As per the notification, the excise duty on processed textile fabrics would be Rs 1.5 lakh per chamber of stenter machine per month for fabric below Rs 30 per sq mtr and Rs 2 lakh for fabric above Rs 30 per sq mtr with effect from December 16, 1998.

The notification clearly states that these excise rates are not applicable to composite mills " i.e a manufacturer or processor who is engaged in processing of fabrics alongwith the spinning of yarn from fibres and weaving and knitting fabrics within the same factory and includes multilocational composite mill."

For the purpose of this notification, an independent processor is defined as a manufacturer who is engaged exclusively in the processing of the fabric with the aid of power and who has no proprietory interest in any factory engagedin spinning of yarn and weaving of fabrics.

Since there has been rampant excise evasion to the tune of Rs 2000 crore by the indepedent textile fabric processors, the excise department informally started collecting Rs 1.5 lakh per month per chamber of stenter machine from these processors especially in Surat.

The independent processors found it suitable and have been asking for its formalisation.

However, the mill sector which has also been pleading for the same excise structure have been kept out of it. " This is like punishing for the progress that we have made" says a spokesperson of the mill sector. On one hand we are asked to modernise and on the other hand we are put to disadvantages, laments a composite mill owner.

"This discrimination is going to be detrimental to the mill sector because we will be paying 5-10 times more excise duty on our fabrics than that produced by the independent processors" says Sudhir Thackersey, chairman of Indian Cotton Mills Federation (ICMF). The ICMF made numberof representations to the government that everybody should be included in this duty structure so as to have uniform excise structure for all.

"Why should only a section of the industry be favoured?" quips Thackersy calling this move as unfair and unjust. The ICMF is planning fresh moves to avail relief in excise to bring both the sectors on par.