The CBR on Tuesday issued notification which said, "In exercise of the powers conferred by Clause (b) of sub-section (3) of Section 5 of the Federal Excise Act 2005, CBR levied fixed amount of federal excise duty at the import stage in lieu of federal excise duty payable at production stage on edible oil and vegetable ghee, including cooking oil @ one rupee per kg."
The CBR move will bring constitutional row between Fata/Pata ghee units over taxes on ghee and cooking oil production.
The CBR had imposed sales tax on ghee production in Fata/Pata units, which they challenged before the Peshawar High Court (PHC). After detailed hearing a divisional bench of the court decided the case in favour of Fata/Pata-based ghee industry and directed the CBR to refund sales tax to the aggrieved units.
The CBR filed a review petition before the Supreme Court against the LHC decision.
Later, the CBR converted the sales tax into excise duty to avoid any constitutional complexity in the case. However, collection of duty at the production stage could not check revenue leakage as some units managed to invade taxes by selling their products without showing it correctly in their record.
Sources said the decision to shift duty on ghee and cooking oil from production to import stage would eliminate tax evasion from the ghee sector and also put an end to disadvantage to settled areas ghee manufacturing units.
The CBR decision of imposing fixed duty at import stage will also meet the Pakistan Vanaspati Manufacturers Association's (PVMA) demand that the government should put an end to advantage being enjoyed by the Fata/Pata ghee units over settled areas' units in taxes and introduce a uniform tax system for the industry.
PVMA former chief Shaikh Ikram appreciated the CBR decision and termed introduction of a uniform tax rate for the entire country as a positive development.
He said CBR Chairman Abdullah Yousuf and member sales tax were the real brain behind the move, which would help the ghee industry in growing at a fast pace in the coming year. Shaikh Ikram added that the ghee industry would extend all-out support to the CBR for introducing an effective monitoring system to check tax evasion.