Common Points — Central Excise Amendment Bill & Health Security Cess Bill, 2025

1. Target Product Category — "Sin Goods"

Aspect	Central Excise Amendment	Health Security Cess
Primary Target	Tobacco & tobacco products	Pan Masala
HSN Chapter	2401, 2402, 2403, 2404	2106 90 20
Common Thread	Both target goods are harmful to public health with high addiction potential

Both legislations focus on products that fall under the broader category of "sin goods" — items considered socially undesirable due to health hazards.

2. Legislative Timing & Enactment Framework

Aspect	Central Excise Amendment	Health Security Cess
Parliament Session	Winter Session 2025	Winter Session 2025
Lok Sabha Date	Passed 3rd December 2025	Introduced (Bill No. 142)
Commencement	Date to be notified	Date to be notified
Republic Year	76th Year	76th Year

Both leave enforcement date to the Central Government discretion via Official Gazette notification — allowing administrative preparation time.

3. Policy Objective — Health & Revenue

Objective	Central Excise Amendment	Health Security Cess
Revenue Generation	✓	✓
Public Health	✓ (Implicit — sin tax)	✓ (Explicit — stated purpose)
National Security	✗	✓ (Explicit — stated purpose)
Deterrence of Consumption	✓	✓

Both operate on the economic principle that higher taxation discourages consumption of harmful products while generating revenue for public purposes.

4. Anti-Evasion Design Philosophy

Both legislations are structured to address endemic tax evasion in their respective sectors:

Feature	Central Excise Amendment	Health Security Cess
Problem Addressed	Under-reporting of production	Under-reporting of production
Solution Approach	Specific duties (per unit/weight)	Capacity-based taxation
Evasion Deterrent	Length-based cigarette rates eliminate classification manipulation	Machine speed/capacity removes production quantity disputes

Key insight: Both move away from ad valorem (percentage-based) taxation toward more verifiable, objective parameters — making evasion harder.

5. Administrative Authority — CBIC

Aspect	Central Excise Amendment	Health Security Cess
Nodal Board	CBIC	CBIC
Administering Officers	Central Excise officers	Central Excise officers (proper officers)
Appellate Forum	CESTAT	CESTAT

Both fall under the indirect tax administration machinery of the Central Board of Indirect Taxes and Customs.

6. Constitutional & Legal Framework

Aspect	Central Excise Amendment	Health Security Cess
Constitutional Entry	Union List — Excise duties	Union List — Cess for specific purposes
Parent Legislation	Central Excise Act, 1944	Standalone new legislation
Tariff Reference	Customs Tariff Act, 1975 (First Schedule)	Customs Tariff Act, 1975 (First Schedule)

Both rely on the Customs Tariff Act's classification system for product identification — ensuring uniformity in HSN-based categorisation.

7. Relationship with GST

Aspect	Central Excise Amendment	Health Security Cess
GST Applicability	In addition to GST	In addition to GST
Compensation Cess	Applicable on tobacco	Applicable on pan masala
Cumulative Burden	Central Excise + GST + Compensation Cess	Health Cess + GST + Compensation Cess

Both levies operate over and above the GST framework — they don't replace GST but add another layer of taxation on these specific goods.

8. Schedule-Based Rate Structure

Feature	Central Excise Amendment	Health Security Cess
Rate Specification	Fourth Schedule (substituted table)	Schedule II
Product Classification	Schedule I (Customs Tariff reference)	Schedule I
Amendment Power	Via legislative amendment	Via notification (Section 34)
Rate Enhancement	Legislative process required	Executive power — up to 2x (Section 6)

Both use schedule-based rate specification, though the Health Cess Bill provides greater executive flexibility for rate modifications.

9. Specific/Fixed Duty Component

Product Type	Central Excise	Health Cess
Cigarettes	₹ per thousand	—
Cigars	₹ per thousand OR % (higher)	—
Pan Masala	—	₹ per month per machine

Both prefer specific duties (fixed amounts) over purely ad valorem rates — this reduces valuation disputes and limits under-invoicing benefits.

10. Minister & Ministry

Aspect	Central Excise Amendment	Health Security Cess
Introducing Minister	Smt. Nirmala Sitharaman	Smt. Nirmala Sitharaman
Ministry	Finance (Revenue)	Finance (Revenue)
Department	Department of Revenue	Department of Revenue

Both are Finance Ministry initiatives under the same Minister, indicating a coordinated policy approach toward sin goods taxation.

11. Industry Sectors Affected

Stakeholder	Central Excise Amendment	Health Security Cess
Manufacturers	Tobacco product manufacturers	Pan masala manufacturers
Related Industries	Packaging, distribution	Packaging, machinery suppliers
Geographic Concentration	UP, Karnataka, Andhra Pradesh, Gujarat	UP, MP, Rajasthan, Gujarat
MSME Impact	Biri manufacturers (lower rates)	Manual processors (lower flat rate)

Both acknowledge the MSME presence in these sectors by providing relatively lower rates for smaller/manual operations.

12. Consolidated Fund Credit

Aspect	Central Excise Amendment	Health Security Cess
Revenue Destination	Consolidated Fund of India	Consolidated Fund of India
Appropriation	General revenue	Specific appropriation for health/security
Earmarking	Not earmarked	Earmarked (but via appropriation)

Both collections go to the Consolidated Fund, though Health Cess has stated utilisation purposes requiring Parliamentary appropriation.

Summary Table — At a Glance

Common Element	Both Legislations
Target Category	Sin goods (health hazards)
Policy Goal	Revenue + health deterrence
Evasion Control	Objective parameters over ad valorem
Timing	Winter Session 2025
Administration	CBIC/Central Excise machinery
GST Relationship	Additional levy, not substitution
Rate Structure	Schedule-based, specific duties preferred
Tariff Reference	Customs Tariff Act, 1975
Constitutional Basis	Union List powers
Minister	Finance Minister
Revenue Flow	Consolidated Fund of India
Commencement	Notification-based

Practical Implication

For businesses dealing in both tobacco products and pan masala (common in the gutka/chewing tobacco space before the ban, and still relevant for related product lines), these two legislations create a compounded compliance burden:

• Central Excise registration and returns for tobacco

• Health Cess registration, machine declaration, calibration, and returns for pan masala

• GST compliance for both

• Compensation Cess tracking for both

Advisory teams should consider integrated compliance frameworks for such clients rather than treating these as isolated levy management exercises.

Download Central Excise Amendment Bill 2025 PDF

Download Health Security Cess Bill 2025 PDF

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