PHC rules FED on unprocessed tobacco is illegal
PESHAWAR: In a significant relief for the tobacco industry, the Peshawar High Court (PHC) has ruled that Federal Excise Duty (FED) cannot be levied on green leaf or hand-stemmed tobacco unless it has undergone processing and conversion through a Green Leaf Threshing (GLT) unit. The court also ordered the immediate release of 3,375 kilograms of seized hand-stemmed tobacco and a vehicle belonging…
The Peshawar High Court has ruled that the Federal Excise Duty (FED) cannot be levied on unprocessed green leaf or hand-stemmed tobacco unless it has undergone processing and conversion through a Green Leaf Threshing (GLT) unit. The court dismissed a petition filed by M/s Pak Hills Tobacco Company Pvt Ltd, setting aside the FED demand against the consignment and releasing 3,375 kilograms of seized hand-stemmed tobacco and a vehicle belonging to a tobacco company.
The court emphasized that hand-stemming, even with tools or machinery, does not qualify as a manufacturing process warranting the imposition of federal excise duty. The judgment provides judicial clarification on the distinction between hand-stemming and industrial tobacco processing, reaffirming that the levy of federal excise duty must strictly comply with the definitions and requirements prescribed under the law.
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