The Federal Excise Duty (FED) Act, 2005 specifies various situations for the levy of FED in relation to specified goods and services. The Finance Bill, 2023 proposed to insert Clause (e) "any item specified in the First Schedule" in Section 3 of the FED Act.
The Finance Act, 2023 reclassified Clause (e) as "any item not covered in clause (a) to (d) above and specified in the First Schedule". This widening of the scope of FED beyond manufacturing, import, and services could lead to the distribution activity of businesses being declared within the ambit of FED through subsequent legislation. The legislature has now clarified this matter in a clear manner, which was missing in the Finance Bill.
The insertion of the word "specified in the First Schedule" at Clause (2) clarifies that the specified goods and services mentioned in the First Schedule would be construed for the purpose of levy of FED under the FED Act. This amendment has addressed an anomaly in the charging provision of the FED Act.
