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Entry NO.:)233449Date: ..1J L0 \ \1=

GOVERNMENT or GOA

Directorate of Industries,Trade & CommercePARTNERING INDUSTRIAL GROWTH

No. DITC/256/Reg/Em-II/Audit/2014-15/ J.,tp

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Dated:- 2.- ~.09.2014.

TO'~e- Df re.a.l~, 11... ~D(reQ.\~ ~ 'Obms'ma+i01 ~ 1'edJ~'~)'...J ror"Ot-fm-~,

1. All the Heads of Departments/Offices, .2. Managing Director of Government Corporations/Autonomous

Bodies/Semi- Government/Government Undertakings.3. All Municipalities.

(GOA).

Sub:-Incentives/Benefits offered to the 551 units.

Sir/Madam,

You are aware that the Micro, Small and Medium EnterprisesDevelopment Act 2006 enacted by the Parliament was assented to by thePresident of India on 16th June 2006 and Act came into force with effect from2nd October, 2006. The concept of Small Scale Industries (551) has been doneaway upon coming into force above Act.

Certain existing units were to en roll themselves under the new schemeby filing of Entrepreneurs Memorandum -11 (EM -11) within a period of onehundred and eighty days. The filing of EM -11 was made mandatory u/s 8 (1)(c) (b) of the above act for the Industrial units engaged inManufacture/Production and having investment in plant & machinery of morethan Rs. 1 Cr. As regard the existing SSI units having investment in plant andmachinery upto Rs. 1 Cr, though the filing of acknowledgement is optional andnot mandatory, it is observed that unless such units enroll themselves underthe new scheme, they were not eligible for any special treatment / privilegesunder any law after 2/10/2006.

The office of Accountant General, Goa in its letter No.AG/GOA/ES/-II/PA/Excise/132 dated.S'l " July 2014 has observed that some of theGovernment Departments have still been extending the special privileges andconcessions to the SSI units terming it as irregular.

A copy of the said letter is enclosed herewith for information andperusal with a request to take appropriate action in the matter.

Yours faithfully,

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.' "---?.v.~~~;Director of Industries. Trade & Commerce.

. +h 01"4 .Dir ctorate ~ Industries, Trade & Commerce

Ground Iloor, Udyog Bhavan. Panaji, GOil

Ph~091 832 2222241 / 22422{'R I 222G377 i f.ax 091 m 22)4116 ! www.goaclilcqoV.lIl

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AlwPorvorim, Ooa- 403S21Fax.:2416228

Tel(D) 2416112 EPABX: 2416224125E-Mail: agauCjpa@eaa.aov.jn

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• , /-)~ ~ \ll ~I ...•\~Dear ~~.~.". N.Q,.t.k s...:<\; .sW~~ .rQ,U 1h .• ""

, . ~"\",lry,,,\.. ~ \\:As you are aware that the Micro, Small an9-·Medium Enterprises Devel<lP'tn~nt .A;ct,2006, enacted .by the Parliament was assented to by the 'President of India on 16 June, 2006, and tli~' Act cameinto force with effect from 2 October, 2006. The concept of Small Scale Industries (551) has beendone away with the above Act. This, in effect nullified the locus standi of the erstwhile SSls.

D.O.No. AG/GOAlES-lIIPAlExcise/ 13"-.

Dated: .J, July, 2014.

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The existing units were to enrol themselves under the new scheme by filing .of EnterpriseMemorandum-II (EM-I!) within a period of 180 days. The filing of EM·IT waS made mandatory'under Sn. 8(1)(e)(b) .. .9f- the above Aet for the existing industrial units engaged inmanufacture/production and having investment in plant and machinery of more than rupees onecrore. As regards the existing SS) units having investment in plant and machinery upto rupees one'crore, it was obvious that unless they enrolled themselves under the new scheme as a Micro orSmall Enterprise by tiling EM-II, they were not eligible for any special treatment/privileges underany law after 2.10.2006. as the very law which gave them locus standi ceased to exist.

However, my office has come across cases in which some of the Government departments stiilcontinues to extend the special privileges and concessions to the erstwhile SSl units, though theyhave not registered themselves under the new scheme. For example, during a performance audit ofthe State Excise Department, it has been revealed that 55 manufacturing units which are notregistered as Micro or Small Enterprise still continues to avail the concessional rate of licence leeas SSl units, which is found to be irregular in view of the following facts:

(i) With the coming into effect of the MSMED Act, 2006 with effect from 2.10.2006, theconcept of Small Scale Industries has been done away with, which has also been clarified bythe Ministry repeatedly.

(ii) Contravention, or abetment to contravene the provision of Sn. 8(1), i.e. non-tiling 01' EM-Ilby manufacturing units having investment in plant and machinery of more than olle crore,was a punishable offence under Sn. 27( I) of the Act. As such, any recognition of. orgranting/facilitating any special privileges, to the erstwhile SS! units whose investment inplant and machinery exceeded one crore, but have not filed EM-II, amounted to abetment tocontravene the. above Act, and was punishable under Sn. 27(1) of the Act.

(iii) The existing act to ensure timely payments and payment of interest on delayed payments tothe SSI units, viz. "the interest on delayed payments to SmRII Scale and Ancillary Industrialundertakings Act, 1993" was repealed vide Sn. 32(1) of the Act. Obviously, repeal of the

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~~Act was done as it has become redundant, as SSls and Ancillary InduatrlaJ undenaJdnasceased to exist with effect 'from 2.10.2006,

(iv) The notification No. SO 857(E) dated: 10.12.1997 as amended from time to time, specifyingthe factors on the basis of which an industrial undertaking shall be regarded as a small scaleor as an 'ancillary industrial undertaking, WIIS rescinded by the Government vide NotificationNo. SO 563(E), dated: 27.2.2009.

In connection with the above, replies/clarifications to the following points may be furnished,

(a) Please state 85 to what action has been taken by the Department to apprise the public,especially the erstwhile Small Scale Industries, of the salient features of the MSMED Act,2006 and also the necessity for the existing 5SIs to me EM·lI to be eligible for the benefitsunder the MSMEO Act, 2006.

(b) Please state whether the Department notified or worked out or proposed to the Governmentfor approval, the special benefits/privileges to which the industry will be eliltiblealternatively after their switchover th;unSSlto··the new schcme"ss Mi~&Stf{Iill1MCaiUfii"'"''''Enterprise, as the cri teria under the new Act are different. If not, please state reasons thereof.

(c) Please clarify as to what action has been taken by the Department of Industries to apprise theGovernment, the Finance Department in particular, of the implications of ~ MSMED Act,2006 with regard to the special treatments, privileges and concessions to the erstwhile SSI .and Ancillary units. Please furnish copies of such communications.

(d) If no action WAS taken by the Industries Department as mentioned above, please state the .reasons thereof, and state whether uny other department/agency was duty-bound to take suchaction.

(c) Please state whether the Government of Goa has issued any specific instructions to continuethe benefits to the erstwhile Small Scale Industrial units irrespective of their non·filing of theEM·ll under the new scheme, If so, copies of the same may be furnished for Audit scrutiny.

A detailed reply may please be furnished with utmost priority.

JJ.~~ Yours sincerely,

Shri S.Y. Naik,Director of Industries, Trade & Commerce,Government of 008,Udyog Bhavan,Panaii, Goa • 403 00 l.

No, AG/GOA/ES·II/PA/Excise/ I'>'l. Dated: ~ I July,2014.

Copy forwarded for information to The Secretary (Industries), Govenunent of Goa,Secretariat Porvorim, Goa.

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