GLT units: Exporters can remove raw tobacco without making payment against duties: FBR

ISLAMABAD: The Federal Board of Revenue has allowed exporters to remove unmanufactured tobacco from the GLT units without payment of any duties.

The tax department on Wednesday issued Federal Excise General Order No 1 of 2024 regarding mitigating the hardship faced by exporters of unmanufactured tobacco.

FEGO No.02 of 2005 (FEGO) in its paras (ii) & (iii) stipulates that removal of unmanufactured tobacco from manufacturing premises, whether for sale or for storage, can only take place upon payment of duty.

This has created difficulties for exporters of unmanufactured tobacco who are otherwise entitled to zero-rating in terms of Section 5 of the Act, however, in view of the above-referred provisions of the FEGO, are required to pay FED upon removal of unmanufactured tobacco from manufacturing premises to a warehouse for storage.

Now, therefore, in exercise of the powers conferred by Section 43 of the FED, 2005, the board is pleased to direct that a GLT unit engaged in the export of unmanufactured tobacco may be allowed to remove unmanufactured tobacco from its manufacturing premises to a declared warehouse without payment of duty.

Sources said that the adjustable excise duty of Rs390 per kg is a liability on the cigarette manufacturers at the GLT stage and the manufacturers can adjust this in their monthly tax returns.

However tobacco Industry people claimed that this will pave the way for unmanufactured tobacco to be exported through zero-rated excise and smuggled back into the country to make tax evaded cigarettes.

The FBR in its order made some conditions that the DCIR concerned shall certify that there is no space available for storage inside the manufacturing premises of such GLT unit and unmanufactured tobacco shall only be stored in a warehouse duly declared to the concerned Commissioner-IR.

In addition, the GLT unit availing this facility shall have confirmed export orders for unmanufactured tobacco and all movement of unmanufactured tobacco including from manufacturing premises to warehouse or removal for exports, as the case may be, shall take place under the supervision of an officer of Inland Revenue not below the rank of Assistant Commissioner-IR, duly authorized by concerned Commissioner-IR in this behalf.

The keys of the warehouse shall be in the custody of an officer designated by the Commissioner-IR concerned while a register, as specified in Annex-I to this General Order, shall be maintained at the manufacturing premises of the GLT Unit recording movement of unmanufactured tobacco, whereas a register as specified in Annex-II shall be maintained at warehouse.

At the time of movement of unmanufactured tobacco from manufacturing premises to warehouse, located outside the manufacturing premises, a transport advice in duplicate

As specified in Annex-III to this General Order shall be issued. Original advice shall accompany the vehicle up to the destination mentioned in the advice, the order reads.

Removal of unmanufactured tobacco from manufacturing premises to a declared warehouse outside the manufacturing premises shall be allowed subject to provision of bank guarantee to the extent of amount of federal excise duty involved and in case of any pilferage, bank guarantee shall be realized.

On the other hand, the Bank guarantee shall be released to the extent of export proceeds realized against the export of unmanufactured tobacco.

An officer of Inland Revenue not below the rank of Assistant Commissioner-IR, duly authorized by concerned Commissioner-IR, shall have free access at all time to any warehouse used for the storage of unmanufactured tobacco.

Copyright Business Recorder, 2024