Background
The Health Security National Security Cess Bill, 2025 was passed by Parliament to introduce a special excise cess aimed at generating a stable and rule-based revenue stream for national security and public health infrastructure.
The cess marks a shift towards dedicated funding for security-related and health-related priorities through a targeted levy.
Purpose of the Cess
The primary objectives of the cess are:
- Strengthening national security preparedness
- Supporting public health infrastructure
- Creating a predictable and earmarked source of revenue
- Reducing reliance on general budgetary allocations
The cess proceeds are credited to the Consolidated Fund of India.
Goods Covered
- Initially applicable only to pan masala
- The Government has the power to notify additional goods in the future
- The scope can be expanded in public interest
Nature of the Levy
The cess is:
- Levied on manufacturing machinery or processes, not directly on output
- Applicable to manual, mechanised, or hybrid manufacturing processes
- Charged in addition to existing taxes and duties
Method of Levy
The cess follows a capacity-linked structure, calculated on:
- Maximum rated speed of machines
- Pack weight
- Flat monthly rate in case of manual processes
The Government may revise the rate, including increasing it up to twice the existing rate, if required in public interest.
Taxable Persons
Liability to pay the cess applies to:
- Any individual or entity that owns, operates, or controls machinery or processes used for manufacturing notified goods
- Liability exists irrespective of existing tax registration or status, ensuring comprehensive coverage
Enforcement Framework
The Bill introduces a strict compliance regime, including:
- Penalties for cess evasion and undeclared machinery
- Prosecution and arrest provisions
- Confiscation of machinery and goods
- Powers to address falsification of records and obstruction of officials
Appeals Mechanism
A multi-tier appellate structure ensures procedural fairness:
- Appellate Authority
- Tribunal
- High Court
- Supreme Court
This framework allows manufacturers to challenge assessments and enforcement actions at every stage.
