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Definition of Small Scale Industries

10 May 2007

Dear Friends,

[b]What is the Definition of Small Scale Industries (SSI)[/b] with regards to requirments of Schedule VI as, "The names of SSI undertakings to whom the company owe any sum together with interest outstanding for more than 30 days, are to be disclosed", and requirements of CARO under section 209 (1) (d) in respect of maintainance of cost records?

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13 Replies

alsdk (13 Points)
Replied 10 May 2007

The One Says:

This is covered by Industrial Regulations and in my view the amount invested in Plant and Machinery of the unit is the criterion for SSI which is 5 crore at the moment (as far as I know)

Correct me if I am mistaken......

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Shiv Prakash (164 Points)
Replied 10 May 2007

The Govt. has given various concessions to small scale industries (SSI). The most important notification giving these concessions is notification No. 8/2003 dated 1-3-2003 nder central excise law. SSI is a units whose turnover is less than Rs. 4 crores are eligible for the concessions. If SSI unit does not avail Cenvat on inputs, turnover upto Rs 100 lakhs is fully exempt. If SSI unit avails Cenvat on inputs, it has to pay full normal duty on all its clearances.
bye from
shivprakash
shivprakash_chaurashia @ yahoo.com

aldj (13 Points)
Replied 10 May 2007

The One Says:

Dear friend Shiv Prakash please check the latest Micro, Small & Medium Scale Enterprises Development Act, 2006. In my opinion we should consider this definition while checking for SSI Balances due for more than 30 days. Please clarify your opinion on this point.

Shiv Prakash (164 Points)
Replied 10 May 2007

THE ONE (whatever and who ever you are) but you are totally wrong that act just gives what is a SME. it has nothing to do with SSI. So you please read that act 5 times and then give advices IS THAT ALRIGHT AND OK.

bye
from shivprakash chaurasia
shivprakash_chaurashia @ yahoo.com

alkdjf (13 Points)
Replied 10 May 2007

The One Says:

Dear friend Shiv Prakash no need to get so worked up.

The question is how should we decide what is a Small Scale Industry ... what better source than Micro, Small & Medium Scale Enterprises Development Act, 2006. Here is why the new law was introduced. SSIs had no legal backing without it except for 2 sections of I (D&R) Act, 1951. Therefore as stated by the Ministry there was a need to define what is a Micro, what is a Small and what is a Medium Scale Industry. The act effectuates the limits of investments in a two-fold manner to indicate the classification as follows up: Micro upto Rs.25 lakh, Small: from Rs.25 lakh to Rs. 5 cr., and Medium: from Rs. 5 cr. to Rs.10 cr. for investments in Plant and Machinery (this is for product category) and Micro: up to Rs.10 lakh, Small: from Rs.10 lakh to Rs. 2 cr.and Medium: from Rs. 2 cr. To Rs. 5 cr. (this is for service category).

From the above one can conclude that to determine what is a SSI one can safely use the Micro, Small & Medium Scale Enterprises Development Act, 2006 or the I (D&R) Act, 1951. I suggest using the Specific instead of the Generic which is a sound rule of law

Please read what the original question was and then give your opinion. (you seemed to have jumped the gun and given CENVAT rules rather than interpretation of what an SSI is for Schedule VI). I would also kindly request you to refrain from giving me advice on how many reading iterations of the Act I need. If I had to guess I would say that you my friend have never read the Act. For future posts by you my friend stick to professional conduct.

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Shiv Prakash (164 Points)
Replied 10 May 2007

THE one whoever your are and whatever you are :::
NOW YOU ARE TOTALLY CONFUSED YOURSELF.......
the question is what is SSI ??? RIGHT....
OK

so question si settled that QUESTION IS What is SSI?? right ....

so the said act gives
Section 7 of the Micro, Small & Medium Scale Enterprises Development Act, 2006:-
7.
1)
Notwithstanding anything contained in section 11B of the Industries (Development and Regulation) Act, 1951, the Central Government may, for the purposes of this Act, by notification and having regard to the provisions of sub-sections (4) and (5), classify any class or classes of enterprises, whether proprietorship, Hindu undivided family, association of persons, co-operative society, partnership firm, company or undertaking, by whatever name called,

(a)
in the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951, as –

(i)
a micro enterprise, where the investment in plant and machinery does not exceed twenty five lakh rupees;

(ii)
a small enterprise, where the investment in plant and machinery is more than twenty five lakh rupees but does not exceed five crore rupees; or

(iii)
a medium enterprise, where the investment in plant and machinery is more than five crore rupees but does not exceed ten crore rupees;

(b)
in the case of the enterprises engaged in providing or rendering of services, as –

(i)
a micro enterprise, where the investment in equipment does not exceed ten lakh rupees;

(ii)
a small enterprise, where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees; or

(iii)
a medium enterprise, where the investment in equipment is more than two crore rupees but does not exceed five crore rupees

SO NOW I AM CLEAR THAT NOWHERE HERE MENTIONED SINGLE WORD ABOUT SMALL SCALE INDUSTRIES........

So now you tell me "[i][/i]genralia spelicibus[i][/i] how to apply the special term over special term.

now u read it 5 time once again bye bye..

from shiv prakash chaurasia

aldjk (13 Points)
Replied 10 May 2007

The One Says:

Shiv Prakash do not just copy and paste stuff give it an interpretation. The Act defines enterprise as "means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 or engaged in providing or rendering of any service or services".

