The Health Security and National Security (HSNS) Cess Act, 2025 introduces a new compliance framework for manufacturers using packing machines or manual production units. Administered through the ACES portal, the Act focuses on registration, declaration of machines, monthly cess payment, verification, and abatement.
This guide explains the HSNS Cess Rules 2026 in a clear, practical manner, helping manufacturers understand what is required, when it is required, and how to stay compliant.
Who Needs to Register under HSNS Cess Rules 2026?
Every taxable person covered under Section 3 of the HSNS Cess Act 2025 must register. Registration is mandatory for each factory where machines are installed.
Registration must be completed online through the ACES portal using Form HSNS REG-01. If machines are installed at multiple factory locations, separate registrations are required for each factory.
For existing manufacturers, liability begins from 1 February 2026, and registration should be completed immediately upon commencement of the Act.
When Does HSNS Cess Liability Begin?
Cess liability starts from the date the Act comes into force or from the date a machine is installed, whichever is applicable.
- Existing manufacturers: Liability begins on 1 February 2026
- New manufacturers: Liability begins from the date of installation or start of production
A temporary registration number is issued upon submission of Form HSNS REG-01, allowing manufacturers to pay cess even before the final registration certificate is issued.
Declaration of Machines: A Critical Compliance Step
Once registration is granted, manufacturers must file a machine declaration in Form HSNS DEC-01 within 7 days. This declaration includes:
- Number of machines
- Maximum rated speed
- Weight of specified goods
- Type of process (machine-based or manual)
Any change affecting cess computation, such as adding a new machine or modifying parameters, requires filing a fresh declaration within 15 days.
Important: A new declaration cannot be filed until the previous one is verified and an order is issued by the department.
How is HSNS Cess Calculated?
HSNS Cess is not based on actual production. Instead, it is calculated monthly based on:
- Number of machines installed
- Maximum rated speed of each machine
For machine-based production, rates are prescribed under Table 1 of Schedule II. For wholly manual processes, cess is payable as per Table 2 of Schedule II.
Even if a machine is operated at a lower speed, cess is payable based on its maximum rated speed, not the actual operating speed.
Monthly Payment and Return Filing Deadlines
To remain compliant, manufacturers must adhere to strict timelines:
- Cess Payment: On or before the 7th day of the current month
- Monthly Return (Form HSNS RET-01): By the 20th day of the succeeding month
Late filing of returns may attract:
- Notices from the department
- Penalties starting from ₹10,000
- Additional interest if payment is delayed
What Happens During Verification?
The proper officer verifies declarations within 90 days of filing. Verification may include:
- Physical inspection of machines
- Checking declared speed and parameters
- Reviewing CCTV footage (mandatory surveillance requirement)
If a discrepancy is found, the officer will:
- Inform the manufacturer
- Provide an opportunity to be heard
- Issue an order revising the cess liability
Any differential cess must be paid along with interest, and liability may be backdated to the date of installation or parameter change.
Abatement Under HSNS Cess Rules
Abatement is an adjustment of cess liability when a machine or manual unit remains non-operative for a continuous period of 15 days or more.
Key conditions for claiming abatement:
- Prior intimation to the officer (minimum 3 working days)
- Machine must be officially sealed
- No production during the sealed period
Abatement is calculated on a pro-rata basis and adjusted against future cess liability. It is not a cash refund.
If a machine is shut down intermittently or for less than 15 continuous days, abatement is not allowed.
Sealing, De-Sealing, and Removal of Machines
Manufacturers must inform the department in advance if they intend to:
- Shut down a machine
- Restart a sealed machine
- Remove or scrap a machine
The proper officer supervises sealing, de-sealing, or removal. Machines cannot be dismantled or removed without departmental approval.
CCTV and Surveillance Requirements
All factories must install CCTV systems covering:
- All packing machines
- Manual process units
Footage must be preserved for 24 months and provided to officers within 48 hours upon request. Failure to comply may lead to compliance action.
Common Compliance Mistakes to Avoid
- Delaying registration or declaration filing
- Declaring operating speed instead of maximum rated speed
- Adding machines without fresh declaration
- Claiming abatement without sealing
- Missing monthly payment or return deadlines
Avoiding these mistakes significantly reduces the risk of penalties, interest, and disputes.
Final Thoughts
The HSNS Cess framework places strong emphasis on machine-based assessment, timely disclosures, and procedural compliance. Manufacturers must adopt a disciplined compliance approach, i.e.maintaining accurate declarations, meeting deadlines, and coordinating closely with the department.
With proper planning and documentation, HSNS Cess compliance can be managed smoothly without disrupting manufacturing operations.
Source: PIB FAQs on HSNS Cess (Act, 2025)/ (Rules, 202) dated 02/01/2026
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CBIC Advisory 2026: Guidelines for HSNS Cess Registration & Payment