AICMI urges Centre to reduce CENVAT rate

Chennai, Mar 7 (UNI) The All India Chamber of Match Industries (AICMI) today urged the Centre to reduce the rate of CENVAT to four per cent from the existing 12 per cent and avoid tax evasion to the tune of Rs 120 crore.

Talking to newspersons here, S Ashok, Vice President of the Association said the reduction of tax would go a long way in helping large scale manufacturers, thereby supporting their considerable employee base.

He said the small players, who were given tax exemption for manufacuturing 100 per cent hand-made matches, misuse the current tax pattern and avoid tax worth about Rs 120 crore, though they do not opt for 100 per cent hand-made process.

Mr Ashok said most organised players have turned splint arranging, splint spilling and dipping into a mechanised process. Some of them outsource dipped splints from the unorganised mechanised units and evade tax under the current tax system in the guise of manufacturing a 100 per cent hand-made product, he said.

Of the estimated production of 90 million bundles (each 600 boxes) a year, less than 18 million bundles were manufactured by the exemption category manufacturers. Hence, the production of 72 millions bundles after export of 6.60 million bundles, should bring in CENVAT revenue of Rs 175 crore, but the collection was only Rs 55 crore, he said.

"It is, therefore, apparent that the tax avoided by using loopholes in the current system is worth around Rs 120 crore", Mr Ashok said and urged Union Finance Minister P Chidambaram to either bring down CENVAT to four per cent or exempt the entire Match Industry from the tax structure and impose one per cent cess on the entire match manufacturers.

He said in the recently presented Union Budget, the Industry, based on its representations, had expected Mr Chidambarm to address these issues and provide relief, but there was nothing in the budget.

"As the Match Industry is bleeding, we have decided to close down its units on March 10 and troop to Delhi to once again request Mr Chidambaram to review and provide relief to the Industry.

He said there were more than three lakh people directly employed and an equal number indirectly employed in the Match Industry units, more than 70 per cent of them were located in Tamil Nadu.

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