Industrial License for Cigarettes not Required for Factories with Less than 50 Person

[CBEC Circular No. 905 dated 4th November 2009]

Subject: Issuance of Licenses to manufacture cigarettes by Central Excise Department.

I am directed to say that Board has received various references from the trade association and field formations regarding issue of licenses to cigarette manufacturing units.

2. The matter had been taken up with Ministry of Commerce and Industry, Department of Industrial Policy and Promotion. The legal position regarding requirement of obtaining industrial license by cigarette manufacturing units under IDRA has been clarified vide letter no. 9(3)2009-IP dated 8th September, 2009. A copy of the same is enclosed for your kind information.

3. Trade and Field formations may be informed suitably.

F.No.110/47/2009-CX3

(Annexure to Circular No.905/25/2009-CX, dated 4.11.2009)

Most Immediate

F.No.9(3) 2009-IP

Governent of India

Ministry of Commerce & Industry

Department of Industrial Policy and Promotion

(Industrial Policy Section)

Udyog Bhavan, New Delhi,

8th September, 2009.

OFFICE MEMORANDUM

Subject- Representation from Bharatiya Kisan Union forwarded by PM Office – ‘issuance of licenses to manufacture cigarette by the Central Excise Department illegally and discriminately’

The undersigned is directed to refer to Central Board of Excise & Customs’ Office Memorandum No. 110/47/2009-CX.3 dated 26th August, 2009 on the subject mentioned above and to say that as per notification No. 477(E) dated 25.7.1991 Cigars and cigarettes of tobacco and manufactured tobacco substitutes is compulsory industrial licensable item which is as follows:

24.02 Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.

As per National Industrial classification Tobacco item is as follows:

160 1600: manufacture of tobacco products [tobacco related products are also included while preliminary processing of tobacco leaves is classified in class 0111]

16001 Tobacco stemming, redrying etc. of tobacco leaf.

However, under Section 3© of the Industries (Development & Regulation) Act, 1951 ‘factory’ is defined as any industrial unit having 50/100 workers with/without the aid of power. Units with less than 50/100 workers as defined therein do not appear within the purview of ‘factory’ definition and therefore beyond the applicability of IDR Act, under which comes licensing.