Electronic Production Monitoring Of Exciseable Goods

Government of Pakistan Revenue Division Federal Board of Revenue ****** Islamabad, the 16th September, 2026. NOTIFICATION S.R.O. 1586 At2O26.- In exercise of the powers conferred by section 40, read with section 45A, ofthe Federal Excise Act, 2005, the Federal Board of Revenue is pleased direct that the following further amendments shall be made in the Federal Excise Rules, 2005, namely: ln the aforesaid Rules, in Chapter XIV after rule 73A, the following shall be inserted, namely: "ChaPter XIVA ELECTRONIC PRODUCTION MONITORING OF EXCISABLE GOODS 738. Application.- (l) The provisions of this Chapter shall apply to- production and sale of excisable (a) the electronic monitoring of goods or class ofexcisable goods through a production monitoring sYstem; warehouses or (b) such manufacturers. production facilities' industrial sectors as may be notified by the Board: and goods or persons as may be specified by the (c) any other excisable Board for the purposes of section 45A ofthe Act: Provided that the Board may. through notification in the official Gazette or by special order, specily the date from which the Production Monitoring System shall be installed and made operational in respect ofany excisable goods. manulbcturer or class of manufacturers. generality of sub-rule (l)' the production (2) Without prejudice to the monitoring system may comprise video surveillance. video analytics solution, digital eye or any other solution approved by the Board for electronic monitoring of production on real time basis. 73C. Definitions.- In this Chapter, unless there is anything repugnant in the subject or context,- lnland Revenue authorized (a) "authorized officer" means an ofllcer of by the Board for the purposes ofthis Chapter;

(b) "authorized vendor" means a person, firm or company approved by the Board for supplying, installing, operating or maintaining the production monitoring system under this Chapter; (c) "Central Control Unit" or "CCU" means the centralized monitoring facility cstablished, dcsignatcd or approvcd by the Board for receiving, processing, analysing and storing production and sales data transmitted through the Production Monitoring System; (d) "digital eye" means software approved by the Board, capable of identiffing, recording, counting, tracking or analysing production, packaging, movement or sale of excisable goods through video footage or other digital means; (e) "excisable goods" or "class ofexcisable goods" means such goods as nray be specihed by the Board through notification in the official Gazettel (f) "manuf'acturer" means a manufacturer or producer of excisable goods; (e) "production rnonitoring equipment" means cameras, sensors, hardware, software, servers, networking equipment and allied equipment approved by the Board; for implementation of the Production Monitoring Systcm; (h) "video analyics solution" means an artiticial intelligence-based software solution capable ofobject detection, product recognition. production counting, anomaly detection, behavir:ural analysis or any othcr analyical function approved by the Board; and (i) "vidco surveillance" means rccording, monitoring or live streaming of production, packaging, storage or dispatch of excisable goods through cameras or other recording devices approved by the Board. 73D. Electronic monitoring of production and sale.- ( I ) The production and sale of excisable goods shall bc monitored tkough a production monitoring system by installation of production monitoring equipment, including video suweillance, video analy,tics, digital eye or any other system or technology approved by the Board, for the purposes of- (a) monitoring and recording ofthe production and sale ofexcisable goods: (b) capture, counting and verification ofproduction; (c) collection. transmission, storage and archiving ofproduction and sales data at the CCU ofthe Board; (d) detection ofproduction interruptions or anomalies; and

(e) data analysis for ensuring cornpliancc with the provisions ofthc Act and the rules made thereunder. goods unless such (2) No manufacturer shall remove. clear or sell cxcisable goods have been monitored and recorded through the production monitoring system provided under this Chapter or any instructions issued by the Board. shall procure, install and 73f,. Authorized vendor.- Every manufacturer maintain the production monitoring system and production monitoring equipmcnt only through an authorized vendor approved by the Board. The Board shall constitute a committee to 73F. Approval Committee.- (l) be known as Approval Committee for evaluation and approval ofvendors, technologies, softwarc, hardwarc and equipmcnt for implementation of thc production monitorrng system. (2) The Board shall specify the procedure ofthe Approval Committee. in accordance with (3) The Approval Committce shall perform its functions the provisions of these rules. person seeking approval as an 73G. Apptication for approval.{l) A authorizcd vendor under this Chapter shall submit an applicatron in duplicate to the Board in such form and manner as may be specified by the Board. such (2) An application under sub-rule (l) shall be accompanied by information, documents and technical details as may be specified by the Board, including, where applicable- (a) profile ofthe applicant; (b) details of rnanagerial and technical personnel indicating name, posit ion. qualification and experience; (c) technical specifications and capabilities ofthe proposed Productton Monitoring System; (d) details ofrelcvant experience and previous assignments; (c) National Tax Number (NTN), Sales Tax Registration Number (STRN), where applicable, and other statutory registrations; (0 auditcd financial statements ofthc prcceding three financial years; (g) an undertaking that the applicant has not been blacklisted by any government or private organizalion and has not been involved in any fiscal fraud; and

