Tobacco and tobacco products
This category includes products covered by the relevant tariff entries and notifications. Effective duties can include Basic Excise Duty and, depending on the product, other applicable duties or cesses.
Central Excise Duty and State Excise in India
A current guide to the Central Excise system after GST, the limited goods that remain within the Central Excise levy, registration and compliance, tobacco-specific rules, State Excise, and the governing statutes.
Current position after GST: With effect from 1 July 2017, Central Excise is no longer the general manufacturing tax for most goods. It continues for goods specified in the Fourth Schedule to the Central Excise Act, 1944, principally tobacco and tobacco products and specified petroleum products. Most other goods are governed by GST.
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What is Central Excise Duty?
Central Excise is a Union duty on manufacture or production of specified excisable goods in India. The principal charging provision is Section 3 of the Central Excise Act, 1944. In the present post-GST structure, the levy is confined to goods listed in the Fourth Schedule to that Act, subject to statutory rates, exemption notifications, valuation provisions and special levies.
The taxable event remains manufacture or production, although the point and manner of payment are governed by the applicable Act, rules and notifications.
Which goods are still subject to Central Excise?
Post-GST Central Excise applies to goods specified in the Fourth Schedule. CBIC describes these broadly as tobacco and tobacco products and specified petroleum products.
Specified petroleum products
The post-GST excise framework continues for specified petroleum products in the Fourth Schedule. The applicable tax structure can involve excise duty and product-specific cesses or additional duties.
The old statement that every item listed in the Central Excise Tariff attracts Central Excise is no longer appropriate as a general post-GST rule. For present liability, the Fourth Schedule to the Central Excise Act, 1944 and current notifications must be checked.
Central Excise Acts, rules and legal framework
| Law / provision | Current relevance |
|---|---|
| Central Excise Act, 1944 | Principal law governing levy, valuation, registration, recovery, refunds, offences, appeals and related Central Excise matters. |
| Fourth Schedule to the Central Excise Act, 1944 | Identifies goods that remain within the post-GST Central Excise levy. |
| Central Excise Rules, 2017 | Provide the procedural framework for Central Excise after introduction of GST, subject to amendments and notifications. |
| Section 3A of the Central Excise Act, 1944 | Allows capacity-based levy for notified goods. This provision is relevant to the 2026 machine-based levy for specified tobacco products. |
| Central Excise Tariff Act, 1985 | Historically central to tariff classification; current Central Excise liability should be checked with the Fourth Schedule and current statutory changes and notifications. |
Central Excise registration and compliance
Registration requirements arise under Section 6 of the Central Excise Act, 1944 and the applicable rules and notifications. Because Central Excise now applies to a limited range of products, old pre-GST registration thresholds and SSI registration declarations should not be used as current general guidance.
Existing Central Excise taxpayers use the CBIC ACES-GST environment for applicable Central Excise functions. The precise registration, declaration, payment and return requirement depends on the product, type of manufacturer and current notification or rule.
2026 machine-based Central Excise levy on specified tobacco products
From 1 February 2026, a capacity-based levy applies to notified goods including chewing tobacco (including filter khaini), jarda scented tobacco and gutkha packed in pouches. The levy operates under Section 3A and the notified packing-machine capacity rules.
Manufacturers covered by the rules are required to comply with the prescribed declaration and payment framework. CBIC's 2026 advisory provides for filing the initial declaration in Form CE DEC-01 through the existing CBIC-GST portal. Existing Central Excise registrants do not require a separate registration merely because these rules apply.
What is State Excise?
State Excise is distinct from Central Excise. States impose and administer excise duties under their own laws in fields assigned to them by the Constitution, most notably alcoholic liquor for human consumption. Registration, licence requirements, duties, fees, transport permits, possession limits and compliance therefore vary from State to State.
A manufacturer, wholesaler, retailer, warehouse operator or transporter dealing in liquor or another State-excise product should consult the Excise Department and statute of the relevant State or Union Territory rather than relying on Central Excise procedures.
Central Excise rates and exemptions
There is no single Central Excise rate applicable to all covered goods. The effective rate depends on the tariff entry, the Fourth Schedule, Finance Act changes, exemption or rate notifications, and any additional duty or cess applicable to the product.
For example, CBIC issued new effective Central Excise duty-rate notifications for tobacco and tobacco products with effect from 1 February 2026. Because rates can change by notification, taxpayers should verify the effective rate for the precise tariff item and date of clearance.
Central Excise and State Excise FAQs
Does Central Excise still apply after GST?
Yes. It continues for goods specified in the Fourth Schedule to the Central Excise Act, 1944, principally tobacco and tobacco products and specified petroleum products.
Is Central Excise payable on all manufactured goods?
No. That was broadly the pre-GST structure. In the current regime, most manufactured goods fall under GST rather than Central Excise.
Who is liable to pay Central Excise?
Liability generally falls on the manufacturer or producer of goods that are subject to Central Excise, subject to the charging provision, rules and any special mechanism applicable to the product.
Is a Central Excise licence required?
The law uses a registration framework rather than the old concept of a general manufacturing licence for Central Excise. Whether registration is required depends on the goods and applicable rules or exemptions.
Do the old SSI turnover exemptions and ₹90 lakh registration declaration still apply generally?
No. Those legacy thresholds should not be presented as current general Central Excise rules after GST. Current liability and exemption depend on the surviving excisable goods and applicable notifications.
Is CENVAT still the general credit system for manufacturers?
No. GST input tax credit replaced the broad CENVAT system for supplies within GST. Legacy CENVAT issues may still arise for historical periods and limited Central Excise contexts, but the pre-GST FAQ should not be used as present general guidance.
Are old monthly and quarterly Central Excise return deadlines still reliable?
No. Legacy deadlines from the pre-GST regime should not be relied upon. Current taxpayers should follow the presently applicable Central Excise rules, online forms and CBIC instructions for the relevant product and period.
Is State Excise collected by the Central Government?
No. State Excise is administered by State or Union Territory authorities under the applicable local excise law.
Tax rates, notifications and procedural requirements can change. Verify the law and notification applicable on the date of manufacture, removal or compliance.