The Central Board of Indirect Taxes and Customs (CBIC), through the Directorate General of Goods and Services Tax (DGGST), has issued Instruction No. 01/2026 dated February 10, 2026, prescribing a detailed Standard Operating Procedure (SOP) for verification of declarations filed by registered persons regarding machines used in the manufacture of pan masala and tobacco products.
The SOP covers declarations filed under FORM HSNS DEC-01 in terms of the Health Security cum National Security Cess Rules, 2026, and FORM CE DEC-01 under the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026. These rules came into force with effect from February 1, 2026, and aim to ensure accurate assessment of production capacity and applicable cess/duty.
To strengthen the verification process, CBIC has engaged the Quality Council of India (QCI) to provide technical expertise to jurisdictional officers. The DGGST has been designated as the nodal agency for coordination, supervision, and data sharing between field formations and QCI. Registration and declaration data will be shared daily with QCI to enable systematic planning and scheduling of factory visits.
A structured coordination mechanism has been laid down wherein QCI will prepare verification schedules and communicate proposed factory visit dates. Field formations will ensure readiness at the taxpayer’s premises, including availability of technical documents, machinery access, and personnel to facilitate smooth verification.
The SOP provides a comprehensive methodology for verification of machine capacity. As detailed in the illustrations on page 2, key parameters such as Revolutions Per Minute (RPM) of the main motor, gear ratio, and number of funnels (in horizontal machines) or cups (in vertical machines) are to be verified and recorded for each machine. These parameters are critical for determining maximum production capacity.
Verification will be carried out using multiple sources, including declarations filed by taxpayers, technical specifications from manufacturers, and physical measurements using calibrated instruments such as tachometers. In exceptional cases, dismantling of machinery components may be undertaken with due approval and only by authorized technical personnel.
To ensure transparency and accountability, the entire verification process, including inspection and measurement activities, is mandated to be videographed and preserved as an official record. The SOP also clarifies that all machines, including sealed or non-operational ones, must be declared and verified, with appropriate procedures for de-sealing and resealing under official supervision.
Post-verification, QCI is required to submit inspection reports within seven days to the jurisdictional authorities. Based on these findings, the Deputy/Assistant Commissioner will issue orders confirming declarations and determining cess liability or annual production capacity, as applicable.
A robust monitoring mechanism has also been introduced. As reflected in the Annexure-II table on page 5, field formations are required to report progress of verification, including timelines for inspections, report submission, and issuance of orders, to DGGST on a weekly basis.
The SOP emphasizes close supervision by senior officers and provides a clear escalation mechanism for addressing operational difficulties. This initiative is expected to bring uniformity, enhance compliance, and ensure accurate determination of duty liability in sectors governed by capacity-based taxation.
The complete SOP can be accessed at: https://www.cbic.gov.in/resources/htdocs-cbec/SOP_Verification_Machines_under_HSNS_Capacity_Determination_Rules.pdf
