On the question of the Special Committee of the Senate Standing Committee on Finance whether any new mechanism is adopted by the FBR to address illicit trade of tobacco sector, the FBR further commented that other necessary action included seizure/confiscation as per law.
The FBR added that field formations have reported that the teams have been deputed to visit the boundary area of Azad Jammu & Kashmir adjoining territorial jurisdiction of RTOs for feasibility of establishment of check posts.
The RTOs have identified and reported 10 boundary areas of AJK adjoining to the field offices, ie, RTO, Abbottabad, Rawalpindi and Sialkot. It has been reported that out of 10, 6 entry points are generally used by cigarettes manufacturers.
The field offices have sought some logistic support in the matter which is under consideration in the Board. The field offices have been directed to constitute mobile squads to monitor these routes till proper establishment of check posts.
Additionally, in order to curb the attempts to evade duty on cigarettes and monitor purchases/procurement of un-manufactured tobacco for manufacturer of cigarettes, the Federal Excise Rules, 2005 have been amended providing for posting of IR officers at green leaf threshing (GLT) units for monitoring of production and transfer of tobacco and proper documentation thereof. Staff has been duly posted on GLT units.
The rate of FED on un-manufactured tobacco has been enhanced from Rs 10/kg to Rs 300/kg through amendment by the Finance Supplementary (Amendment) Act, 2018. Though FED paid on un-manufactured tobacco is adjustable against FED paid on cigarettes, green leaf threshing units providing un-manufactured tobacco are fewer and easier to monitor. The realisation of FED due at un-manufactured tobacco stage will disincentivise evasion of FED on cigarettes.
The matter has also been discussed with the chief secretary and finance secretary and revenue authorities of AJK who are cognizant of the sensitivity of the matter.
They have been requested for similar action of enforcement in AJK. A guideline for effective enforcement measures in AJ&K and Pakistan has been drafted and shared with the revenue authority of the AJK. It is further added that chief secretary of AJK has also been requested to supervise the implementation to curb the illicit movement of cigarettes and tobacco from AJK.