The minimum retail price comes to Rs 4.47 per pack of 10 cigarettes and Rs 8.94 per pack of 20 cigarettes.
The decision has been taken to restrict the manufacturers to sell cigarettes not less than the specified retail price. Otherwise, the excise inspectors would not allow clearance of cigarette consignments from the factory gates.
Under the Central Excise Act, 1944, the Central Board of Revenue (CBR) has issued SRO 689 (I)/2004 here on Thursday for the fixation of minimum retail price (excluding sales tax) on cigarette packs.
Official sources told Business Recorder that the notification has been issued to discourage the practice of selling of certain brands of cigarettes in the market at throwaway prices, which does not cover even the minimum cost incurred by the manufacturers of these brands.
This phenomenon clearly indicates that the manufacturers of these cigarettes are evading the leviable duties and taxes.
For this purpose, the CBR has taken many steps to control evasion of central excise duty and other taxes through legislative measures.
The Cigarettes Manufacturers Association has also been agitating for fixation of minimum retail price of cigarettes and a provision in Section 4 (2) of the Central Excise Act, 1944 was added in the Budget 2003-04 empowering the tax authorities to fix minimum retail price to curb evasion of excise duty.
To arrive at a minimum benchmark retail price for a pack of 10 cigarettes, CBR's Central Excise Wing conducted an exercise under which inputs from the concerned collectorates, Cigarettes Manufacturers Association and Sales Tax Wing was obtained for the purpose of retail price.
Moreover, the CBR has completely scanned cost structure of all cigarette brands manufactured in each unit.
After including the incidence of excise duty, minimum manufacturing cost, trade and profit margins as well as expenses and taking into account the average prices of different brands in lower slabs, the minimum retail price of a pack of 10 cigarettes has now been fixed at 84 percent of the retail price given in Clause (iii) of heading No 24.02 of the SRO 333 (I)/2002 of June 15, 2002.
As per the existing duty structure, the minimum retail price comes to Rs 4.47 per pack of 10 cigarettes and likewise Rs 8.94 per pack of 20 cigarettes.
Following is the text of the notification issued on Thursday.
"In exercise of the powers conferred by the second proviso to sub-section (2) of Section 4 of the Central Excise Act, 1944 (I of 1944), the Central Board of Revenue is pleased to fix the minimum retail price (excluding sales tax), as specified in column (3) of the Table below, of the goods specified in column (2), falling under Heading/sub-heading of the First Schedule to the said Act specified in column 91) of the said Table, namely:-