1. PTBA Summer Camp-2009 PAKISTAN TAX BAR ASSOCIATION
Paper presented on
FEDERAL EXCISE ACT, 2005
SCHEDULES, ELECTRONIC FILING
OF EXCISE RETURN RULES, 2005 &
CUSTOMS, EXCISE & SALES TAX
APPELLATE TRIBUNAL
PROCEDURE RULE, 2006
PTBA Summer Camp-2009
Organized by
PTBA Academy of Taxation
At Pearl Continental Hotel, Bhurban By
Adnan Mufti, FCA
Partner, Shekha & Mufti, Chartered Accountants

2. Overview The Law of Federal Excise Duty
Duty on Manufacturing / Import / Services
Zero Rating of Duty & Drawback of Duty / Rebate
Adjustment / Credit of Duty
Determination of Value of Excise Duty
Misc. Provisions of FED Act
Excise Registration / Book Keeping / Filing of Return / Payment of FED
Audit
Schedules: First Schedule, Second Schedule & Third Schedule
Electronic Filing of Federal Excise Return Rules, 2005
Customs, Excise & Sales Tax Appellate Tribunal (Procedure) Rules, 2006

3. The Law of Federal Excise Duty
Federal Excise Duty is levied and collected on the goods / services specified under the First Schedule to the Federal Excise Act 2005
FED is charged on manufacturing, import and rendering of services
FED one stage levy and is not collected like sales tax on each stage when the
goods are sold or the services are rendered

4. Duty on Manufacturing / Import / Services
Goods specified in the First Schedule are subject to levy and collection of FED in the following manner:
Goods imported into Pakistan
Goods produced / manufactured in Pakistan
Manufacturing is :
any process incidental to the completion of a manufactured product;
any process of re-manufacture, remaking, reconditioning or repair;
processes of packing or repacking
any person who employs hired labour in production
any person who engages in the production or manufacture of goods on his own
account if such goods are intended for sale
any person who, whether or not he carries out any process of manufacture
himself or through his employees or any other person, gets any process of
manufacture carried out on his behalf by any person who is not in his
employment:

5. Duty on Manufacturing / Import / Services
Goods specified by the Federal Government
Goods as are produced or manufactured in the non-tariff areas and are brought to the tariff areas for sale or consumption thereon: [SRO 649(I)/2005, dated 01 July 2005]
vegetable ghee and cooking oil
cigars
perfumes
beauty or make-up preparations
shave preparations
pre-shave
shaving, etc.
Services provided in Pakistan
Services originated outside Pakistan but rendered in Pakistan

6. Special Excise Duty
In addition to FED chargeable under Section 3, Special Excise Duty [SED] is
only chargeable on one time basis of the value of following goods:
Goods produced or manufactured in Pakistan
Goods imported into Pakistan,
SED is chargeable on all items irrespective of the fact that such goods are chargeable to FED or sales tax
SED is not part of the value for the purpose of assessment customs duty, federal excise duty, sales tax or advance come tax
Special Excise 1% of value of supply as per Sales Tax Act 1990 (gross money consideration received from the recipient of supply)
Manufactured goods chargeable to FED on the basis of retail price - SED will be levied on the retail price excluding the amount of FED
No separate invoice for SED required. Invoice issued for sales tax purpose should mention the amount of SED:

7. Duty on Manufacturing / Import / Services
Exemptions from SED!
Certain categories of goods are exempt from levy of SED:
POL products
Edible oil
Electrical energy
Pharmaceutical products
Meat of bovine animals, sheep, goat and poultry
Cereals, rice
Poultry and cattle feed including their ingredients
Agriculture tractors, etc.
Goods specified under certain notifications such as milk, cream, yogurt, butter,
petroleum crude oil, bicycles, specified stationery

8. Duty on Manufacturing / Import / Services
Rates of FED
Standard 16% of the value of excisable goods or services
In certain cases, other rates of FED applicable in the First Schedule, as specified thereon
The Federal Government may levy and collect higher or lower rate of FED through notification, e.g. international air traveling
The FBR may, by notification, levy FED on:
- the basis of production capacity of plant, machinery or the installation
- fixed basis on any goods or services
cigarettes
vegetable ghee
cooking oil
travel by air on international journey

