The Central Board of Revenue (CBR) has made it mandatory for the registered manufacturers of shoe adhesives, who availed excise duty exemption on solvent oil, to maintain record of purchases/imports of the raw materials used in the manufacture of their finished products.
The Board issued 'Federal Excise General Order (FEGO) 8 of 2006' on Wednesday to streamline the excise duty exemption on solvent oil used in the manufacturing of shoe adhesives under SRO 949(I)/2006.
According to the procedure, in case of sale of solvent oil to the registered manufacturers of shoe adhesives by the oil marketing companies (OMCs) after procuring the solvent oil from the oil refineries/oil exploration companies, the OMCs shall, on the basis of orders received from the registered manufacturers of shoe adhesives, intimate to the refineries/oil exploration companies about the requirement of solvent oil for the shoe adhesives industry.
Based on such intimation, the refineries/oil exploration companies shall issue invoices to the OMCs reflecting the exemption of excise duty mentioning that the solvent oil covered therein is meant exclusively for the consumption of the registered manufacturers of shoe adhesives.
In such cases, the oil refineries/oil exploration companies may issue invoices, even subsequent to the completion of supply process, as agreed between the refineries/oil exploration companies and oil marketing companies.
As per notification, in case of sale of solvent oil by the refineries/oil exploration companies directly to a registered manufacturer of shoe adhesives, the exempt invoice shall be issued directly in the name of the manufacturer.
The OMCs shall maintain separate record of exempt supplies obtained from oil refineries/oil exploration companies under this General Order. The manufacturer, availing the exemption, shall be required to meet the conditions laid down in SRO 949(I)/2006.
The manufacturer, availing the exemption, shall be required to maintain record of purchases/imports of other raw materials used for the manufacture of shoe adhesives showing the description, quantity and value of goods, name, address and registration number of the supplier and the amount of tax on purchases. The record would be produced at the time of any subsequent audit to verify that the exemption for solvent oil had been availed for the manufacture of shoe adhesives only.
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