ISLAMABAD (January 04 2005): The Central Board of Revenue (CBR) has turned down a major demand of the ministry of industries and production seeking exemption of central excise duty (CED) on cement used in Export Processing Zones (EPZs) for building infrastructure. In this connection, the CBR has issued instructions to all collectors of sales tax to charge central excise duty on cement as per existing law.
Official sources said here on Monday that the cement could not be considered as a raw material used in the manufacturing of goods exported through EPZs.
Since, cement and other such construction material is not taken to EPZs as a raw material for further manufacturing of goods for export, they are liable to excise duty at the statutory rate.
The distortion between imported and locally manufactured raw material/intermediary goods taken to EPZs has been done away with in the budget 2004-05 by rescinding the notification SRO.574(I)/2000.
The CED exemption available on the imported as well as locally manufactured raw material or intermediary goods, which are used by manufacturers located in EPZs for further manufacturing of goods meant for export, is in line with the policy outlined by the industries ministry.
Keeping this in view, the CBR cannot accede to the ministry's request for permitting CED exemption on cement brought into EPZs, officials added.
On the other hand, the ministry of industries and production opined that exemption of CED on supply of construction material like cement and steel to EPZs has been withdrawn by the CBR.
This exemption was available to EPZs investors for the last 22 years against convertible foreign exchange. The cement was needed for building infrastructure facilities by exporters. The CBR's decision will also increase the construction cost of investors and discourage new investors.