Rs 160 cr duty, cess evasion detected as CGST busts clandestine pan masala unit in Telangana
Hyderabad, Aug 22 (TNT): The Hyderabad CGST Zone has detected an estimated Rs 160 crore in duty and cess evasion while busting a clandestine pan masala and tobacco manufacturing unit in Medchal-Malkajgiri district, officials said on Saturday.
Acting on specific intelligence, CGST officers conducted a search at a tin-shed facility on August 20 and seized 40 undeclared Form-Fill-Seal (FFS) pouch-packing machines used for manufacturing and packing pan masala, tobacco and scented jarda.
Around 56 workers were found at the premises during the search, where the unit was allegedly manufacturing and packing both branded and unbranded products.
The officers seized around 5,500 kg of finished stock, including ready-to-dispatch consignments valued at Rs 76 lakh, besides 2,015 kg of pan masala mixture and 810 kg of tobacco.
Packing material, documents and two vehicles allegedly used for transporting the illicit goods were also seized.
The unit was allegedly operating without registration and clearing finished products without payment of applicable GST, Health Security se National Security (HSNS) Cess and Central Excise duty, the department said.
The key person allegedly involved in organising and managing the clandestine manufacture and clearance was arrested on August 21 and produced before the Special Judge for Economic Offences, Hyderabad, who remanded him to judicial custody for 14 days.
The department said the estimated Rs 160 crore evasion was assessed based on the stock physically verified, machinery and manpower deployed and statements recorded during the investigation.
A capacity-based cess and taxation regime has been in force in the pan masala and tobacco sector since February 1, 2026.
Under the Health Security se National Security (HSNS) Cess Act, 2025, a capacity-based monthly cess is applicable on pan masala based on the number, type and capacity of packing machines installed.
A similar capacity-based central excise levy is imposed on chewing tobacco, jarda and gutkha under the Central Excise Act, 1944.
The Hyderabad CGST Zone has intensified intelligence-led enforcement against clandestine manufacturers in the sector to curb tax evasion, officials said.
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