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MD Dewani
MUMBAI, FEB 21: The texturising industry, according to its spokesman, has been an unfortunate victim of the arbitrary and irrational taxation structure which, on the one hand, affects its growth and, on the other hand prevents the consumer from obtaining the fabric of his choice at a reasonable price.
The industry points out that until 1994 various processes through which partially oriented yarn (POY) has to undergo before being used in the manufacture of fabrics, were exempt from any levy. However, subsequently the government started levying separate tax on processes like drawing, twisting, texturising, dyeing etc. from the revenue angle, though it was irrational to do so, inasmuch as POY could not be used in fabrics without undergoing such processes.
This has given rise to a crop of problems like determination of assessable value of such forms of yarn and evasion of duty by unscrupulous processors. If the government wanted some additional revenue it could have obtained it by increasing the excise on POYitself, instead of levying it on twisting, texturising etc. That would have helped in avoiding the problems of duty evasion as well. It would always be much easier to deal with, say, 30 producers of POY, instead of dealing with nearly 1600 texturisers. Secondly, the aggregate duty burden on texturised yarn has become excessive. For instance, while the excise duty on cotton yarn is just around 5.75 per cent and that on blended yarn 20.70 per cent, in the case of texturised yarn it is as high as 34.50 per cent. All this is arbitrary and highly discriminatory against texturised yarn. This obstructs the use of texturised yarn in fabrics.
The texturising industry is, therefore, of the view that either all types of yarn should be subjected to the same rate of duty, or if that is not considered feasible, the duty on natural fibre yarn be fixed at 8 per cent and that on man-made fibre yarn be levied at a uniform rate of 13 per cent.
The industry is however emphatic that the duty should be charged only at thefirst stage when POY leaves the spinners' factories and there should be no further levy at the converters' stage, if evils of evasion and Inspector Raj are to be ended. The industry is of the view that there is a good potential for the export of texturised yarn. However, inadequate neutralisation of the incidence of import duty prevents it from taking full advantage of this potential. If the DEPB rates for textured polyester are suitably revised upward, the industry can step up its exports.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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