Gangtok, April 4: A central government notification to do away with the existing 100 per cent excise duty exemption in Sikkim has sent manufacturing companies into a huddle, with some contemplating packing up and others hesitant about new ventures.

An association of the industries hit by the order is also contemplating legal action so that status quo is maintained.

The companies had been enjoying the exemption since 2003. The notification issued by the finance ministry on March 27 re-imposed the excise duties in 12 different slabs for various manufacturing units in Sikkim and the northeastern states.

These states were earlier exempt under the Northeast industrial and investment promotion policy of 2003. The sop providing a 10-year waiver was renewed in 2007 for a decade under the new northeast industrial and investment promotion policy. This meant that the benefits should have been available to all the industries setting up their units and starting production in Sikkim and the Northeast before March 31, 2017.

According to the new notification, which came into effect from April 1 this year, the duty payable will be calculated on the basis of the excise that the companies already pay to the Centre, but get back as refund. Under the new directive, the refund would be minus the excise rate charged for each category of industry.

Pharmaceutical companies that had made a beeline for Sikkim, following the waiver, will be hit the maximum as they will have to pay excise at the rate of 56 per cent, the highest in the state.

Yesterday, 13 manufacturing units met under the Sikkim Industrial Association to chart out the next course of action. The companies claimed that the exemption had been a major incentive for investing in Sikkim.

“Apart from power subsidy, 100 per cent excise exemption and transport subsidies were some of the other incentives for investing in Sikkim. Now that the exemption is being withdrawn, we will have to do a rethink. Existing units may pack off and those who had decided on new ventures have stalled the process. We have also decided to come together to see what can be done,” said G.D. Jalan, the director of Akshay Ispat & Ferro Alloys.

A senior central excise official said: “Massive misuse of the loopholes in the earlier exemption prompted the revision of the duties.”