These units, CEU says, will have to obtain HSD and furnace oil supplies from the oil depots, instead of the oil companies directly, escalating their cost.

Those badly off are units dependent entirely on captive power plants like cotton yarn units which will have to pay 16 per cent excise duty, besides 25 per cent local sales tax, bringing the total incidence to 41 per cent.

The petroleum ministry is unfazed by the spate of representations from atleast a dozen units forwarded through the CEU. The units are Asian Peroxides Ltd (Chennai), TT Exports and Parasmpuria International, both of Delhi, Nagreeka Exports Ltd, Orbit Fabrics Ltd and Sarla Polyester Ltd, all of Mumbai, Madhya Pradesh Textile Mills Association and Maya Spinners Ltd, both of Indore, Sri Anusham Rubber Ltd (Nagercoil), Forbes Gokak Ltd (Belgaum) and Prerna Syntex of Alwar.

The decision implies that EOUs using furnace oil/HSD and obtaining these duty-free against CT-3 firm from the refineries will be denied this benefit. They will have to procure supplies from local depots of the oil companies by paying the duty as the CT-3 form can only be issued by the manufacturer directly and the depots are only the distribution points.

"The EOUs operate in a highly competitive market and the petroleum ministry's embargo will lead to huge financial losses and will ultimately result in closure as their products will be priced out in the world market", says CEU president R. Veermani.

This will have an adverse fall-out, leading to unemployment and disruption in the encouraging industrial growth registered so far by EOUs in several states, he warns. Under the revised export and import policy notified on March 31 this year, the EOUs will be judged on the basis of net foreign exchange earned as a percentage of exports and the stipulated minimum export performance.

They will be eligible for a tax holiday on a graduated scale from April 1 this year till the year 2010. Earlier they had been enjoying a tax holiday for ten years till March 31 this year.

Following the announcenment of the revised policy, the customs has issued a notification allowing software technology park units to import captive power plants and captive generating sets without duty.