The Hindu Business Line : Excise exemption for in-house consumed yarns, fabrics

In a move expected to benefit not just large mills but also small textile processors in centres such as Tirupur, Ludhiana and Panipat, the Finance Ministry has exempted yarns (subjected to certain types of processing) and unprocessed fabrics used for `home consumption' from payment of excise duty.

Thus, a mill that produces yarn (subjected to `doubling, winding, warping, bleaching or pirn winding') for `home consumption', i.e. used for manufacturing fabrics within the factory, will not have to pay any excise duty on all clearances of such yarn. The facility would be available in respect of yarn used in the manufacture of fabrics of cotton, wool, man-made staple fibres and filaments or even knitted and crocheted fabrics.

In the case of unprocessed fabrics (including those subjected to `plain roll calendaring' or `decatizing') used for home consumption purposes, excise exemption has been allowed for first clearances up to Rs 25 lakh during any financial year. The exemption would be given even if the work of calendering or decatizing is performed by a job-worker outside the factory's premises.

At the same time, the excise exemption for unprocessed or partially processed fabrics used for in-house consumption cannot be taken by larger units, whose annual clearances of such fabrics exceed Rs 35 lakh. No such monetary limits have been prescribed for yarn, implying, therefore, that all clearances for use within the factory of production to manufacture fabrics will now be excise exempt.

The Ministry has further stipulated that in cases where a manufacturer clears the unprocessed or partially processed fabrics from more than one factory, "the exemption shall apply to the said aggregate value of clearances for home consumption from all such factories and not separately for each factory".

Conversely, "where the said fabrics are cleared by more than one manufacturers from a factory, the exemption shall apply to the said aggregate value of clearances for home consumption by all such manufacturers and not separately for each manufacturer", the Ministry clarified.

The timing of the latest sops comes amidst concern voiced by a section of the textile industry that it has been `left out' of the Mini Budget exercise, which has granted duty relief mainly on sectors such as IT, aviation and steel. Unlike other manufacturing sectors, the textile industry is still languishing in recession mode, with production growth rates during April-November 2003 amounting minus 6.3 per cent for cotton textiles, 3.7 per cent for wool, silk and man-made textile fibres and 0.5 per cent for textile products (including ready-made garments). This is as against 6.2 per cent for industry as a whole 6.8 per cent for manufacturing.

Relief for vacuum flasks, insulated wares

CONTINUING with its enthusiasm to impart duty relief on an almost daily basis in the run-up to elections, the Government has slashed the excise duty on vacuum flasks and insulated wares from 16 to 8 per cent.

The move would benefit companies such as the Pune-based Eagle Flask Industries Ltd and Milton Plastics Ltd. At the same, as both vacuum flasks and insulated wares are covered under Maximum Retail Price (MRP) based excise levy, the Finance Ministry has brought down the level of abatement (as a percentage of retail sale price) from 40 to 35 per cent on the former and from 45 to 40 per cent in the case of the latter.

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