ISLAMABAD: The Federal Board of Revenue (FBR) has allowed exemption from one percent Special Excise Duty (SED) on the supply of tractor parts by registered vendors to the manufacturers of tractors.
This exemption would apply with retrospective effect to all supplies made on or after July 01, 2007. This would help reduce the cost of manufacturing of agriculture tractors in the country.
In this regard, the FBR on Wednesday amended SRO 655(1)/2007 through a notification issued here. The exemption from SED is subject to some conditionalities. Firstly, exemption under this notification of special excise duty paid by a recognised manufacturer of agricultural tractors, registered under the Federal Excise Act, 2005, to the registered vendors, shall be allowed only by way of refund.
Secondly, the registered manufacturer of agricultural tractors shall claim the refund of SED paid to vendors on the parts actually used in the supply of tractors in a tax period.
The manufacturers would submit documents including invoices showing payment of special excise duty; sales tax-cum-federal excise returns filed by the manufacturers of tractors and his registered vendors; a revolving bank guarantee valid for at least ninety days issued by scheduled bank to the collector having jurisdiction of an amount not less than the average monthly refund claim during last 12 months and would also submit undertaking that refund if found not due shall be adjusted against the bank guarantee.
Thirdly, the refund claim shall be processed in the same manner as Recognised Agriculture Tractor Manufacturers Rules, 2005; and the relevant provisions of Chapter V of the Sales Tax Rules, 2006 shall apply.
However, one time waiver from rule 28 (1) is granted in respect of refund claims arising out of supplies made before the issuance of this notification subject to the condition that the same are filed before the 31st January, 2008. sajid chaudhry