Centre Revises Central Excise Duty on Unmanufactured Tobacco

The Ministry of Finance, Department of Revenue, has issued Notification No. 04/2026–Central Excise dated 1 February 2026, amending the earlier Notification No. 03/2025–Central Excise. The amendment, issued under Section 5A(1) of the Central Excise Act, 1944, introduces a clear distinction in the excise duty structure applicable to unmanufactured tobacco.

Under the revised notification, unmanufactured tobacco or tobacco refuse falling under tariff heading 2401, which does not bear a brand name and is not packed for retail sale, will continue to attract a Nil rate of central excise duty. However, a new entry has been inserted as Sl. No. 1A, under which all other forms of unmanufactured tobacco or tobacco refuse will now attract central excise duty at the rate of 18 percent.

This change signals a calibrated policy approach, providing relief to non-branded, non-retail tobacco while imposing a significant duty on other categories. The amendment is expected to impact pricing, compliance, and tax planning for stakeholders in the tobacco supply chain.