According to the CBR, the whole system shall now operate on self-clearance, self-assessment and self-compliance basis. Hence, the staff posted in excisable units has to be withdrawn.
From July 1, 2005, the Central Excises Act, 1944 and the Central Excise Rules, 1944 shall stand substituted with the Federal Excise Act, 2005 and Federal Excise Rules, 2005, respectively.
The Federal Excise Act, 2005 has been incorporated in the First Schedule of the finance bill 2005-06, while the Federal Excise Rule, 2005 has been notified vide SRO.534(I)/2005, dated June 6, 2005, under new excise legislation. The whole excise taxation system has been conceptually and structurally changed.
Salient features of the new excise legislation are that the traditional licensing and warehousing systems have been done away with. Manufactures of excisable goods and service providers shall be required to obtain excise registration.
However, no excise registration is warranted where sales tax registration has already been obtained.
The First Schedule of the Federal Excise Act, 2005 contains a positive list of excisable goods and excisable services. The Second Schedule contains description of goods on which duty is to be collected under VAT mode.
Except for services relating to insurance, excise duty on all other excisable services is collectable under VAT mode (notification in this regard will follow shortly).
Adjustment of excise duty paid on inputs used in manufacture of goods on which excise duty is payable or has been paid is admissible, except for beverage concentrate. The excise duty paid on concentrate shall not be adjustable against the duty payable on aerated water.