This demand is understood to have been made by the industry which has argued that the present system of collecting excise levy from the processors of POY lead to chances of duty evasion and constant disputes with the Central Excise authorities about correctness of invoices issued by texturisers.

The texturising industry argues that POY can be used in the manufacture of fabrics only after it undergoes draw-twisting or texturising. Since 1994 the government has started levying excise duty on various processes through which POY passes before it gets converted into textured yarn for use by fabric producers. There are about 2000 converters in the country who undertake texturising, twisting and dyeing of such yarn.

It is always difficult to keep a close watch ontheir activities. Also, there are frequent disputes about prices shown by converters in their invoices. Such disputes often ignore the fact that texturised yarn is a highly sensitive commodity whose prices continue to fluctuate from day to day and from week to week. This leads to needless disputes.

One of the ways to avoid possible duty evasion and disputes based on such charges, according to the texturising industry, is to consolidate the excise duty on POY and that on various processes it undergoes before being used by fabric manufacturers and to collect the same at the POY stage itself. This will avoid the need to keep a watch over the activities of small converters. It will also be more convenient for the government to collect consolidated excise duty from a small number of spinners than from a large number of converters of POY. The chances of duty evasion by small converters located in distance places will be avoided.

The paper work and the pursuant burden of the Excise Department will thus bereduced and the excise authorities would be able to concentrate their attention on bigger cases. Anyway, the government has nothing to lose under the proposed scheme and every thing to gain. On the other hand, small converting units which are complaining about frequent harassment by the authorities will experience tremendous relief and will be able to concentrate their attention on their manufacturing activities.

In case this proposal is not acceptable to the excise authorities the texturising industry suggests another alternative. It proposes that the government should fix periodically tariff values for thecalculation of excise duty. This can also eliminate chances of under invoicing and disputes between converters and the authorities.

The texturising industry has also demanded that the rate of excise duty on all types of yarns should be the same. At present, according to it, the rate of duty on synthetic filament yarns is extremely high with the results that fabrics made from such yarn though popularbecause of their strength and durability become costly.

If for some reason a uniform rate of excise levy on all yarns is not considered desirable at this stage from revenue considerations, a dual rate system should be adopted under which excise levy on natural fibre yarns may be fixed at 10 per cent and on synthetic yarns at 12 per cent.

The texturising industry has further demanded that in order to bring about market determined price mechanism for POY, an alternative sourcing of PTA and POY must be made available. If the import duty on these inputs is brought down to 10 per cent, that would lead to a price discipline in the local market and it might not be necessary to actually import any PTA or POY.Yet another suggestion made by the texturising industry is that no duty should be charged under the T&T Act whose original objective has ceased to exist and the Act itself has become redundant.