This was presented before CN Sarangi, the Chief Commissioner of Central Excise in Mumbai by Prabhu Singh Walia and Narendra Patel, respectively president and vice-president of the newly formed New Textile Processors Association on Monday.

The proposed withdrawal of drawback facility is in response to a plea to introduce new structure of levying excise following a meeting held here last week with the representatives of various trade associations of the textile processing industry. The duo, who had voiced serious concern at the meeting, were invited by the excise department for their comments on the new proposal separately when they have categorically submitted that if implemented, the new proposal will not only lead to a substantial revenue short fall from the processing houses but will force closure of smaller units which comprise 80per cent of the industry. Walia questioned the wisdom of the Central Board of Excise and Customs (CBEC) in suggesting the new format as, according to him, a new definition of the chamber of a stentor machine will be required to be introduced. This was because the new proposal envisages levy of specific duty at the rate of Rs 1.5 lakh per month per chamber of a stentor machine instead of ad valorem recovered from the processing units on the fabrics they have been processing. Each stentor machine may have five chambers each of which could process about 25,000 metres of fabric on which the duty recovered under the provisions of the current format worked out at the rate of about 11.8 per cent. Process houses charge around Rs 2-3 per metre for processing.

Thus each chamber, if it processed so much will end up paying duty to the tune of over Rs 4-6 lakh per month. If the new proposal is implemented, the same chamber will be paying only Rs 1.5 lakh per month, which in turn means a net loss of Rs 2.5-4.5 lakh perchamber per month to the exchequer.

Besides, these type of production is generated mainly by larger units where fabric of dearer and heavier variety like suitings is processed. Most of the smaller units do not have such modern machines and will be the biggest losers, they claimed.

They said that the larger units, comprising about 20 per cent of the industry which are so far paying heavy duty on their production duty the ad valorem duty structure will end up paying a fraction of it while smaller units which do not have enough work to sustain for more than one shift will have to shell out Rs 1.5 lakh per chamber. This will force them to shut their units and divert to some other business, Patel claimed. He added that even without the stentor, a unit owner can still dry and finish the fabric. How is the government going to recover duty from such units if there is no stentor, and thus no chamber, but the rest of the plant exist they asked.

Both told the chief commissioner that each stentor also needed feedback from machines like jet dyeing and several smaller units do not have this facility and are not even capable of using their respective units to its full strength.

This units will either resort to fabric processing without using the stentor or will be forced to shut themselves rendering a large work force job less. He claimed there was another way of evading duty by using the old jigger machine method which was used in 50s.

He claimed that by using jigger machine for dyeing the fabric and drying and finishing it on the drying range, the processor still produced the processed fabric and that without using the chamber. Only requirement is that the grey should have been woven in such a fashion that it neither shrinks nor elongates while being processed which available today, he claimed.

Explaining the process involved he said firstly the process involves washing of the fabric then bleaching, dyeing which is followed by the fabric being put in the jigger overflow. Then the drying and finishing iscarried out on drying range where stentor in not required.

By resorting to the age old practice the structure of the cloth never changes which in other words mean that the processing house can still process fabric without using a chamber on a stentor machine, he said.He cited the example of tarpaulins which are processed even today in a similar manner. He also claimed that all unbranded shirting are processed similarly. Will such units have to pay anything if they are not using the chamber for processing.

Further they pointed out that the situation of unit owners who are not undertaking job work and are only interested in finishing grey stocks they have themselves procured from the local market. After finishing say 1.5-2 lakh meter of fabric, such units would be required to pay Rs 3-4 lakh per month per chamber even if they have 4-5 chambers on their respective stentor machines.

However, the same party will be forced to pay Rs 6-7.5 lakh per month if the new scheme is enforced, Walia said. He addedthat the sole beneficiaries of the new scheme will be either the composite mills or the large units where as the smaller units will be forced to shut their shop.

It is for the first time the trade has come out in open to tell the department about ways and means available for evading duty if the new structure is implemented.