Financial Daily from THE HINDU group of publications
Monday, Nov 10, 2003
Financial Daily from THE HINDU group of publications Monday, Nov 10, 2003 |
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Industry & Economy
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Knitwear & Hosiery Knitted garment makers protest higher excise rate G. Gurumurthy
Coimbatore , Nov. 9 Major branded knitted garment producers in Tirupur are on a tight spot with the Central Excise department claiming a higher excise rate on their products cleared for domestic market. The claim is based on the former's assessment that the articles of apparels produced by them contained materials other than cotton and hence would qualify for 10 per cent excise levy as against the 8 per cent rate applicable for apparels made of 100 per cent cotton. The dispute is expected to generate considerable heat as the units involved in the row with the Excise authorities are all regarded the top-notch knitwear producers whose market for basic knitted innerwear is spread across many States. Their individual company's volume of sale ranged between Rs 40 crore to Rs 60 crore. The stakes are equally high for the Central Excise Department. Worried over the falling excise earnings and the yawning gaps in revenue generation, it has spread the Cenvat duty chain wider in the textile sector this year. As per the mandatory excise duty regime extended to knitwear sector for the first time from this year, all articles of apparels made of 100 per cent cotton would be subjected to 8 per cent excise duty, while the apparels containing materials other than cotton would attract a higher excise rate of 10 per cent. It is said that the Excise authorities, after the 6-month `cool-off' period for implementing the `Cenvat' duty regime, are undertaking a thorough inspection of the products being manufactured by the branded knitwear producers. They reportedly came across product ranges that contained materials of non-cotton to some percentage, leading them to slap a 10 per cent excise duty. The affected units claim that the presence of non-cotton materials such as polyester sewing threads, which are used for greater stitching strengths or for labelling, are unavoidable. The say the percentage of these materials would be far too negligible to change the character of the cotton innerwears. Similarly, the use of synthetic materials such as elastics in the innerwears would also be unavoidable. The units were being called to pay the 10 per cent rate effective from April 1, when the mandatory excise duty regime on knitwear was introduced. The producers have mounted pressure on the Excise authorities through their apex knitwear producers body, the South India Hosiery Manufacturers Association. In the face of strong resistance being put up by these producers, the issue is being referred by the Coimbatore Zonal Central Excise authorities to the central board of excise and customs' tariff committee.
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