Revenue Board still charging central excise duty on sulphonic acid

ISLAMABAD (May 03 2003) : Despite withdrawal of Central Excise Duty (CED) on sulphonic acid used in soap/detergents, the Central Board of Revenue (CBR) is still charging the levy on the raw material, putting aside the rule.

Sulphonic acid, sulphonates and other active detergent concentrates were extensively used as major ingredient to produce soap/detergents.

The soap industry has strongly contested that certain collectorates of the sales tax and central excise were unaware of the latest CED structure for sulphonic acid and still charging excise duty negating the relevant SRO issued a few months back. Sources said that either the collectorates have refused to follow the CBR's notifications or regional collectors were simply unable to correctly interpret the amendments.

The CBR has recently announced a major relief to the soap/detergent industry and abolished the central excise duty (CED) on the import of basic raw material, sulphonic acid.

The CED was withdrawn by doing away with the condition of “bank bond” submission equivalent to the amount of excise duty previously paid at a later stage.

Taking serious note of the situation, the CBR has informed the regional collectorates that it has been brought to the notice of the board that collectorates were demanding CED on sulphonic acid falling under PCT heading 34.02 after issuance of SRO 133 (I)/2003 of February 4, 2003.

The collectorates should follow the new status under the amended SRO and issued clarification to the soap industry.

The CBR has clarified to the collectorates that sulphonic acid falling under PCT heading 34.02, was exempted from the CED vide entry (ii) under PCT heading 34.02 of SRO 33 (I)/2002 dated June 15, 2002 [amended vide SRO 497 (I)/2002 August 8, 2002, if cleared in bulk, while liable-to CED at 10 percent of retail price if in retail packing.

After issuance of SRO 497 (I)/2002 an anomaly occurred that the user of non-duty paid sulphonic acid have to fulfil the formalities laid down under Chapter X of the Central Excise Rules, 1944 because the entry regarding clearance of non-duty paid sulphonic acid has existed under SRO 333 (I)/2002 (entry (i) of heading “Respective headings of Chapter 34).

The anomaly has been removed vide SRO 133 (I)/2003.

Now the sulphonic acid can be cleared without payment of duty and without fulfilling the formalities of Chapter X.