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CED adjustment on beverage disallowed

ISLAMABAD (December 10 2003): The Central Board of Revenue (CBR) has turned down a major demand of soft drink manufacturers to allow adjustment of central excise duty (CED) on beverage concentrate.

Sources told Business Recorder here on Tuesday that the beverage industry was pressing the tax authorities for permitting adjustment of CED on the beverage concentrate.

Soft-drink manufacturers opined that beverage concentrate is a raw material on which CED adjustment should be given under SRO.333(I)/2002 like other raw materials.

Tax officials clarified that the adjustment of CED would only be available on paint and varnishes, perfumery and cosmetics, soaps and detergents.

However, no CED adjustment would be given on non-manufactured tobacco, beverage concentrate and POL products except base lube oil.

The CBR used to collect over Rs 3 billion as central excise duty (CED) per annum on beverage concentrate, which was one of the major revenue spinners.

After budget 2003-2004, the CBR issued a clarification to all collectors explaining that the Central Excise General Order (CEGO) 2/2003 was only applicable on items (paint and varnishes, perfumery and cosmetics, soaps and detergents etc), on which adjustment of CED has been allowed in terms of section 3 (11), under SRO 333(I)/2002.

No adjustment whatsoever was available to items like non-manufactured tobacco, beverage concentrate, and POL products, which have not been allowed facility under SRO. 333(I)/2002.

Despite this clarification, the soft drink industry once again approached tax authorities to avail CED adjustment, which was rejected outright by the CBR.

The CBR contended that the issue has already been examined in the last budget and need no further clarification, sources added.

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