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise,

have the same powers and be subject to the same provisions as an officer-in-charge of a police

station.

27. Recovery of amount due and assistance of officers.—(1) Any amount due under this Act

(including any interest or penalty) from any taxable person may be recovered in the same manner as an

arrear of land revenue.

(2) All officers of police, central tax and customs and all officers of the Central Government and the

State Government engaged in the collection of land revenue, and all village officers are hereby

empowered and required to assist the proper officer in the execution of this Act.

* CORRIGENDA dated 16th December, 2025

18

CHAPTER VIII

REVISION AND APPEALS

28. Revision.—(1) The revisional authority, not below the rank of a Commissioner, authorised in

this behalf, by an order of the Board, may, on his own motion, or upon information received by him,

call for and examine the record of any proceedings, and if he considers that any order passed under this

Act by any officer subordinate to him is erroneous insofar as it is prejudicial to the interest of revenue,

or is illegal or improper, or has not taken into account certain material facts, whether available at the

time of issuance of the said order or not, or in consequence of an observation by the Comptroller and

Auditor-General of India, he may, if necessary, stay the operation of such order for such period as he

deems fit and after giving the person concerned an opportunity of being heard and after making such

further inquiry as may be necessary, pass such order, as he thinks just and proper, including enhancing

or modifying or annulling the said order.

(2) The revisional authority shall not exercise any power under sub-section (1), if—

(a) the order has been subject to an appeal under section 29 or section 30; or

(b) the period specified under sub-section (1) of section 29 has not yet expired or more than two

years have expired after the passing of the order sought to be revised; or

(c) the order has already been taken up for revision under this section at an earlier stage; or

(d) the order was passed in exercise of the powers under sub-section (1).

(3) The revisional authority may pass an order under sub-section (1) on any point which has not been

raised and decided in an appeal referred to in clause (a) of sub-section (2), before the expiry of a period

of one year from the date of the order in such appeal or before the expiry of a period of two years

referred to in clause (b) of that sub-section, whichever is later.

(4) Every order passed in a revision under sub-section (1) shall, subject to the provisions of section

30 or section 32 or section 33, be final and binding on the parties.

(5) If the order subject to revision under sub-section (1) involves an issue on which the Appellate

Tribunal or the High Court has given its decision in some other proceedings and an appeal to the High

Court or the Supreme Court against such decision of the Appellate Tribunal or the High Court is

pending, the period spent between the date of the decision of the Appellate Tribunal and the date of the

decision of the High Court, or the date of the decision of the High Court and the date of the decision of

the Supreme Court, shall be excluded in computing the period of limitation referred to in clause (b) of

sub-section (2) where proceedings for revision have been initiated by way of issue of a notice under

this section.

(6) Where the issuance of an order under sub-section (1) is stayed by the order of a Court or Appellate

Tribunal, the period of such stay shall be excluded in computing the period of limitation referred to in

clause (b) of sub-section (2).

(7) For the purposes of this section, the expression “record” shall include all records relating to any

proceedings under this Act available at the time of examination by the revisional authority.

29. Appeals to appellate authority.—(1) Any taxable person aggrieved by any order of the

adjudicating authority may, within a period of three months from the date of receipt of the order

appealed against by such person, appeal to such appellate authority, not below the rank of a

Commissioner, authorised in this behalf, by an order of the Board, in such form and manner, as may be

prescribed.

(2) The proper officer, not below the rank of Commissioner, may on his own motion, call for and

examine the record of any proceedings in which an adjudicating authority has passed any order under

this Act, for the purpose of satisfying himself as to the legality or propriety of the such order and may,

by order, direct any officer subordinate to him to apply to the appellate authority within six months

from the date of communication of the order of the adjudicating authority for the determination of such

points arising out of the said decision or order as may be specified by such proper officer in his order.

19

(3) Where, in pursuance of an order under sub-section (2), the authorised officer makes an

application to the appellate authority, such application shall be dealt with by the appellate authority as

if it were an appeal made against the decision or order of the adjudicating authority and such authorised

officer were an appellant and the provisions of this Act relating to appeals shall apply to such

application.

