ISLAMABAD, Jan 19: The Central Board of Revenue (CBR) has notified that exporters of ghee and cooking oil are entitled to duty drawback of federal excise duty (FED) of Re1 per kg paid at the import stage. A Federal Excise General Order No 1 issued here on Thursday said that under section 5 of the Federal Excise Act (FEA), 2005, drawback of duty paid on goods used in the manufacture of goods exported out of Pakistan is admissible. Therefore, exporters of ghee/cooking oil were entitled to drawback of FED paid at the import stage, the circular added.

According to the circular, it was clarified that no FED would be collected on the domestic production of edible oil — crude oil, vegetable ghee and cooking oil.

The FED at the rate of Re1 per kg on these products would be collected on import stage, which would be the final liability under the FEA 2005.

The CBR, through notification SRO24 of 2006, levied FED at Re1 per kg on these products at import stage in lieu of duty payable on value addition at the local manufacturing stage.

According to the circular, a simplified federal excise return has been prepared for the manufacturers of edible oil, ghee and cooking oil (Annex-A), which is to be filed by the manufacturers falling in purview of the said SRO. As payment of fixed excise duty of Re1 per kg is in lieu of the net excise duty payable at manufacturing stage, no adjustment of inputs would be admissible.

It was made clear that in accordance with CBR’s ruling C.No.16(17)ST/82 October 3, 2003, if a manufacturer of vegetable ghee is producing hydrogen gas within his premises for use in the manufacture of final product i.e. vegetable ghee, its consumption within the same premises is exempted from the levy of sales tax.

However, this exemption will not apply to such hydrogen gas which is not manufactured within the manufacturer’s premises or is either purchased/supplied by the manufacturer of vegetable ghee.

It was also clarified that sales tax on other taxable by-products, such as CO2 and oxygen gas, would be separately payable at a standard rate of 15 per cent, added the circular.