15 May 2004	Saturday	24 Rabi-ul-Awwal 1425

ISLAMABAD, May 14: The government is likely to abolish Central Excise Duty (CED) on five out of total 11 items from the financial year of 2004-05.

Well-placed sources told Dawn on Friday that the items considered for withdrawal of CED included, paints & varnishes, perfumery & cosmetics, soap & detergent, insurance and bipumen.

The sources said that the decision of withdrawal of CED on these items was taken following the observation that no tangible revenue was raised from these items. The decision is expected to be announced in the up-coming budget.

According to the statistics, the five major revenue spinners -cigarettes, cement, natural gas, POL products and beverages - contributed around 86 per cent of the CED collection during the financial year 2002-03 while the contribution of many other manufactured items was minimal.

Further analysis showed that the revenue raised from cigarettes during the first half (July-December) of the current financial year stood at Rs7.50 billion against Rs6.628 billion during the same period of last year, showing an increase of 13.3 per cent. Revenue from cement stood at Rs4.324 billion against Rs5.352 billion over the same period last year, indicating a decline of 19 per cent.

Revenue from natural gas stood at Rs2.31 billion during July-December period of fiscal year 2003-04 against Rs2.12 billion of the last year, an increase of 9.2 per cent.

Revenue from POL products stood at Rs1.639 billion against Rs1.693 billion over the same period of last year, showing a decline of 3.2 per cent, while the revenue realization from beverages during the same period under review stood at Rs1.056 billion against Rs0.997 billion over the same period of last year, showing an increase of 5.9 per cent.

The total CED collection from all the 11 items stood at Rs19.4 billion during the first half year of the current financial year. While the revenue realization from these five items stood at Rs16.847 billion during the same period under review. This indicated that the revenue realization from all the five items considering for withdrawal of CED stood at around Rs2 billion during the period under review.

According to the sources the withdrawal of CED on these items would result in increasing the production of some items which would result ultimately into increase in the collection of general sales tax.

The government is withdrawing the CED on items as a policy matter to merge completely the tax with GST in the next few years as part of the re-structuring of the tax machinery.