Date:15/04/2006 URL: http://www.thehindubusinessline.com/2006/04/15/stories/2006041504060100.htm

Back Acrylic fibre sector seeks duty relief

Our Bureau

New Delhi , April 14

A section of acrylic fibre manufacturers is keen that the excise duty on acrylonitrile monomer (ACN) be halved to 8 per cent from the current level of 16 per cent.

They also want the Centre to exempt ACN imports from the levy of 4 per cent additional customs duty. These demands have emanated from those acrylic fibre manufacturers who are relying on imports for their ACN requirements.

Acrylonitrile monomer is main raw material for manufacture of acrylic fibre and the acrylic fibre industry is totally dependent on imported raw materials, except IPCL, which manufactures ACN for captive consumption.

In the Budget, the excise duty on ACN was retained at 16 per cent and therefore the CVD continue to be levied at 16 per cent. This is even as excise duty on man-made fibre was reduced to 8 per cent from 16 per cent.

With CVD of 16 per cent and an additional customs duty of 4 per cent on imports of ACN, the acrylic fibre manufacturers claim that they can adjust only 8 per cent by way of Cenvat on acrylic fibre (as against 22 per cent cenvatable duty on imports).

An acrylic fibre industry official said the Government's intention to keep a huge gap (of about 14 per cent) between input-output is not understandable, especially when the value addition is not significant. The official said the acrylic fibre industry is already suffering heavy losses on account of high cost of imported raw materials due to the rise in oil prices.

As regards the justification of the demand for removal of 4 per cent additional customs duty, it was claimed that this would not hurt the Indian industry, as ACN is not manufactured in India for sale.