New Delhi, Dec 4 (UNI) Finance Minister Nirmala Sitharaman is slated to introduce the Health and National Security Cess Bill, 2025 in the Lok Sabha on Thursday, aiming to levy a cess on the production of specific goods, including pan masala. The move seeks to generate dedicated funds for strengthening public health initiatives and national security measures.
The Bill, initially introduced in the Lok Sabha on December 1, 2025, proposes a cess on machines or manual processes used in manufacturing pan masala and any other goods notified by the central government.
“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,” Sitharaman explained in the Bill’s Object and Reasons.
Under the Bill, the cess will be payable monthly by those owning or controlling machines or processes involved in producing the specified goods. The cess will be calculated based on machine capacity or manual production units, with self-assessment and return filing mandated for compliance. Interest will accrue on any delayed cess payments.
For machine-based production, cess rates vary widely. For example, a machine with a maximum speed of up to 500 pouches per minute, each weighing up to 2.5 grams, will incur a cess of Rs 1.01 crore per month. This rate escalates to Rs 25.47 crore monthly for machines operating between 1,001 and 1,500 pouches per minute with pouch weights above 10 grams. Manual production factories will face a fixed monthly cess of Rs 11 lakh. The government reserves the right to double these rates in public interest for specified durations.
To ensure proper compliance, officers of Commissioner rank or higher will conduct audits and can initiate recovery proceedings for unpaid or underpaid cess, including interest and penalties. The Bill outlines penalties for violations such as operating machines without declaration, non-payment of cess, failure to register, and tampering with seized goods. Penalties range from Rs 10,000 or the evaded cess amount—whichever is higher—to up to Rs one lakh for aiding offenses. Criminal prosecution with imprisonment from one to five years applies in cases involving fraud or evasion exceeding Rupees one crore.
The Bill also establishes a three-tier appeal system, allowing aggrieved parties to challenge orders first before an appellate authority, then the Customs, Excise, and Services Tax Appellate Tribunal, and finally the High Court for significant legal questions.
Further, officers of Joint Commissioner rank or above are empowered to inspect production sites, and search and seize goods, machines, documents, or records where evasion is suspected.
Sitharaman emphasized the Bill’s focus on transparency and compliance: “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.”
This initiative is expected to bolster funds for critical health and national security sectors, reflecting the government’s dual-pronged approach to public welfare and safety. UNI SKA AAB
Health and National Security Cess Bill 2025 poised for Lok Sabha passage today
