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G. Gurumurthy

COIMBATORE, March 20

WHAT bothers the powerloom manufacturers and cloth trade most right now — the impending `Cenvat' chain or the stocks of fabrics they would (like to) hold?

Obviously, from now and the end-March 31, it is the fabric stocks that should be logically the more worrisome factor for many in the fabric trade because from April 1, 2003, the powerloom unprocessed fabrics would attract 10 per cent excise duty.

The fabrics stocks are being cleared fast as they are now non-exciseable and the tendency among the cloth trade now is to clear as much stocks before March 31.

Insiders in the trade say that many are already working hard to clear the goods on sale as the fabric sans excise duty now cleared for sale could be conveniently billed for price plus10 per cent beyond April 1 next when the 10 per cent excise duty should come in vogue for every metre of fabric cleared from the weaving shed.

Many traders are feverishly clearing the goods under benami names, which could be sold at higher price later in the name of the excise duty paid. Some traders would be willing to offer at a discounted price. Only those powerloom weaver-cum-traders who do not hold stocks are regretting.

However, on the contrary, the fear of the impending excise at fabric stage has driven many powerloom weavers, especially those who convert at small volume or converting fabric on day-today basis and these have scaled down their operations by refusing to buy any yarn from the market.

These weavers have either suspended their yarn purchases or stopped producing cloth. Their worry seems to be that any stocks they would hold beyond the saleable lots by April 1 would automatically lead them to paying excise duty.

This has naturally upset the yarn movement and the cotton yarn market is faced with sluggish off-take for the past two weeks, the market sources say.

In any case, the Central Excise authorities, it is said, have decided to allow Modvat credit for the stocks of fabrics, which are declared for excise duty, and the fabrics that do not have the duty paid document would be given the deemed Modvat benefit up to March 31.

The reluctance on the part of many powerloom weavers bodies to comply with the Central excise is more to do with their fear of entering into official records than merely paying the excise duty.

The powerloom industry sources confide privately that it is not just the new duty structure that they are afraid of, but a slew of Government records that they will have to face once they accept to registering with the Central Excise.

Close on the heals of the Excise, the State Sales Tax Department would also follow suite to book the weavers, especially when the new State value-added tax (VAT) system is poised to make its appearance.

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