(4) Every appeal under this section shall be verified in such manner, as may be prescribed.

(5) No appeal shall be filed under sub-section (1), unless the appellant has paid— (a)in full, such

part of the amount of cess, interest, fine, fee and penalty arising from the impugned order, as is admitted

by him; and (b) a sum equal to ten per cent. of the remaining amount of cess in dispute arising from the

said order, subject to a maximum of twenty-five crore rupees, in relation to which the appeal has been

filed.

(6) Where the appellant has paid the amount under sub-section (5), the recovery proceedings for the

balance amount shall be deemed to be stayed.

(7) The appellate authority shall give the appellant a reasonable opportunity of being heard.

(8) The appellate authority may, if sufficient cause is shown at any stage of hearing of an appeal,

grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded

in writing.

(9) After the receipt of any appeal under this section, the appellate authority shall, after giving the

appellant a reasonable opportunity of being heard in the matter and after making such further inquiry

as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling

the order appealed against but shall not refer the case back to the adjudicating authority that passed the

said order.

(10) The order of the appellate authority disposing of the appeal shall be in writing and shall state

the points for determination, the decision thereon and the reasons for such decision.

(11) The appellate authority shall, where it is possible to do so, hear and decide every appeal within

a period of six months from the date on which it is filed.

30. Appeals to Appellate Tribunal.—(1) Any person aggrieved by an order of the appellate

authority or revisional authority, may appeal to the Appellate Tribunal against such order in such form

and manner, as may be prescribed, within a period of three months from the date of receipt of such

order sought to be appealed against by him or by the proper officer, or, as the case may be.

(2) The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard,

pass such orders thereon as it thinks fit, confirming, modifying or annulling the order appealed against,

or may refer the case back to the proper officer who passed such order with such directions as it may

think fit, for a fresh adjudication, after taking additional evidence, if necessary.

(3) The Appellate Tribunal may, at any time within a period of six months from the date of such

order, with a view to rectify any mistake or error apparent on the face of the record or for any other

sufficient reason, amend any order passed by it under sub-section (1) and shall make such amendments

if the mistake is brought to its notice by the proper officer or the other party to the appeal.

(4) An amendment made under sub-section (3) which has the effect of enhancing an assessment or

reducing a refund, or otherwise increasing the liability of the other party, shall not be made under this

sub-section, unless the Appellate Tribunal has given notice to him of its intention to do so and has

allowed him a reasonable opportunity of being heard.

(5) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within

a period of three years from the date on which such appeal is filed.

(6) The Appellate Tribunal shall send a copy of every order passed under this section to the proper

officer and the other party to the appeal.

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(7) The provisions of sub-sections (1), (2), (5) and (6) of section 129C of the Customs Act, 1962

(52 of 1962), shall apply to the Appellate Tribunal in the discharge of its functions under this Act as

they apply to it in the discharge of its functions under the Customs Act, 1962.

(8) The President or any other member of the Appellate Tribunal authorised in this behalf by the

President may, sitting singly, dispose of any case which has been allotted to the Bench of which he is a

member, where the amount of cess or fine or penalty involved, does not exceed fifty lakh rupees.

31. Appearance by authorised representative.—(1) Any person who is entitled or required to

appear before an adjudicating authority or a revisional authority or the Appellate Tribunal in connection

with any proceedings under this Act, otherwise than when required under this Act to appear personally

for examination on oath or affirmation, may, subject to the other provisions of this section, appear by

an authorised representative.

(2) For the purposes of this section, “authorised representative” means a person authorised by the

person referred to in sub-section (1) to appear on his behalf, being—

(a) his relative or regular employee; or

(b) any legal practitioner who is entitled to practise in any Civil Court in India; or

(c) any person who has acquired such qualifications, as may be prescribed, for this purpose.

32. Appeal to High Court.—(1) Any person aggrieved by an order passed by the Appellate Tribunal

may file an appeal to the High Court and the High Court may admit such appeal, if it is satisfied that

the case involves a substantial question of law.

