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Custom duty on all fiber intermediates should be at 2%

Feb '07
O P Lohia, Chairman, Textile Task Force, FICCI has sent his pre-budget expectations exclusively to Fibre2fashion.

1. Customs Duty rationalization

There should be a progressive duty structure graduating from raw materials to finished goods, while simultaneously moving towards lower peak rates.

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The custom duty on all fiber intermediates (PX, PTA & MEG) to be at 2 percent, polymers at 5 percent, yarns & fibers (Synthetic, Cotton & Natural) at 10 percent and all types of fabrics at 12.5 percent.

2. Excise Duty rationalization

(a) The excise duty on inputs is more than the excise duty on the finished goods with a result that the CENVAT accumulation is actually rising instead of reducing.

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(b) Besides above, it is highly desirable that there should be progressive convergence of excise duty between all fibers with a fiscal regime neutral across all the fibers and the bias in favour of any particular fiber should be done away with immediately. It is suggested that:

Implement uniform 4 percent excise duty on the entire value chain i.e. fiber intermediates and yarns & fibers (synthetic, cotton, blended & natural).

With the implementation of uniform excise duty on yarns & fibers (synthetics, cotton & natural fibers), will lead to standardized duty drawback rates on all the fibers & yarns.

Strangely without collecting any duty on cottons and yarns & fibers, the Government losses Rs330 crore duty drawback on cotton yarns, which could be avoided.

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