The Ministry of Finance (Department of Revenue) has issued Notification No. 04/2026–Central Excise dated February 01, 2026 to amend the earlier Notification No. 03/2025–Central Excise, dated 31 December 2025.
The amendment has been made in public interest under the powers conferred by Section 5A(1) of the Central Excise Act, 1944.
The revised rates come into effect immediately from the date of publication.
Key Amendments Introduced
Revised Entry for Unmanufactured Tobacco (HS Code 2401)
As per the updated Table in the notification, the original Serial No. 1 has been substituted.
The new entry reads: “Unmanufactured tobacco or tobacco refuse, not bearing a brand name and not packed for retail sale – NIL rate of excise duty.”
This change provides a full exemption from Central Excise duty on unbranded and non-retail-packed unmanufactured tobacco.
New Entry Inserted as Sl. No. 1A
To distinguish between exempt and non-exempt categories of unmanufactured tobacco, a new serial number 1A has been added.
The new entry states: “Unmanufactured tobacco or tobacco refuse, other than Sl. No. 1 – 18% excise duty.”
This means:
- Unmanufactured tobacco (HS 2401) with a brand name or
- Packed for retail sale
will now attract 18% excise duty.
Impact of the Notification
- Ensures clear differentiation between branded and unbranded unmanufactured tobacco for taxation purposes.
- Aims to prevent revenue leakage while promoting regulatory clarity for tobacco manufacturers and traders.
- Aligns excise duty structure with broader policy objectives of discouraging branded/retail tobacco consumption while easing the burden on primary producers and bulk handlers.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/02/CBIC-cus-No.-04-2026-Central-Excise.pdf