9. Duty on Manufacturing / Import / Services
Liability to pay FED / SED
Goods produced - person producing such goods
Goods imported into Pakistan - person importing such goods
Services rendered in Pakistan – service provider
Services rendered by person outside Pakistan - recipient of service in Pakistan (international air travel)
Goods produced in non-tariff areas and brought to tariff areas - person bringing or causing to bring such goods in tariff areas

10. Zero Rating of Duty & Drawback of Duty / Rebate
Goods exported out of Pakistan
Goods specified through notifications
Drawback of duty is available on duty paid manufactured goods which are exported out of Pakistan
Drawback of duty is available on goods shipped as provisions or stores for consumption on board a ship or aircraft proceeding to a destination outside Pakistan
The claim for the rebate of duty shall be lodged, within three months of the date on which the goods were exported, with the Collector in whose jurisdiction the person is registered

11. Zero Rating of Duty & Drawback of Duty / Rebate
Duty paid on raw material of following goods is subject to duty drawback as per
following:
Vegetable ghee 90% of FED paid at import stage on
same quantity of edible oil as exported
Cooking oil Rs.6.69 per kg
Margarine Rs.5.97 per kg
Soft drinks (all pack sizes) Rs.1.72 per litre

12. Zero Rating of Duty & Drawback of Duty / Rebate
Restrictions!
FBR may restrict payment of duty drawback, refund or adjustment of duty upon exportation of following goods:
goods exported from Pakistan by land route without being declared exportable
against FED rebate as per conditions prescribed under the Export Policy
export of consumer goods to any country, in retail packings, bearing the retail price in PKR
export of excisable goods in retail packing not printed, in bold letters, with the words:
“NOT FOR SALE IN PAKISTAN” or such other code as the FBR may approve
“FOR EXPORT ONLY” MANUFACTURED FOR ____________________ (the name of their customer)

13. Adjustment of Duties of Excise
FED paid
on goods specified in the First Schedule, and
used directly as input goods for the manufacture of such goods shall be deducted from the amount of FED calculated on such goods
Adjustment of FED admissible only if valid proof for payment of purchases and sales is available
FBR may restrict or disallow whole or part of the amount of adjustment of FED, e.g. aerated waters and flavours and concentrates [SRO 650(I)/2005,dated 01 July 2005]
Adjustment of FED can be effected while issuing debit and credit note (Rule 14A)
Input SED paid on industrial inputs is adjustable from output SED only !

14. Determination of Value for Excise Duty
Duty shall be paid and assessed on the basis of value as determined under Section 2(46) of the Sales Tax Act For instance:
motor cars and other motor vehicles,
other mineral oils excluding sewing machine oil,
concentrates for aerated beverages in all forms including syrup form
Value under Section 2(46) of the Sales Tax Act 1990
money consideration received from the recipient of supply
Open market price
Discounted price
Assessment under Section 25B of the Customs Act 1969 for imports
Value determined Valuation Committee
Value fixed by the Board

15. Determination of Value for Excise Duty
Charges
Services liable to FED at a rate on the basis of charges - FED is paid on the total amount of charges for the services including ancillary facilities or utilities, if any, irrespective whether such services have been rendered or provided free of charges or on confessional basis
Telecommunication (Pay Phone Card !)
Domestic Air Travel

16. Determination of Value for Excise Duty
Import
Goods chargeable to FED at import stage - FED is assessed and paid on the value determined in accordance with Section 25 of the Customs Act 1969

17. Determination of Value for Excise Duty
Retail Price
Goods liable FED on the basis of retail price, duty will be paid on the basis of retail price, fixed by the manufacturer inclusive of all duties, charges and taxes other than sales tax
Retail Price Mechanism also applicable to Imported Goods !
FED charged on imported cigarettes on the basis of retail price

18. Determination of Value for Excise Duty
Exceptions !
If more than one price is fixed for same brand or variety of goods manufactured, the highest of such price and such retail price shall be assessed for the purpose of FED
FBR may fix minimum price of any goods or class of goods for the purpose of levying and collecting of FED and duty shall be paid accordingly
Minimum price of lubricating oil in packs at US$ 2 per litre for assessment of FED at import stage
Where the goods sold on higher than the price fixed by FBR, the duty shall be levied on such higher price

