A new notification issued by the Union Finance Ministry amending certain exemptions on availing excise duty credit is seen with concern by the hosiery manufacturers and technocrats in Tirupur cluster.

As per the new notification issued by Department of Revenue under the Union Finance Ministry, the excise duty credit could be claimed by the producers of end products only if the previous links in the production chain had paid the duty for the inputs at each of the stages.

If the exemptions could not be availed, the garment manufacturers would have to end up paying excise duty at 12.5 per cent.

“For a hosiery products manufacturing cluster like Tirupur which is dominated by mirco, small and medium scale enterprises and also the production processes lying scattered, meaning very little of vertical integration, it will be difficult for the garment manufacturer to prove that duty has been paid on all items used in the course of manufacturing garments,” S. Chandrasekar, a chartered accountant and excise duty consultant, pointed out to The Hindu .

Raja Shanmugam, a garment manufacturer, pointed out that the producers of garments now would not be able to get exemptions on the excise duty under CENVAT Credit Rules, 2004, due to the amendment been made, if duty was not paid on any of the inputs like buttons, fabrics or even packaging materials.

Hosiery manufacturers further pointed out that majority of the suppliers of inputs were micro enterprises and expecting them to keep the financial statements on duties paid would be difficult.

The different stakeholders feel that the notification on amendment was issued 'silently' without much deliberations with the industrialists in clusters like Tirupur where the nomenclature of production chain was unique due to its dispersed nature.