According to FAITMA, export production was brought under Textile Cess because the Textile Committee was giving direct help and guidance to the exporting community by way of ensuring and administering the minimum levels of standards and by creating awareness about quality standards. The Committee was also undertaking a compulsory inspection of export consignments without levying any charge.
Since the Textile Committee is not playing this role, it has no justification for imposing Cess on export production and thus be removed forthwith, the federation said.
The federation has pointed out that currently, Textiles Committee runs the largest network of textile testing laboratories and serves as a consultancy organisation for the textile unit. It also gives consultancy for adoption of ISO standards in the industry. Infact, the imposition of Cess on export production goes counter to the avowed policy of the Centre to exempt export production from all duties, taxes and cesses. It is, therefore, necessary that this aspect must be reviewed by the Centre and the Textile Committee Cess on export production should be removed forthwith, the federation added.
The federation in a memorandum submitted to Prime Minister AB Vajpayee said that the department of revenue had communicated that the facility of drawback for duty in respect of inputs which are not covered by standard input output norms (SION) or inputs not permitted under advance licences. Nevertheless, the department of revenue started rejecting the applications for fixing of brand rate. The exporters hitherto getting the compensation for yarn duty as committed by the Centre stopped getting it. The federation has pointed out that the provision of fixation of brand rate for neutralisation of excise duty suffered on yarn was factored into the FOB prices quoted to the foreign importers. It is, therefore, not correct and infact unfair on the part of the government to renege on their commitment, it said.