(h) such other information or documents as may be required by the Board. 73H. Criteria for grant of authorization.-An applicant seeking authorization as a vendor shall demonstrate. to the satisfaction of the Board, that the production monitoring system and production monitoring equipment comply with the technical specifications, functional requirements and perfbrmance standards specified by the Board. T3I. Functions and responsibilities of information technology team of Board. - The information technology team olthe Board shall perform such functions and responsibilities as may be assigned or specified by the Board for the implementation, operation and monitoring ofthe production monitoring system. 73J. Procedure for grant of authorization.- (l) Upon receipt of an application under rule 73G, the Approval Committee shall evaluate the application in accordance with this Chapter. (2) For the purpose ofevalualion. the Approval Committee may (a) on receipt ofan application for grant of authorization, the approval comm ittee shalleraluate it: (b) fix a date for a hearing to be attended by the applicant for the purposes of evaluation of the application submitted under clause (a); (c) carry out visits and physical inspections to ascertain eligibility of the applicant for authorization under this Chapter; and (d) require the applicant to give practical demonstration of the technological solution ottered for approval. (3) The Approval Committee shall. within sixty days of receipt of the application, submit its recommendations to the Board for grant or refusal of authorization: Provided that where authorization is recommended to be refused. the reasons therefor shall be recorded in writing. (4) Where the applicant fulfils the prescribed technical, financial and other requirements, the Approval Committee may recommend the grant of authorization to the Board. (5) The Board may grant aulhorization to the recommended applicant, subject to such terms and conditions as it may specify. (6) Before the grant of authorization, the applicant shall fumish an unconditional bank guarantee equivalent to five per cent ofthe project cost or five million rupees. whichever is lower. in favour ol the Board.

(6) shall remain valid for the (7) The bank guarantee furnished under sub-rule period ofauthorization and may be encashed by the Board in the event of any violation of the provisions ofthe Act, these rules or, as the casc may be, the terms and conditions of the authorization. An authorization granted 73K, Responsibilities of authorized vendors.- (l) under this Chapter shall, unless suspended or cancelled earlier, remain valid for a period ofthree years and may be renewed by the Board in accordancc with this Chapter' the provisions ofthe Act, these rules (2) The authorization shall be subject to and such terms and conditions as may be specified by the Board. shall be non-transferable and (3) An authorization granted under this Chapter shall not be assigned or sub-contracted without thc prior approval ofthe Board. procure, install' configure, commission and (4) The authorized vcndor shall maintain the production monitoring system and production monitoring equipment in accordance with the specifications specified by the Board. the installation and commissioning (5) The authorized vendor shall complete ofthe production monitoring system within forty five days ofthe issuance ofthe purchase order or within such extended period as may be allowed by the Board' shalt provide technical support, soltware upgrades, (6) The authorized vendor faults to ensurebug fixes, preventive maintenance and prompt rectification of uninterrupted operation of thc production monitoring system. provide all necessary technical assistance and (7) The authorized vendor shall support.to the Board and its information technology team for the implementation, operation and monitoring ofthe production monitoring system. shall be submitted to the Board (8) An application for renewal ofauthorization at least three months before the expiry of the authorization. the performance of the authorized (9) The Board may, after evaluation of vendor and compliance with this Chapter, renew the authorization for a further pcriod of three years, subject to such terms and conditions as it may spccify. The authorized vendor shall 73L. Technical support and training.- (l) upgrade the production monitoring system, including the related hardware, software, communication equrpment and other components, in accordance with the technical specifications and requiremcnts specified by thc Board. provide technical and operational training to (2) The authorized vendor shall the officers and officials of the Board and fumish such documentation, user manuals and technical support as may be requircd by the Board conduct pcrformance reviews, (3) The Board may, Ilom time to timc, inspections or technical evaluations of the production monitoring system to assess its functionality, efliciency and compliance with this Chapter.

