Textile excise kitty dips 16% in '03-'04

RUN UP TO THE BUDGET 2004-05

The Centre's revenue collections from the textile sector has dipped by almost 16 per cent compared to 2002-03.

However, in the same period, the Cenvat (Central Value Added Tax) credit availed of by the textile manufacturers, has more than doubled.

The figures on excise duty receipts for the last fiscal will bolster the claim of the powerloom and handloom manufacturers that the change in the Cenvat chain made in Budget 2003-04 has not benefited the Centre.

Instead, the figures of actual collection of duty from the sector for 2003-04 shows that there has been a decline of 15.6 per cent in the excise duty receipts from the textile sector. The total indirect tax receipts from textiles has gone down to Rs 3,179 crore from Rs 3,767 crore.

But in terms of the Cenvat credit availed of by the textile industry, the figure has leaped to Rs 7,905 crore, which is more than double that of the level for 2002-03, at Rs 3,780 crore in the same period.

Refuting the lobbying being carried on by the powerloom and handloom sectors, tax officials said the rise in Cenvat credit availed of by the textile industry has vindicated the changes carried out in Budget 2003-04.

They said the changes made in the tax laws and rules for the textile industry throughout the last fiscal, was meant to bring all sections of the industry within the Cenvat chain.

Instead of allowing deemed credit, the ministry had made it mandatory for all users to produce documents in support of the duty waiver.

This was meant to bring all downstream manufacturers under the excise net.

The Kelkar Taskforce on Indirect Taxes had said this was necessary as the textile industry was, to a large extent, controlled by traders.

Tax officials also feel that the rise in Cenvat credit is an indication that the industry too had benefited.

Hitherto, small-scale manufacturers had been complaining that the large manufacturers were not ready to source their supply like yarn from them, as there was no provision for Cenvat credit.

But the steep rise in cenvat credit showed that the position has ben reversed.

Textile Minister Shankar Singh Vaghela has asked Finance Minister P Chidambaram to rollback the Cenvat credit regime introduced by Jaswant Singh in 2003-04. Vaghela's stand has been, however, questioned by the big mill-owners.