CENVAT Accumulation-NCCD: With effect from 1^st March 2003 Polyester yarns comprising Partially Oriented Yarn (POY) Fully Drawn Yarn (FDY) and Draw Textured Yarn (DTY) were levied NCCD @ 1%. This duty was withdrawn on DTY vide notification 46/2003 CE dated: 17.05.2003. This created an anomaly for the texturising industry where their raw material i.e. POY was subjected to NCCD but the finished product was exempted.

While NCCD is cenvattable, the credit cannot be adjusted for any other duty payment except NCCD itself. Hence NCCD on raw material (POY) could not be offset on DTY since same exited from this duty. This resulted in a scenario where the inflow of credit did not have a corresponding outflow thereby causing pile up of un-refundable funds for the industry. NCCD has now been withdrawn completely on Polyester sector. The amount lying as credit under NCCD be allowed to be credited to the Basic Excise Duty account of the assesses under excise rules.

Customs Duty on Titanium Dioxide (TIO2) and Spin Finish oil should be reduced from the 10 and 7.5% respectively to 5%. Special Additional Duty @ 4% leviable on imports should be abolished altogether. To begin with the facility of refund of SAD on similar lines availed by merchant trader importers, be extended to manufacturer importers also. Customs duty on PSF, POY, FDY, DTY and polyester chips which is presently @ 5% is considerably low leading to rampant dumping. To arrest this trend, import duties on these should be increased immediately to discourage cheap imports.

Equality in excise duty structure between Synthetic Fiber and Cotton i.e. 4% or optional route needs to be put in place to ensure level playing field. Simultaneously duty on all raw materials / consumables of synthetic fibers and yarns also should be brought down to 4%. Both customs and excise duties on Capital Goods and their spare parts used by the Polyester industry should be reduced to 5% and 4% respectively.

Textile Companies setting up small capacity captive power plants to augment, their power requirements should be encouraged, since same also leads to lessen burden on the national grid. Power forms a significant production cost for textile sector, hence excise and customs duties on plant and machinery for power projects up to 50 MW should be abolished. This will encourage and add up new capacities in the sector and surplus if any can be sold to the grid. This will also support capital goods manufacturers for power Industry.

Furnace Oil (FO) extensively used by manufacturing units for running their DG sets for augmenting their power requirements, has been kept out of excise cuts in all the three stimulus package announced by the government. Presently excise duty on this item continues @ 14% against duty on polyester yarns and fibers @ 4% leaving a wide gap of 10% causing considerable CENVAT accumulation which is not salvageable. It is to be noted that power occupies up to 15% of the manufacturing cost and hence has a direct bearing on the final price of the finished goods. It is imperative that input costs of power production also be accorded duty cuts leading to a cascading effect on prices of all the manufactured goods. Excise duty on Furnace oil should be immediately brought down to 4%.

Garden Silk Mills Ltd: Mr Rajesh Sharma, Deputy GM (Marketing)

Being mainly associated with the Polyester based Chips, Filaments and Fabrics sub-sector, our views are obviously with regards to Polyester industry. PTA / MEG are raw materials for Polyester and hence, their Import Duty should be 5% or lesser. Finished Polyester yarn like POY / DTY and FDY are finished products, hence their import duty should be 12% or higher. Duty drawback of Polyester Chips and yarns should be brought back to its original levels. DEPB rates of Polyester Chips and Yarns should be increased by at least 2% to counter Chinas increased export incentive and to make Indian exports competitive. Excise duty should be kept unchanged for all products and for MEG, it should be brought down to 4% (same as that of PTA). TUF should be increased and continued and finally GST should be brought in as quickly as possible.