December 12, 2006	Tuesday	Ziqa'ad 20, 1427

MUZAFFARABAD, Dec 11: The AJK Excise and Taxation Department has achieved a sizeable increase in the amount of central excise duty (CED) on locally manufactured cigarettes and is set to meet its target in the ongoing financial year despite the closure of another cigarette factory in the region, a senior official said.

Asif Abbasi, AJK's collector excise and taxation, told Dawn on Monday that his department had taken effective measures to enhance the amount of CED on locally manufactured cigarettes, stuck in the range of Rs 110 million for several years, to around Rs 270 million.

Of the 55 licensed cigarette manufacturing units in Pakistan, 12 are located in AJK, but currently only seven of them are operational -- five in district Bhimber and two in district Mirpur.

Mr Abbasi said his department had raided and sealed three units last year on receiving reports that they were either manufacturing fake cigarettes or evading duties and was facing litigation on the very actions.

Apart from that, one unit was closed by its owner last year while another one, giving Rs3.5 million per month as CED, stopped production last month; nevertheless, the department was set to achieve its target for the current year, he added.

Last year the CBR had allowed its directorate-general of investigation and intelligence (customs and excise) to intercept non-duty paid cigarettes brought into the tariff areas of Pakistan from AJK at the entry points, but without creating any harassment or hazards to the duty-paid cigarettes from the region.

But Mr Abbasi said the CBR had never formally written his department that counterfeit or non-duty paid cigarettes were being brought from AJK territory into the Pakistani markets.

"We only hear allegations, but so far we have not received any documentary evidence to substantiate such accusations, he said, questioning why so far a single consignment from AJK purported to have been marketed without payment of duties had been confiscated anywhere in Pakistan.

"Its we who have themselves suggested to the CBR to establish its check-posts on the entry and exit points between the AJK and Pakistan to remove its doubts," he said.

Market sources, influenced by two major multi-national cigarette manufacturing concerns, allege that evasion of duties or manufacturing of counterfeit cigarettes by AJK units was causing a loss of Rs2.6 billion to the AJK exchequer per annum.

But Mr Abbasi dismissed the figure as "highly exaggerated," and said he was at loss to understand who had worked it out and how.

He pointed out that following the introduction of self-assessment scheme in Pakistan and its adoption in AJK last year, the E&T department personnel could not enter any factory to check the size of its production.

"We have to believe them (regarding the production figures). But we do conduct checking outside and if any consignment is found without documents, we take strict action," he said.

He said he believed that putting undue pressure on the existing units (in AJK) might force them to close down which would consequently deprive the AJK exchequer of the income it was getting presently.

In response to a question, Mr Abbasi said a law empowering the CBR to install close-circuit visual cameras in the cigarette-making units in order to check the quantum of their supply has not yet been adopted in the AJK.