In its memorandum, the Acraitp suggested a marginal increase in the rate of excise duty per chamber thereby retaining the stenter-based compounded levy. Mr Savai said the system is already recommended by the ministry of textile, Kashi Ram Rana to the FM.

The ad valorem duty was prevalent till December 1998. Then it was abandoned and the system of chamber-based compounded duty on processed fabric was introduced. As per the new system, levying of duty would be based on the production capacity. It offered a level playing field with no scope for manipulation in excise duty.

During the period, most of the independent processed fabric unit were working with optimum capacity which enhanced their viability and boosted modernisation plans, says sources.

Savai said, most of domestic industry's hot air stenters after modernisation, are now better than the stenters installed abroad. According to industry sources, the reversion to ad-valorem system is a step harming the interests of the sector. The system will add to the cost of textiles and result in substantial price rise for the consumers. Textile trade is already waning out due to the flooding of cheap imported goods. More process houses and traders will have to close down due to non-viability in the newly proposed tax structure. Further, industry fears that ad-valorem system will increase paperwork and create endless controversies regarding value, cost etc. Acraitp is the representative body of 13 textile associations.

It includes Mumbai textile Merchant's Mahajan, Hindustan Chamber of commerce, Bharat Merchant's Chamber, Shri Mangaldas market cloth merchants association, Mumbai Sindhi cloth merchant's amd commission agents, swadeshi market textile merchant's association, United mills organisation, Bombay screen printers association, New mumbai processors association, Dombivali powerprocessors' association, Ambernath-Badlapur processors' association.