Our Bureau

Madurai , June 23

THE Member of Parliament from Dindigul Constituency (TN), Mr N.S.V. Chittan, has appealed to the Union Finance Minister, Mr P. Chidambaram, to levy excise duty on cotton in pressing factories instead of levying the duty on yarn.

In a memorandum, Mr Chittan drew attention to the protest by spinners against their inclusion in the Central value added tax (CENVAT) excise network and the poll promises by many political parties to abolish CENVAT in such sectors. He has suggested that a reasonable excise duty be levied on cotton bales in the pressing factories and added that the existing levy on yarn be removed, as enforceability will become easy and effective.

There are about 400 cotton-pressing factories in the country and this small group can easily be brought under the excise network. If the system is implemented by the Government, no cotton will go out of the pressing factories without payment of excise duty and the spinning mills will have no option but to pay the excise duty while buying cotton.

However, the duty paid by them must be treated as cost of raw material like any other purchase tax/levy like CESS and CST. Further, the exporting units may be allowed to get a refund of the excise duty paid on cotton like the refund of CST. Such a step will fulfil the electoral promise, besides having advantages, such as easy implementation, effective control, check on duty evasion, abolition of CENVAT credit to spinners on purchase of cotton, robust growth in terms of revenue to the exchequer, elimination of unaccounted purchase/sales and reduction in number of assesses, he said.

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