Hyderabad: Hyderabad CGST zone officials have busted an alleged illegal pan masala and tobacco manufacturing unit in Medchal Malkajgiri district, uncovering 40 undeclared pouch-packing machines and detecting suspected GST, cess and central excise duty evasion estimated at around Rs 160 crore.Key accused Syed Azeemuddin of Hyderabad, who allegedly organised and managed the manufacture and clearance of the products, was arrested on Aug 21. He was produced before the special economic offences court in Hyderabad, which remanded him to 14 days‘ judicial custody.Acting on specific intelligence, CGST officials conducted searches at a tin shed premises in Dommara Pochampally on the outskirts of Hyderabad on Aug 20. During the operation, officials found 40 undeclared form-fill-seal (FFS) machines being used to pack pan masala and tobacco/jarda products. Fifty six workers were present at the facility at the time of the search.Officials said the unit, though unregistered, was manufacturing products linked to a Goa-based brand.5,500 kg of finished products seizedAccording to CGST officials, the unit was engaged in the manufacture and packing of several branded and unbranded varieties of pan masala and scented jarda without registration.During the raid, officials seized around 5,500 kg of finished pouches and ready-to-dispatch consignments valued at approximately Rs 76 lakh. They also seized 2,015 kg of pan masala mixture, 810 kg of tobacco, packing material and two vehicles allegedly used for transporting the goods.The 40 FFS machines operating at the premises, along with documents recovered during the search, were also seized.CGST officials said evidence gathered during the operation indicated that the finished products were being cleared without payment of the applicable GST, health security and national security cess and central excise duty.Based on the stock physically verified at the premises, the number of machines installed, manpower deployed and statements recorded during the operation, officials estimated the total tax and duty evasion at Rs 160 crore.Capacity-linked levyThe detection assumes significance as a capacity-based taxation and cess regime for the pan masala and tobacco sector came into force on Feb 1.Under the Health Security and National Security Cess Act, 2025, a monthly capacity-based cess is levied on pan masala based on the number, type and capacity of packing machines installed. A similar capacity-based central excise levy applies to chewing tobacco, jarda and gutka under the Central Excise Act.CGST officials said undeclared packing machines could be used to evade these capacity-linked levies.The Hyderabad CGST zone said it has intensified intelligence-based enforcement in the sector through data analytics and coordinated field operations to curb tax evasion and illegal manufacturing activities.
