CENVAT mostly untouched: Textiles Ministry

Most of the textile and apparel industry does not avail CENVAT, highlights a report released by the Ministry of Textiles adding that the CENVAT route will prepare the textile and apparel industry for GST when it comes into force. Central Value Added Tax (CENVAT) is a tax levied on the manufacture or production of movable and marketable goods in India. 

The Textiles & Apparel Achievement Report released by DIPP on November 24 shows that there has been an upward revision of duty drawback rates wherein All Industry Rates (AIR) of Duty Drawback has been revised for various products from November 23, 2015. “The revised rate encourages the industry to follow the CENVAT route as exporters opting CENVAT facility would get enhanced drawback rate and value,” the report mentioned adding that this will prepare the textile and apparel industry for GST when it comes into force. 

The report also shows comparison when of Duty Drawback rates when CENVAT is availed by exporters and when it is not. In case of Cotton Yarn, when the CENVAT was not availed, the duty drawback rates were in the range of 2.8-4.7 in the year 2014 and between 2.5 – 4.5 in 2015. However, when the CENVAT was availed, the duty drawback rate were in the range of 0.9 – 1.3 in 2014 and between 1.2 – 1.4 in 2015. In case of Apparel, when the CENVAT wan not availed the duty drawback rates were in the range of 7.2 – 10.5 in 2015 while when the CENVAT was availed, the rates were in the range of 2.0 – 3.5 in 2015. Similar were the cases with Cotton Fabric, Man-Made Fabric and Home Textiles.