CITI reiterates need for refund of taxes to exporters

21 Dec '07

3 min read

Confederation of Indian Textile Industry (CITI) has reiterated the need to reimburse all duties and taxes to exporters of textiles and clothing.

In a statement issued explaining the discussions held by the governing committee of the Confederation on 18th December 2007, Shri P.D.Patodia, Chairman stated that CITI welcomed the increase of 0.5% to 1% announced by Government on 13th December 2007 in the drawback rates available to exporters. However, he pointed out that duty drawback rates take into account only Central Duties, whereas state level duties amounting to 6% of export value remain unrebated.

Shri P.D.Patodia welcomed the recent statements of both Minister of Finance and Minister of Commerce and Industry on the need to refund state level duties to exporters. However, he lamented the delay in establishing a mechanism for such refunds.

Given the extent of inter-state transactions involved in the long textile value chain, refund of such duties by state governments will not be practicable, he added. Shri Patodia pointed out that the 4% Additional Customs Duty collected by Central Government on imports, in lieu of state level duties charged on domestic goods, is an appropriate pool for financing refund of state level duties to exporters by the Central Government. Alternatively, Duty Free Scrips that can be redeemed for payment of customs duties can be provided to exporters towards state duties.

Referring to the plight of Export Oriented Units in the sector, Shri Patodia pointed out that the relief measures announced by government through draw back and DEPB rates are not available to them. Since EOUs are equally affected by the rupee appreciation problems, he suggested a three pronged approach for mitigating their problems by (i) extending the optional excise duty regime to them for cotton textile products (since cotton fibre is not subject to any excise duty), (ii) increasing duty draw back on Furnace Oil for which EOUs are eligible, in proportion to the increase in Furnace Oil prices and (iii) to allow EOUs which have been in existence for a minimum period of 10 years to debond without payment of any duties on capital goods.

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