19. Determination of Value for Excise Duty
Applicable Value & Rate of Duty
The value and the rate of duty applicable to any goods or services will be in
force:
in the case of good - on the date on which the goods are supplied for export or for home consumption
in the case of services - on the date on which the services are provided
in the case of goods produced outside the areas to which the Act is applied and brought to such areas for sale or consumption therein - the date on which the goods are brought to those areas

20. Determination of Value for Excise Duty
Collection of Excess Duty
Any person who has collected or collects any duty which is
Not payable as duty
In excess of the duty actually payable
and incidence of which has been passed on to the consumer, shall pay
the amount of such duty to Federal Government
NO REFUND AT ANY GROUND !

21. Miscellaneous Provisions of FED Act
Default Surcharge
If a person
fails to pay the duty or part thereof
receives a refund or makes an adjustment of duty which is inadmissible
he shall, in addition to the duty payable, be liable to pay default surcharge at the rate of KIBOR + 3% per annum of the duty due
Recovery of unpaid duty or of erroneously refunded duty or arrears of duty,
Where any person
has not levied or paid any duty
has short levied or short paid such duty
has received any amount of refund of duty erroneously,
shall be served show cause notice requiring him for payment of such duty such notice to be issued within three years from the relevant date.

22. Miscellaneous Provisions of FED Act
Short paid amounts recoverable.-
Where a registered person pays the amount of duty less than the duty due as indicated in his return, the short paid amount of duty along with default surcharge shall be recovered from such person by stopping removal of any goods from his business premises and through attachment of his business bank accounts without prejudice to any other action under the Act or the rules made thereunder:
Provided that no penalty under this Act or rules made thereunder shall be imposed unless a show cause notice is given to such person.

23. Miscellaneous Provisions of FED Act
Exemptions from FED.-
All goods imported, produced or manufactured in Pakistan and services provided or rendered except such goods and services as are specified in the First Schedule shall be exempt from whole of excise duties
Goods and services specified in the Third Schedule shall be exempt from duty subject to such conditions and restrictions, if any.
Goods specified in 3rd Schedule: No adjustment shall be admissible in respect of goods exempt from duty of excise whether conditionally or otherwise.
The Federal Government may by notification in the official Gazette, exempt any goods or class of goods or any services or class of services from the whole or any part of the duty

24. Miscellaneous Provisions of FED Act
Appeals to Collector (Appeals)
Any order passed by an Federal Excise Officer may be challenged with the Collector (Appeals) within 30 days of communication of such order
Appeals to the Appellate Tribunal and Reference to High Court
The order passed by Collector (Appeals) may be challenged by any person before Appellate Tribunal within 60 days of communication of such order
The aggrieved person may prefer an application in the prescribed manner to the High Court within 90 days of communication of order passed by Appellate Tribunal

25. No refund of duty erroneously levied or paid, unless claimed within one year.––
The duty or part thereof paid or overpaid through inadvertence, error or misconstruction, shall not be refunded unless a written claim is lodged to the Collector within one year from the date of such payment.
Delayed Refund. —
If the refund due is not paid within specified time, the taxpayer will be paid refund as well as additional amount equal to KIBOR per annum of the amount of refund due
Payment of duty not to be postponed.—
Under no circumstances whatsoever, any registered person shall on his own or otherwise defer or postpone the payment of duty on the pretext or ground that he has not received the price inclusive of duty or the amount of duty from a person to whom he has sold excisable goods or rendered or provided excisable services.
No default surcharge for holidays.—
In situations where any amount of duty due to be paid on a given day is not deposited owing to holiday, no default surcharge shall be paid or required to be paid if such amount of duty is paid on the next working day.