Also how about answering the question and enlightening us about what is an SSI for the purposes of Schedule VI in your opinion.

dalsdj (13 Points)
Replied 10 May 2007

The One Adds:

Yeah let me add that the SSIs are required to submit an IEM in Part A and Part B. A perusal of this would provide sufficient evidence as to whether a unit is a SSI. (May be Messier Shiv Prakash would have a different opinion though ........ I await it)

Suggestion: Why don't we have a cordial discussion I am sure you are capable of it. I don't claim to be a genius. I am a mere mortal. I make mistakes (not in this case since clearly you did not read the question), everyone does ... why I am sure you may have made a few in your time. There is no need to launch any personal attacks here ..... at least I don't see the need to do that. I use a pseudonym and I am sure many here do what's wrong with that.

I sincerely await your reply hopefully this time a bit more benign but that is up to you. I hold no animosity or grudges my friend and I am sure you don't want to either but your comments portray you that way. In case you further your aggressive intentions then consider this conversation over. On the other hand a fruitful constructive one is welcome. SHARE don't try and SCARE.

Shiv Prakash (164 Points)
Replied 10 May 2007

WELL WELL THE ONE "my friend" (i hope so),
You should agree that Schedule 6 of the companies act straight foreward ask for the o/s balance from SSI. (I think i am right and sure i am) SO now please tell me weather 3 different classifications are needed to be made viz. MICRO ,, medium and small enterprises under the main heading of SSI.?????????
I am still very very confident that since the CENVAT notification categorically and specifically uses the definition and language itself very very clearly mention as to what is a SSI...... so i stick to that point and MAY i be pleased to enlighten u and all that SSI would still be an enterprise having turnover of 4 crore limits as mentioned in that notification.

MAY now you be please to answer weather now a person needs to make 3 different classifications viz. micro,medium and small for the purpose of SSI and ask each and every of his debtor / creditor to give amount of plant and machinery.?????????????????

I have heard and read that ACT and i do know what that act means and why was is created NOW ......I HOPE I HAVE GIVEN ENOUGH interpretation to it and not just cpoied and pasted the STUFF.

I put an end to this conversation from my end with following for u :-
SUGGESTION :::: with a kind prescription stop using that nortorious and crooked "THE ONE" and show ur name to all and secondly please read that act now 10 time with the background material from the official gazzette of india to get the interpretation AND DO not confuse other without sound knowledge. (RIGHT BOY/GIRL whatever u are)

bye bye
from shivprakash chaurasia

dlajsd (13 Points)
Replied 10 May 2007

The One Says:

Dear friend Shiv Prakash The One does not agree with all that you have said above.

[b]However in my opinion the position remains that amount of investment in plant and machinery must be less than 5 Crore as I stated in my original post(and not 4 Crore as you put it)
[/b]
As for classification once you are below 5 Crore the rest is not relevant as far as Schedule VI goes (again in my opinion) I am sure you would like to refer to [b]Order No. S.O.229 (E) on 21-02-2006[/b] which enhanced the limit for SSIs which was previously 1 Crore to 5 Crore. (This is independent of CENVAT I am not questioning CENVAT position put up by you)

Now my using name The One seems to be conjuring up dreary images in your mind. I can't help that I will continue to use this title. Why how should anyone know who is who on any internet forum and why should they? You might not be Shiv Prakash (boy or girl or an admixture) after all ........ just kidding ...... the penguin's a nice touch by the way. You should put up your picture there if you are so interested in full and fair disclosures. :o

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(Guest)

max turnover for ssi unit(limit for ssi unit)govt benfits&etc,e.g ifssi unit crosses turn over 4.5 crores for the year 2006-07 ,the unit will remain ssi unit or medium.what is the procedure please give advice/sugesstion.

(Guest)

hello i am interested to start a small scale industry what i have to do to get the help of government and others

S. Banerjee (Practising Cost Accountant. Core area- Central Excise. Service Tax Costing system installation including maintenance of Cost Records and Cost Audit and Management Audit mainly Revenue leakages Audit) (622 Points)
Replied 01 December 2008

Dear Friends,

The defination of SSI is different under different Acts:

An industrial undertaking in which the investment on Fixed Assets in plant and machinery whether held on ownership or terms on lease or on hire purchase does not exceed Rs 10 million as per Small Scale Industries Act.

As per Central Excise Act SSI Unit means a unit whose turnover is less than 4 crores (Rs 3 Crores upto 2004-05) in the last Financial Year.

Under Central Excise Act 1944 the Govt. has given various concessions to SSI units to encourage their growth. SSI units whose turnover was less than Rs. 4 coroes in 2006-07 are eligible for the concessions, if the units does not avail Cenvat Credit on inputs, turnover upto Rs. 150 lacs (Rs 100 lacs upto 2006.07) is fully exempt.

According to the definition of Central Excise all industries are eligible for concession irrespective of their investment or numbers of employees or size of the industry or unregistered under SSI Act. Any industry is eligible for this concession if its annual turnover is less than 4 crores. (FOR DETAILS PLEASE SEE MY WRITE UP DATED 21.10.2008 UNDER EXCISE TOPICS "EXCISE ON CONVEYOR BELT".

Under section 209(1)(d) of Companies Act 1956 SSI is to be considered to thsoe units whose

(a) aggregate value of machinery and plant installed wherein, as on the last date of the preceeding financial year , does not exceed limit as specified for a small scale industrial undertaking under the provisions of the Industries (Development and Regulation Act 1952 and

(b) the aggregate value of turnover made by the company from sale or supply of all its products during the preceeding financial year does not exceed ten crores of rupees.

Hope now it is clear to all,

Thanks,

S. Banerjee