Syllabus:

FED Act, 2005: Sec 1-18

FED Rules:
Rule 2 Definition

Rule 3-6 Registration and Allied matters

Rule 7-14A Invoicing and duty adjustment
Rule 32,33 Drawback of duty paid on goods exported
Rule 44-47 Payment of duty and filing of monthly return

BASIC CONCEPTS

Duties specified in the First Schedule to be levied: (Sec-3)

 Subject to the provisions of this Act and rules made there under, there shall be levied and
collected in such manner as may be prescribed duties of excise on:
(a). goods produced or manufactured in Pakistan;
(b). goods imported into Pakistan irrespective of their final destination in territories of Pakistan
(c). such goods as the Board with the approval of the Federal Minister-in-charge may, by
notification in the official Gazette, specify, as are produced or manufactured in the non-
tariff areas and are brought to the tariff areas for sale or consumption therein
Non-Tariff Area: means Azad Jammu and Kashmir, Northern areas and such other territories
or areas to which FED Act does not apply.
(d). services provided in Pakistan including the services originated outside but rendered in
Pakistan
at the rate of fifteen per cent ad valorem except the goods and services specified in the First
Schedule, which shall be charged to Federal excise duty as, and at the rates, set-forth therein.

 Where excisable goods and services are supplied to non-register further duty @ 2% will be
charged only on those goods as specified by the Board. Board has not notified any good so far.
 The liability to pay duty shall be
(a). in case of goods produced or manufactured in Pakistan, of the person manufacturing or
producing such goods;
(b). in case of goods imported into Pakistan, of the person importing such goods;
(c). in case of goods produced or manufactured in non-tariff areas and brought to tariff areas
for sale or consumption therein, of the person bringing or causing to bring such goods to
tariff areas.
 (d). in case of services provided or rendered in Pakistan, of the person providing or rendering
such service provided where services are rendered by the person out of Pakistan, the
recipient of such service in Pakistan shall be liable to pay duty.
 The Board may, by notification in the official Gazette, in lieu of levying and collecting duties
of excise on goods and services, as the case may be, levy and collect duties:
(a). on the production capacity of plants, machinery, undertakings, establishments or
installations producing or manufacturing such goods; or
(b). on fixed basis, as it may deem fit, on any goods or class of goods or on any services or
class of services, payable by any establishment or undertaking producing or manufacturing
such goods or providing or rendering such services.
Exemptions (Sec 16)
All goods imported, produced or manufactured in Pakistan and services provided or rendered
except such goods and services as are specified in the First Schedule shall be exempt from whole
of excise duties levied under section 3.
Provided that goods and services specified in the Third Schedule shall be exempt from duty subject
to such conditions and restrictions, if any, specified therein and no adjustment in terms of section
6 (Adjustment of duty) shall be admissible in respect of goods exempt from duty of excise whether
conditionally or otherwise.
Application of the provisions of the Sales Tax Act, 1990 (Sec-7)

 In case of goods specified in the Second Schedule or such services as may be specified by the
Board through a notification in the official Gazette the duty shall be payable in sales tax mode.
 It means that a registered person is entitled to adjust the amount of input paid under Sales Tax
Act against FED payable by it under FED Act, Similarly amount of FED paid on
goods/services can be adjusted against the output tax payable by the registered person under
the Sales Tax Act, 1990.
FIRST SCHEDULE
EXERCISABLE GOODS

Goods FED Rate Sales Tax

mode
Edible oils, Vegetable ghee and cooking oil 16% Ad val. Yes
Concentrates for aerated beverages 50% Ad val. No
Aerated waters 11.5% of No
retail price
Cigars, cheroots, cigarillos and cigarettes, of 65% of retail No
tobacco substitutes. 2 price
Liquefied Natural Gas, Liquefied propone, Fixed rate No
Natural Gas, Liquefied ethylene,
Un-manufactured tobacco Fixed No

Note:
FED is chargeable in sales tax mode in respect of Edible oil, vegetable ghee and cooking oil only.
However fixed tax is charged on vegetable ghee and cooking oil which constitute full and final
discharge of tax liability of such manufacturer. Hence it is also not leviable in sales tax mode.
EXERCISABLE SERVICES