(2) An appeal under sub-section (1) shall be filed within a period of one hundred and eighty days

from the date of receipt of the order appealed against by the aggrieved person and it shall be in such

form and verified in such manner, as may be prescribed.

(3) Irrespective of sub-section (2), the High Court may entertain an appeal after the expiry of the

period specified in the said sub-section, if it is satisfied that there was sufficient cause for not filing the

appeal within such period.

(4) Where the High Court is satisfied that a substantial question of law is involved in any case, it

shall formulate that question and the appeal shall be heard only on the question so formulated, and the

respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such

question.

(5) The High Court may, for reasons to be recorded in writing, hear the appeal on any other

substantial question of law not formulated by it, if it is satisfied that the case involves such question.

(6) The High Court shall decide the question of law so formulated and deliver such judgment thereon

containing the grounds on which such decision is founded and may award such cost as it deems fit.

(7) The High Court may determine any issue, which–

(a) has not been determined by the Appellate Tribunal; or

(b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such

question of law referred to in sub-section (4).

(8) Where an appeal has been filed before the High Court, it shall be heard by a Bench of not less

than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges

or of the majority, if any, of such Judges.

(9) Where the High Court delivers a judgment in an appeal filed before it under this section, effect

shall be given to such judgment by either side on the basis of a certified copy of the judgment.

(10) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5

of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under

this section.

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33. Appeals to Supreme Court.—(1) An appeal shall lie to the Supreme Court—

(a) from any order passed by the High Court; or

(b) from any judgment or order passed by the High Court in an appeal made under section 32 in

any case which, on its own motion or on an application made by or on behalf of the party aggrieved,

immediately after passing of the judgment or order, the High Court certifies to be a fit one for appeal

to the Supreme Court.

(2) The provisions of the Code of Civil Procedure, 1908, relating to appeals to the Supreme Court

shall, so far as may be, apply in the case of appeals under this section as they apply in the case of appeals

from decrees of a High Court.

(3) Where the judgment of the High Court is varied or reversed in the appeal, effect shall be given

to the order of the Supreme Court by either side on the basis of a certified copy of the said order.

CHAPTER IX

MISCELLANEOUS

34. Power of Central Government to amend Schedule I.—(1) The Central Government may, if it is

of the opinion that it is expedient or necessary in the public interest so to do, by notification, add to

Schedule I any goods and on any such notification being issued, the said Schedule shall be deemed to

be amended accordingly.

(2) Every notification issued under sub-section (1) shall, as soon as possible after it is issued, be laid

before each House of Parliament.

35. Power to make rules.—(1) The Central Government shall, by notification, make rules for

carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may

provide for all or any of the following matters, namely:—

(a) the abatement or other conditions subject to which the cess determined shall be payable under

sub-section (6) of section 5;

(b) the conditions subject to which the cess shall be abated due to non-operation under

sub-section (7) of section 5;

(c) the activities, schemes and programmes for national defence and security or public health for

which the cess may be utilised under sub-section (3) of section 7;

(d) the form and manner of registration by a taxable person with the jurisdictional proper officer

under sub-section (1) of section 8;

(e) the manner and the period within which the proper officer may cancel a registration under

sub-section (2) of section 8;

(f) the form, manner and conditions subject to which taxable person may apply for revocation of

cancellation of registration and the manner and the period within which the proper officer may

decide upon the application for revocation of cancellation of registration under sub-section (5) of

section 8;

(g) the form, manner and period within which self-declaration shall be furnished by the taxable

person and the other technical or operational particulars to be contained in the said declaration under

sub-section (1) of section 9;

(h) the period, form and manner for furnishing a revised declaration, for any change in the

relevant parameters, by the taxable person under sub-section (2) of section 9;

(i) the form, manner and period within which the proper officer shall do the calibration,

verification or confirmation of the declaration filed by the taxable person under sub-section (4) of

section 9;

22

(j) the oversight, monitoring or verification mechanism to be complied with by the taxable person

under sub-section (6) of section 9;

