The Central Board of Revenue (CBR) has imposed one percent special excise duty (SED) on import and local manufacturing of goods from July 1. The Board on Friday issued SRO 655(I)/2007 to levy SED on import and local manufacturing of goods specified in the First Schedule of the Customs Act, 1969.
Sources told Business Recorder that SED would generate around Rs 16 billion in 2007-2008 through this new revenue generation measure. The amount of special excise duty would not be part of the value for assessment of customs duty, federal excise duty, sales tax or advance income tax in case of imported or locally manufactured goods.
Another important feature is that SED paid at import or local supply stage on industrial inputs will be adjustable against special excise duty chargeable on goods manufactured therefrom at local supply stage.
No other adjustment of special excise duty will be allowed against any amount of federal excise duty or sales tax or any other tax or vice versa. Where goods on which special excise duty has been paid are exported, the exporter shall be entitled to drawback of such duty in such a manner and to such extent as may be directed by the Board.
According to the notification, SED would not be applicable on vegetables, seeds, edible oil, POL products, natural gas/LPG, electricity, phosphoric acid, pharmaceutical products, fertilisers, gold and silver, tin plate, computer hardware, bitumen, currency notes as well as items classified in Chapter 99 of Pakistan Customs Tariff and temporarily imported goods under the Duty and Tax Remission for Exports (DTRE) scheme.
Moreover, items on which sales tax is zero-rated will also not be liable to special excise duty. In this regard, the Board has specified the list of all SROs relating to zero-rating at serial number 25 of the Table of SRO.655(I)/2007 for the purpose of SED exemption.
This levy would also be not applicable on imported goods subject to customs duty at the rate of zero-percent under Customs Act or any notification issued thereunder.
Under the conditions and restrictions specified in the notifications, special excise duty shall be paid in case of goods imported, in the same manner as customs duty is paid by an importer under the Customs Act, 1969 (IV of 1969). In case of goods produced or manufactured, in the same manner as federal excise duty is paid by a producer or manufacturer under the Federal Excise Act, 2005.
The value for the purpose of levy of special excise duty shall be: In case of goods imported, the value determined in accordance with section 25 of the Customs Act, 1969 (IV of 1969) for the purpose of assessing customs duty; and In case of goods produced or manufactured, the value determined under sub-section (1) or as the case may be sub-section (4) of section 12 of the Federal Excise Act, 2005, excluding the amount of excise duty levied under section 3 of the said Act.
The special excise duty would also not be applicable on the supplies made by the cottage industry and goods produced for subsequent export by the manufacturers.
Exemption from SED would be applicable on imports made by privileged personnel/organisations under grant-in-aid agreements; goods imported by various agencies of the United Nations; diplomats/embassies; household articles including vehicles and goods for donation to projects established in Pakistan, imported by the rulers and dignitaries of UAE and Qatar.
Special excise duty would not be applicable on goods supplied free of cost as replacement of identical goods previously imported; goods imported into and exported (except to tariff area of Pakistan) from the Export Processing Zones and any enactment relating to Gwadar Special Economic Zone and the levy would not be applicable on un-cut precious and semi precious stones; polished semi-precious stones; jewellery casting powder; moulding rubber; injection wax; jewellery casting machines and accessories; rhodium-plating solution concentrate; bright and chrome lacquering solution;
steel balls and pins (different sizes) used for polishing; diamond cutting tools; alloys of silver copper and sinc for mixing in 24 ct gold; mounts and findings of gold, silver and platinum jewellery and ground handling equipment, service and operation vehicles, catering equipment and fuel trucks not manufactured locally, imported by domestic airlines or by any other service company to which a licence has been issued by the Civil Aviation Authority.