Imported cigarettes, aerated waters: TRC Body for revising FED collection mechanism

Tax Reform Commission's (TRC) sub-committee has strongly recommended the Federal Board of Revenue (FBR) to revise Federal Excise Duty (FED) collection mechanism on imported cigarettes and aerated waters. Sources told Business Recorder here on Monday that the TRC's sub-committee on sales tax and federal excise has raised an important issue of determination of value for purposes of duty under section 12 on the import of cigarettes/cigars and different types of aerated waters.
In this regard, the TRC's sub-committee has recommended computation of the FED on cigarettes and aerated waters on the basis of retail price exclusive of FED to avoid the complications of imposition of duty over duty. According to the TRC, sub-section 4 of section 12 deals with goods that are chargeable to duty on the basis of manufacturers' retail price. It requires that FED should be computed on retail price inclusive of all duties, charges and taxes other than sales tax. Currently, FED on the basis of retail price is chargeable on imported cigarettes, cigars, and like products and various types of aerated waters.
TRC has recommended that the FED should be computed on the retail price exclusive of FED so to avoid the complications of imposition of duty on duty. The rationale for change is that the existing law results in computation of duty on duty ie FED on FED. The proposal would have negative impact on revenue, but it is not legitimate to charge duty on duty, TRC added.