The Federal Board of Revenue (FBR) has directed every person engaged in processing of un-manufactured tobacco for cigarette making to maintain tax record and file return to help control excise duty evasion in the cigarette industry.
The Board on Saturday amended Federal Excise Rules, 2005 through a notification, bringing the entire cigarette industry into tax net. Sources told Business Recorder that documentation would also be required by units which are engaged in processing of tobacco for cigarette manufacture. There are some unregistered cigarette manufacturers which would come into the tax net through data being compiled by green leaf threshing units.
Through the new rules, the board has made it mandatory for the independently working 'Tobacco Green Leaf Threshing' (GLT) units to file monthly return and submit data on their warehouses and depots/stores of processed un-manufactured tobacco to the concerned collector.
The GLT units are those companies which are engaged in processing and converting tobacco green leaf into un-manufactured tobacco useable for manufacture of cigarettes. The independent GLT units, engaged in manufacturing/processing of un-manufactured tobacco, have to maintain tax record.
The new rules would be applicable to GLT units working independently or operating in the premises of cigarette manufacturing factories. The rules specify that at the time of sale of processed un-manufactured tobacco, the GLT units shall issue a tax invoice to a cigarette manufacturer or any other person. In case of export of processed un-manufactured tobacco by GLT units, such manufacturer or person shall be entitled to zero-rating and shall be issued zero-rated invoice.
The contract processing of un-manufactured tobacco by GLT for any person shall be specifically mentioned in tax invoice indicating process charges and federal excise duty leviable thereon.
The units shall furnish monthly return. The registered cigarette manufacturing factories shall be entitled to claim adjustment of federal excise duty paid by them on processed un-manufactured tobacco purchased from GLT units.
The GLT units shall declare all their warehouses, depots and stores for storage of processed un-manufactured tobacco to the collector of respective jurisdiction. The declaration shall be made in the first month of every year unless the status changes during the year, which shall require an amendment.
The cigarette manufacturing factories operating their own GLT units shall not be required to issue invoices for self-consumption of processed un-manufactured tobacco for manufacture of cigarettes. They shall make a separate entry for each receipt of processed un-manufactured tobacco and shall maintain a register of receipts, issues and balances.
On the other hand, the cigarette manufacturing factories, operating GLT units within their premises shall file single monthly return as prescribed in these rules.
The tax invoice of clearance of processed un-manufactured tobacco will include name of the seller/manufacturer; sales tax/FED registration number; name/address of consignee/buyer; CNIC/NTN; value of goods excise duty description of excisable goods; type of packaging and other information specified in the rules. In case of stock movement, other than sale, the column pertaining to value is not mandatory to be filled, the rules added.
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