Government contemplating replacing surcharge with special excise duty

The government is likely to convert one percent surcharge on the import of goods into "special excise duty" to obtain the required legal cover that it needs for the collection of Rs 13.240 billion under this levy in 2007-2008.
Sources told Business Recorder on Monday that the government is also studying a proposal to levy one percent "special excise duty" at the local manufacturing stage of specific sectors to extend the scope of surcharge imposed on the import of goods in the budget.
According to sources, replacement of surcharge with special excise duty will justify WTO regime. The government may face legal problems in the collection of surcharge under the WTO regime. Moreover, it is imperative for the government to be crystal clear and specific about the law under which it seeks to impose the surcharge on imported goods. Under the existing tax laws, the board is legally empowered to collect special excise duty at the import stage.
The government has to amend the Finance Bill 2007-2008 for proper enforcement of the special excise duty at the import stage. Sources said that the Ministry of Finance would shortly take decision on these proposals.
If special excise duty is levied on some sectors at their local manufacturing stage, revenue generation from surcharge/special excise duty might cross over and above Rs 13 billion in the new financial year, sources added.