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Saturday, Aug 02, 2003

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Small spinners blame Cenvat for woes

G. Gurumurthy

Coimbatore , Aug. 1

EVEN as extending support to the Centre's introduction of the `Cenvat' chain for the textile industries, the small-scale spinning mills under the banner of the South India Small Spinners Association (Sisspa) have blamed the current depressed market for cotton and fabric on the prevailing `confusion' in the implementation of the `Cenvat' regime by the Central Excise department.

Thanks to the confusion caused in the implementation of the Cenvat duty regime across the textile chain and despite offering several extensions of the deadline in effecting the new duty system for the powerloom industry, the new duty regime is yet to become fully operational, the Sisspa leaders said. They added this situation has also given room for more evasion of excise duty in the textile sector.

Talking to newspersons here on Thursday, the Sisspa President, Mr R. Chinniyan, and other office-bearers said the yarn and fabric market took a beating in the past three months because of the confused market situation arising out of the Cenvat duty issues.

While the excise duty evasion continued, the new excise duty had cast burden on the powerloom operators adhering to the duty regime who are unable to sell their fabric, forcing them to reduce their weaving operations. This has created the vicious cycle of slipping into "slow movement of yarn affecting the spinners who in turn faced piling of yarn stocks," said Mr Narayanaswamy, the past president of Sisspa. The Sisspa office-bearers feel that a reduction in the excise duty for both cotton yarn and fabric by 50 per cent from the current levels would dissuade the tax evaders to adhere to the `Cenvat' duty system but this measure should be gone through coupled with the vigorous enforcement to curb the excise duty evasion.

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