According to the FBR instructions issued to the field formations, Federal Excise Duty @ Re 1/- per filter rod of cigarettes was imposed during the budget 2010-11. The filter rods for cigarettes are classified in Pakistan Customs Tariff (PCT) heading 5502.0090, which is "others" category of artificial filament tow. Since the unit of measurement (UoM) against this PCT heading is "KG" whereas the unit of measurement for filter rod is prescribed as "per filter rod", therefore, the Customs Collectorates are requested to ensure that consignments under PCT heading 5502.0090 are cleared after applying the correct rate of FED and correct UoM for filter rods, FBR instructions added.
Sources said that proper application of unit of measurement for levy of the FED on filter roads would help in generating an amount of Rs 3 billion in 2010-2011.
According to the FBR summary moved to the cabinet for budget (2010-20110 approval, filter plug is a material used, at one end of cigarette stick to filter the smoke. One filter rod is sufficient for manufacturing six filter plugs or in other words six cigarettes Two major companies have their indigenous manufacturing facility of filter rods whereas the needs of other registered and unregistered cigarette manufacturers are being catered by M/s Paramount international and M/s Filter Pakistan.
These two registered filter rod manufacturers produced 2614 million filter rods in 2008-09 out of which 1200 million filter rods were supplied to unregistered persons, which are; presumed to be utilised in manufacturing of non-duty paid cigarettes in the country. Sale of filter rod to unregistered persons was disallowed vide SRO 61(1)/2010 but the same was challenged before the court of law and a stay order has been dated by Sindh High Court.
In order to tap revenue' from manufacture of cigarettes by unregistered manufacturers, it is proposed that, a levy of federal excise duty @ Re 1 per filter rod (52mm to 132mm in length) may be, imposed which will be adjustable by registered users whereas duty', will be collected at source from unregistered manufacturers, the FBR added.