The Hindu Business Line : ICMF resents Kelkar proposals on yarn

THE Indian Cotton Mills' Federation (ICMF) has expressed disappointment over the Kelkar panel's recommendation to increase the basic excise duty on cotton yarn from the existing level of 8 per cent to 16 per cent from the year 2003 - 04 and then reduce it to 14 per cent in the subsequent year.

"There is already substantial duty evasion in the cotton yarn sector because the 8 per cent duty is much above the profitability of this industry. Any further increase in duty will be an invitation for increased evasion", ICMF said in a statement issued here.

The Kelkar panel on indirect taxes has, in its final report, recommended a uniform duty of 16 per cent (to be reduced to 14 per cent in 2004 - 05) on all fibres and yarns. In its report, the panel said that the duty of cotton yarn should be raised from 8 per cent to 16 per cent in 2003-04. It also recommended that the basic excise duty on polyester filament yarn be brought down from 32 per cent to 14 per cent in four instalments.

"The fact that cotton yarn produces do not get Cenvat credit, since cotton is not excisable, makes it all the more necessary to have a low excise duty for cotton yarn which is the first stage of incidence in excise chain", ICMF statement said.

It urged the Government to have a uniform rate of 8 per cent duty for the entire value chain in textiles and not to allow any exemption or concessional duties and deemed Cenvat credit.

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