FED on services chargeable in sales tax mode FED

Rate/va
lue
Advertisement on closed circuit T.V., cable T.V., hoarding boards, 16% of
poles Signs and sign boards. charges
Note:
Advertisement in newspaper and periodicals and financed out of funds
provided under grants-in-aid agreements is exempt.
Services by banking company, insurance company, finance society, 16% of
Modaraba, Musharika, leasing company, foreign exchange dealers, charges
NBFC, Asset management company excludin
Note: g
Marine insurance for export, Life insurance, Health insurance, crop and markup
livestock insurance and services rendered by banking company and
NBFC in respect of Hajj and Umrah, cheque book, insurance,
Musharika and Modaraba financing and utility bill collection is exempt
from FED.
Shipping agents, stock brokers, port and terminal operators 16%
Telecommunication services 17%
Note:
Internet and international leased lines or bandwidth services are
exempt.
FED on services not chargeable in sales tax mode:
Inland carriage of goods by Air 16%
Passenger travel by air within or outside Pakistan and Chartered flights Fixed
Franchise services (include royalty, trade mark, technical fee etc.) 10%

Note:
Advertisement on CCTV, Cable TV, Newspaper, periodicals, sign boards, pole signs, hoarding
boards, Shipping agents, services provided by banking companies, insurance, modaraba, leasing
companies, foreign exchange dealers, NBFC, Franchise services and services provided by stock
brokers are subject to Federal excise only if provincial sales tax is not levied on such services.
Determination of value for the purpose of duty (Sec-7)

 Where any goods are liable to duty under this Act at a rate dependent on their value, duty
shall be assessed and paid on the basis of value as determined in accordance with sub-section
(46) of section 2 of the Sales Tax Act, 1990, excluding the amount of duty payable thereon.
 Where any services are liable to duty under this Act at a rate dependent on the charges
therefore, the duty shall be paid on total amount of charges for the services including the
ancillary facilities or utilities, if any, irrespective whether such services have been rendered or
provided on payment of charge or free of charge or on any confessional basis.
 Where any goods are chargeable to duty at the import stage, duty will be assessed and paid
on the value determined in accordance with section 25 of the Customs Act, 1969 (IV of 1969),
including customs duties payable thereon.
 Where any good is chargeable to a duty on the basis of retail price, duty thereon shall be paid
on the retail price fixed by the manufacturer, inclusive of all duties, charges and taxes, other
than sales tax levied and collected under section 3 of the Sales Tax Act, 1990, at which any
particular brand or variety of such goods should be sold to the general body of consumers.

Registration (Sec-13)

 Any person engaged in the production or manufacture of goods or providing or rendering

services liable to duty of excise under this Act shall, unless otherwise specified, be required to
obtain registration in the prescribed manner regardless of his annual turnover or volume of
sales of such goods or services.
Note: In sales tax cottage industry is not required to obtain registration but there is no such
provision in FED, thus every manufacture is required to be registered.

 Where a person who is already registered under the Sales Tax Act, 1990, shall not be required
to take separate registration for excise purpose and his sales tax registration shall be deemed
to be a registration for the purpose of this Act
Provided that provisions of the Sales Tax Act, 1990, including those relating to exemption
threshold shall not apply where a person obtains or is liable to obtain registration for the
purposes of this Act but does not have or is not liable to registration under the Sales Tax Act,
1990
Default surcharge (Sec-8)
If a person does not pay the duty due or any part thereof within the prescribed time or receives
a refund of duty or drawback or makes an adjustment which is not admissible to him, he shall,
in addition to the duty due, pay default surcharge at the rate of KIBOR plus three per cent‖
per annum of the duty due, refund of duty or drawback.
Adjustment of duties of excise (Sec-6)

 For the purpose of determining net liability of duty in respect of any goods, the duty already
paid on goods specified in the First Schedule and used directly as input goods for the
manufacture or production of such goods shall be deducted from the amount of duty
calculated on such goods.
 Adjustment of duty of excise under sub-section (1) shall be admissible only if a person
registered under this Act holds a valid proof to the effect that he has paid the price of goods
purchased by him including the amount of duty and received the price of goods sold by him
 including the amount of duty through banking channels including online payment whether
through credit card or otherwise.
 From the date to be notified by the Board, adjustment of duty of excise under sub-section (1)
shall be admissible only if the supplier of input goods and services has declared such supply
in his return and he has paid amount of tax due as indicated in his return.
 Notwithstanding the provisions of sub-section (1), the Board may, by a notification in the
official Gazette, disallow or restrict whole or part of the amount of or otherwise regulate the
adjustment of duty in respect of any goods or class of goods.