(k) the manner for collection of cess from taxable person under sub-section (1), and the form,

manner, the period within which and the conditions and restrictions subject to which return shall be

furnished by the taxable person under sub-section (2), of section 10;

(l) the form and manner of rectification of omission or incorrect particulars filled in the return by

a taxable person under sub-section (4) of section 10;

(m) the form and manner of the notice issued by the proper officer to a taxable person who fails

to furnish the return within the specified time under sub-section (5) of section 10;

(n) the manner of information to the taxable person of the discrepancies noticed in his return by

the proper officer under sub-section (1) of section 11;

(o) the period, frequency and manner of audit to be undertaken by the proper officer under sub-

section (1), and the manner in which the taxable person shall be informed of the said audit under

sub-section (3), of section 12;

(p) the manner of declaration of preparation or maintenance of records to the proper officer by

the taxable person under clause (a) of sub-section (2) of section 14;

(q) the manner of calculation of interest under sub-section (2) of section 17;

(r) the manner of compounding of offences by the proper officer under sub-section (1), and the

offences or class of persons to whom compounding shall not be available under clause (e) of sub-

section (2), of section 23;

(s) the amount for compounding of offences under sub-section (4) of section 23;

(t) the manner and quantum for execution of bonds or furnishing of security for release of seized

goods or machines on provisional basis under sub-section (8) of section 24;

(u) the manner of disposal of goods or machines seized by the proper officer under

sub-section (11), and the manner of preparation of inventory of the seized goods under

sub-section (12), of section 24;

(v) the form and manner of preferring appeal to the appellate authority under sub-section (1), and

the manner of verification of such appeal under sub-section (4), of section 29;

(w) the form and manner of preferring appeal to the Appellate Tribunal under sub-section (1) of

section 30;

(x) the qualifications for a person for becoming an authorised representative under clause (c) of

sub-section (2) of section 31;

(y) the form for appeals preferred by the aggrieved person before the High Court and the manner

of verification of such appeal under sub-section (2) of section 32;

(z) any other matter which is to be or in respect of which provision is to be made, by rules for

carrying out the provisions of this Act.

36. Laying before Parliament.—Every rule made and every notification issued under this Act

shall be laid, as soon as may be after it is made or issued, before each House of Parliament while it

is in session for a total period of thirty days which may be comprised in one session or in two or

more successive sessions, and if, before the expiry of the session immediately following the session

or the successive sessions aforesaid, both Houses agree in making any modification in such rule or

notification, or both Houses agree that the rule should not be made or notification should not be

issued, the rule or notification shall thereafter have effect only in such modified form or be of no

effect, as the case may be; so, however, that any such modification or annulment shall be without

prejudice to the validity of anything previously done under that rule or notification.

23

37. Effect of amendments, etc., of rules, notifications or orders.— Where any rule, notification

or order made or issued under this Act or any notification or order issued under such rule, is

amended, repealed, superseded or rescinded, then, unless a different intention appears, such

amendment, repeal, supersession or rescinding shall not—

(a) revive anything not in force or existing at the time at which the amendment, repeal,

supersession or rescinding takes effect; or

(b) affect the previous operation of any rule, notification or order so amended, repealed,

superseded or rescinded or anything duly done or suffered thereunder; or

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any rule,

notification or order so amended, repealed, superseded or rescinded; or

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed

under or in violation of any rule, notification or order so amended, repealed, superseded or rescinded;

or

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege,

obligation, liability, penalty, forfeiture or punishment as aforesaid,

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and

any such penalty, forfeiture or punishment may be imposed as if the rule, notification or order, as the

case may be, had not been amended, repealed, superseded or rescinded.

38. Protection of action taken in good faith.—(1) No suit, prosecution or other legal proceeding

shall lie against the Central Government or any officer of the Central Government for anything which

is in good faith done or intended to be done, in pursuance of this Act or any rule made thereunder.

(2) No proceeding, other than a suit, shall be commenced against the Central Government or any

officer of the Central Government for anything done or purported to have been done in pursuance of

this Act or any rule made thereunder, without giving the Central Government or such officer a month’s

previous notice in writing of the intended proceeding and of the cause thereof or after the expiration of

three months from the accrual of such cause.