26. BOOK KEEPING/ FILING OF RETURN/ PAYMENT OF FED
Book Keeping, Invoicing & Return Filing
Maintain and keep the following records till 5 years at business premises or registered office in English or Urdu language:
records of clearances and sales made indicating description, quantity and value of goods, name and address of the person to whom sales were made and the amount of the FED charged;
records of goods purchased showing the description, quantity and value of goods, name, address and registration number of the supplier and the amount of FED, if any, on purchases;
records of goods cleared and sold without payment of FED;
records of invoices, bills, accounts, agreements, contracts, orders and other allied business matters;
records of production, stocks and inventory;
records of imports and exports; and
such other records as may be specified by FBR

27. BOOK KEEPING/ FILING OF RETURN/ PAYMENT OF FED
Book Keeping, Invoicing & Return Filing
Serially numbered invoice to be issued at the time of clearance or sale of goods, including goods chargeable to 0%, or providing or rendering services containing the invoice particulars
No separate invoice to be issued if Sales Tax Invoice is being issued !
Electronic invoice may be issued !
For every month, a registered person shall furnish correct return through web portal of FBR upto 18th day of the following month, whereas due amount of FED should be deposited on 15th day of the following month, except Airline is required to file return on 15th day of following 2nd month

28. AUDIT
The Collector may depute any Excise official to conduct audit of the
registered person on annual basis
Scope of audit :
the quality of the records, accounts, invoices, returns and statements maintained, issued or furnished;
the declarations, assessments and payments made on the monthly returns and challans submitted;
performance of the obligations under the provisions of the Act and these rules;
comparison of production vis-à-vis installed capacity;
comparison of production vis-à-vis raw materials and inputs acquired;

29. AUDIT the valuation of the goods as made and declared;
adjustments of duty availed;
refunds and rebates taken;
concessions and exemptions availed;
stocks of inputs and outputs; and
need and direction for further enquiries or investigation.

30. Audit Rectification of genuine errors in records
Genuine errors in records identified during audit can be rectified by registered person, if any, provided that he discharges due liability
Stock taking during audit
Where needed, stock-taking may be conducted during audit
Audit of composite units
In case of registered persons who are paying FED as well as sales tax, the audit to be conducted on composite basis

31. Electronic Filing of Federal Excise Return Rules, 2005
Electronic filing of FED return through web portal of FBR, compulsory for all registered persons
Single return is prescribed for sales tax and excise purpose
Payment of FED on prescribed FED payment challan upto 15th day of the following tax period, whereas return to be filed electronically upto 18th day of the following tax period

32. Customs, Excise & Sales Tax Appellate Tribunal (Procedure) Rules, 2006
Documents for filing appeal with Tribunal
Performa of appeal
Index & proper paging of appeal
Power of attorney
Affidavit duly attested by Oath Commissioner
Summary of the case
Attested copy of recovery memo, when required
Attested copy of seizure, when required
Attested copy of FIR, if any
Attested copy of show cause notice, order in original & order in appeal
Attested copy of CNIC of the person claiming ownership of non-duty paid smuggled goods and vehicles.

33. Customs, Excise & Sales Tax Appellate Tribunal (Procedure) Rules, 2006
Procedure for filing the appeal
Memorandum of appeal in the prescribed form to be presented to Registrar by appellant in person or through authorized representative or shall be sent through registered post
Upon presentation of appeal, the Registrar or any authorized person shall affix seal of the Tribunal on Memorandum of Appeal
Memorandum of Appeal should contain specific grounds of appeal without any narrative or arguments; grounds to be numbered consecutively
Memorandum of Appeal should accompany the documents as specified in proforma list
The appellant, before filing of appeal, shall a send memorandum and grounds to appeal to respondent by registered post
The appellant, except leave of Tribunal, cannot urge or be heard in support of any ground not set forth in the memorandum of appeal.

34. Customs, Excise & Sales Tax Appellate Tribunal (Procedure) Rules, 2006
Where memorandum of appeal is signed by an authorized representative, authorization letter to be annexed with memorandum of appeal. The authorized representative should declared himself as lawyer / accountant / consultant / authorized representative in terms of Chapter IX of Sales Tax Rules, 2006
Application for stay against recovery proceedings or disposal of case shall be made presented in the same manner as the appeal is presented. The stay application should incorporate all the details pertaining to the appeal.

35. THANK YOU