LUCKNOW, Aug. 22 -- : The Directorate General of GST Intelligence (DGGI) has detected tax, cess and duty evasion of around Rs.185 crore in a clandestine pan masala and tobacco manufacturing network spread across Chitrakoot and Banda districts, according to a press release shared by the agency. The Lucknow Zonal Unit of the DGGI detected the alleged evasion during coordinated searches at six premises linked to two firms - one engaged in manufacturing pan masala and allied products and the other involved in trading, the press release said. Acting on specific intelligence, DGGI officers began the searches around midnight on Tuesday. The operation resulted in the detection of 27 undeclared pouch-packing machines, including six machines for scented jarda, nine for pan masala and 12 for dohara/desi gutkha, according to the release. The agency said the alleged evasion relates to GST, Health Security se National Security (HSNS) Cess and Central Excise duty. The DGGI said evidence gathered during the searches indicated that the network was using undeclared machinery at unregistered premises to manufacture finished products and clear them clandestinely without payment of applicable levies. According to the DGGI, the alleged evasion of approximately Rs.185 crore has been detected so far. The agency said the figure relates to the tax, cess and excise duty allegedly evaded through suppression of production and clandestine clearance. The investigation assumes significance because the capacity-based cess and taxation regime for the pan masala and tobacco sector came into effect on February 1, 2026. Under the HSNS Cess Act, 2025, a capacity-based monthly cess is imposed on pan masala based on the number, type and capacity of packing machines installed. A similar capacity-based Central Excise levy applies to chewing tobacco, jarda and gutkha under the Central Excise Act, 1944. The DGGI said unscrupulous manufacturers attempt to evade these levies by operating undeclared pouch-packing machines outside their declared production infrastructure. The searches also led to the seizure of 15,50,922 pouches of finished goods, comprising pan masala, chewing tobacco, scented jarda and sugandhit supari. The agency seized 32.9 tonnes of areca nut and cut areca nut, 2.8 tonnes of tobacco and 8.4 tonnes of packing material, pouches and laminates. Other material seized included 470 kg of katha powder, 850 kg of glycerine, 545 kg of essence and 256 kg of unpacked pan masala. Mixing, areca nut crushing and drying machines were also found at the premises. The proprietor of the manufacturing firm was prima facie found to be organising and managing the alleged clandestine manufacturing and clearance operation, the DGGI said. He was arrested on August 19 under Section 26 of the HSNS Cess Act, 2025, and Section 13 of the Central Excise Act, 1944. He was produced before the Special Chief Judicial Magistrate (Customs), Lucknow, who remanded him to judicial custody. The investigation is continuing and the agency said further recoveries are expected. The Chitrakoot-Banda operation is part of the DGGI's wider intelligence-led enforcement against alleged tax evasion in the pan masala and tobacco sector. According to Thursday's press release, DGGI formations across the country have booked 27 cases since February 1, 2026, involving suppression of production, clandestine clearance and evasion of applicable duty, tax and cess. The agency said these cases have resulted in detection of Rs.668 crore in duty, tax and cess evasion, while voluntary payments of Rs.11.7 crore have been made during investigations. The nationwide action has also resulted in the seizure of 131 pouch-packing machines and arrest of 17 persons, the DGGI said....