39. Power to remove difficulties.—(1) If any difficulty arises in giving effect to the provisions of

this Act, the Central Government may, by order published in the Official Gazette, make such provisions,

not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for removing

the difficulty.

(2) No order shall be made under this section after the expiry of five years from the commencement

of this Act.

(3) Every order made under this section shall, as soon as may be after it is made, be laid before each

House of Parliament.

24

SCHEDULE I

[See sections 2(o) and (p) and 4(1)]

SI. No. Chapter / Heading / Sub-Heading / Tariff Description of Goods

(1) (2) (3)

1. 2106 90 20 Pan masala

2. Any other goods which may be notified

Explanation.—

(1) In this Schedule, reference to a “tariff item”, “heading”, “sub-heading” and “Chapter”, wherever

they occur, shall mean respectively a tariff item, heading, sub-heading and Chapter in the First Schedule

to the Customs Tariff Act, 1975 (51 of 1975).

(2) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975

(51 of 1975), the section and Chapter Notes and the General Explanatory Notes of the First Schedule

shall, so far as may be, apply to the interpretation of this Schedule.

25

SCHEDULE II

[See sections 2(o), 4(1), 5 and 6]

TABLE 1

Applicable to wholly or partly machine-based process

Sl. No. Number of pouches or tins

or containers per minute

(Maximum rated speed of

machine)

Weight of the specified goods per

pouch or tin or container

Amount of cess

per month per

machine

(rupees in lakhs)

(1) (2) (3) (4)

1. Up to 500 Up to 2.5 grams 101.00

Above 2.5 grams but below 10 grams 364.00

Above 10 grams 849.00

2. 501 to 1000 Up to 2.5 grams 202.00

Above 2.5 grams but below 10 grams 728.00

Above 10 grams 1698.00

3. 1001 to 1500 Up to 2.5 grams 303.00

Above 2.5 grams but below 10 grams 1092.00

Above 10 grams 2547

4. Above 1500 Up to 2.5 grams 101 x S/450

Above 2.5 grams but below 10 grams 364 x S/450

Above 10 grams 849 x S/450

TABLE 2

Applicable to wholly manual process

Sl. No. Speed or capacity of

process

Weight of the specified goods per

pouch or tin orcontainer

Amount of cess

per month

(rupees in lakhs)

(1) (2) (3) (4)

1. Any Any 11

Notes:

(1) For the purposes of this Schedule, in Table 1 in column (4) of the table above, the term “S”

represents maximum rated capacity of a machine.

(2) For the purposes of this Schedule, where a packing machine contains multiple tracks or multiple

packing lines and, in addition to packing the specified goods in pouches, performs any supplementary

processes such as moulding, shaping or otherwise giving a definite form to the pouches for brand

distinction or for prevention of counterfeiting, two such tracks or lines shall be deemed to constitute

one individual packing machine for the purpose of calculating the cess liability.

(3) The number of packing machines to be taken into account for computation of the cess specified

in this Schedule shall be determined in accordance with the rules prescribed by the Central Government.

26

STATEMENT OF OBJECTS AND REASONS

It is proposed to levy the Health Security se National Security Cess to contribute towards twin

purposes of enabling targeted utilisation for public health, as well as national security. The Health

Security se National Security Cess Bill proposes to levy cess on the machines installed or processes

undertaken by which the specified goods, namely, pan masala is manufactured or produced, whether

manually or through hybrid processes.

2. The cess is linked to the production capacity of machines or other processes rather than the

quantity actually produced of such specified goods. The Bill provides for taxable persons to self-declare

all machines or processes for each factory or premises, and the cess would be calculated in the aggregate

for each such location. The Bill also provides that proper officer may verify and recalibrate these

declarations through prescribed mechanisms. Compliance is proposed to be ensured through

technological and inspection-based monitoring.

3. The notes on clauses explain the various provisions contained in the Bill.

4. The Bill seeks to achieve the above objectives.

NEW DELHI; NIRMALA SITHARAMAN.

The 28th November, 2025.