73M. Fee and charges.- (l) An authorized vendor shall charge the manuf'acturer such fee or charges for the supply, installation" operation, maintenance and support ofthe production monitoring system as may be approved by the Board. (2) No fee or charges shall be payable bythe Board or its ficld formations for the purposes ofthis Chapter. (3) The Approval Committee may, either on its own motion or on the request ofa manufacturer or an authorized vendor, determine the maximum fec or charges that may be chargcd by an authorized vendor from a manufacturer. (4) The Approval Committee may speciflz the approved fee or charges in such manner as it may deem appropriate. (5) The fce or charges shall rcmain applicablc during the period of authorization unless revised by the Approval Committee. (6) An authorizcd vendor may apply to the Approval Committee for rcvision of the approvcd fee or chargcs whcrc therc is a material changc in the basis of determination or due to exceplional economic circumstances. (1) The Approval Committee may. after providing an opportunity ofhearing to authorized vendor, wherc necessary, approve or rejcct the rcquest for revision of the fee or charges. (8) Where a request for revision of fee or charges is rejected, the authorized vendor may apply to the Approval Committee fbr cancellation of its authorization. (9) The Approval Committee may, after considering the request made under sub-rule (8). cancel the aulhorizat ion. 73N. Functions and responsibilities of manufacturer.- (l) Every manufacturer to whom this Chapter apply shall- (a) makc all production facilities available for installation of the production monitoring system and allow access to the authorized vendor and the Board for routine operations, inspection. maintenance, repair and upgradation ofthe production monitoring system; (b) establish, operate and maintain the information technology infrastructure, including intenret connectivity, unintemrpted power supply and such other facilities as may be specified by the Board, wherever required for the purposes ofthis Chapter; (c) not produce, process, pack, clear or supply excisable goods except tkough the production monitoring system in such manner as may be specified by the Board; (d) be responsiblc to pay the approvcd fee or chargcs to the authorized vendor in accordance with this Chapter;

(e) be responsible for the smooth functioning, protection and security of the production monitoring system; (0 report to the Commissioner concemed, within one hour of any operational lailure, damage, disruption, tampering, unauthorized interference or rnalfunction of the production monitoring system: Provided that where any damage to the production monitoring system is found to be attributable to the carelessness, negligence or deliberate act ofthe manufacturer, the cost olrepair or replacement shall be borne by the manufacturer, without prejudice to any proceedings that may be initiated under the Act or these rules; authorized by (g) allow unhindered access to the Board or any offrcer the Board for inspection, verification, maintenance, audit or any other purpose connected with the implementation ofthis Chapter; notice ofany (h) give the Board not less than thirty days prior written proposed installation, commissioning, expansion. modification, relocation, suspension or discontinuance of any goods or production line or ofthe production monitoring system; devices, (D make available any damaged or defective equipment, cameras or any component of the production monitoring system for inspection by thc ofliccr authorized by the Commissioncr; () report any inoperative production lines within one hour of occurrcnce to the conccmed Commissioner and the officer authorized by such Commissioncr shall immediatcly proceed to secure such lines using a security seal and register the action in the system; (k) ensure that no person tampers wittr, bypasses, disables, obstructs or otherwise intcrferes with thc production monitoring systcm or any device or equipment forming part thereofi de-sealed to (D production lines sealed as aforesaid shall not be resume operation except with the permission of the Commissionen and procedures or (m) comply with such other directions, conditions, requirements as may be specified by the Board for the effective implementation of this Chapter; 73O. Liability of authorized vendor.- (l) Without prejudice to any other action under the Act or these rules, an authorized vendor found to have willfully colluded with a manufacturer in thc violation of the provisions of thc Act or thesc rules shall be liablc to action under the Act or the rulcs made thereunder. that (2) Where, after affording an opportunity ofbeing heard, it is established an authorized vendor has colluded with a manufacturer resulting in evasion of duty or taxes, such vendor shall be liable for the consequences provided under the Act or the rules made thereunder, including recovery ofduty, taxes, default surcharge and, as the case may be, penalties.

73P. Audit,-The Board may conduct. or cause to be conducted. periodic audits, inspections or technical evaluations of the production monitoring system and take such corrective or remedial measures as may be considered necessary. / [C.No.6(3)TI) (lzh Second Secretary (ST