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  • Jan 5th, 2005
  • Comments Off on Procedure to pay excise duty on bitumen purchase simplified
To avoid double taxation on the petroleum bitumen, the Central Board of Revenue (CBR) has decided that the purchaser of bitumen will pay difference between the excise duty paid on bitumen purchased in bulk from the refinery and that will be chargeable from the end-consumer. The CBR has amended SRO. 333(I)/2002 through an SRO. 16(I)/2005 issued here on Tuesday to simplify procedure for payment of excise duty by the purchaser of the products from the refinery.

Giving details of the decision, the CBR officials said that the sale of petroleum bitumen, whether in bulk or packed in drums is chargeable to central excise duty (CED) at the rate of 15 percent ad valorem under the Central Excise Act, 1944 read with SRO. 333(I)/2002.

Under the Central Excise Act, 1944, re-packing of goods is considered as manufacturing and subsequently liable to the CED. Strict implementation of the definition has created this anomaly. The licensees who purchased bitumen in bulk for subsequent sale without processing, by re-packing in metal drums, were subject to excise duty on their retail sale, thus, resulting in double taxation.

The officials said they were also at a financial disadvantage as the refineries paid the tax once when they sold bitumen in bulk or in metal containers.

To remove the anomaly, the CBR has allowed the bulk purchasers to pay excise duty to the extent of their value addition when bitumen, on which CED has been paid on bulk purchase value, is sold by re-packing in metal containers without further processing.

Copyright Business Recorder, 2005


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