The Tirupur hosiery cluster feels that changes in the procedure of claiming excise duty credit could hamper its business. According to the new rules, excise duty credit can be claimed by producers of end products only if the previous links in the production chain have paid the duty for the inputs at each of the stages. Producers of garments from now will not be able to get exemptions on excise duty if duty it has not been paid on any of the inputs like buttons, fabrics or even packaging materials.

Tirupur says it’s a hosiery product manufacturing cluster which is dominated by mirco, small and medium scale enterprises. The production processes are scattered with little vertical integration. So ,it would be difficult for garment manufacturers to prove that duty has been paid on all items used in the course of manufacturing garments. Hosiery manufacturers further say most suppliers of inputs are micro enterprises and expecting them to keep financial statements on duties paid is not realistic.

They feel that the amendment notification was issued without much deliberation with industrialists in clusters like Tirupur, where the nomenclature of the production chain is unique due to its dispersed nature.