Budget 2010 - Benefit extended to SSI Units

[C.A. Surender Gupta]

Notification No. 8/2003 dated 1.3.2003 provides exemption for SSI (small scale industries) units upto 1.5 crores where the turnover of the preceding year is not exceeding 4 crores during the provisos year. In the budget 2010, no special duty exemption has been given to SSI units. Though it is said that SSI units are allowed to avail full exemption utpo 1.5 corores but SSI exemption is beneficial for SSI units which is engaged in consumer goods. An SSI unit engaged in production which is an input for another unit, is not encourage from this exemption. Because while availing the exemption under notification 8/2003 upto 1.5 crores, SSI unit can not avail the cenvat credit and therefore, can not enable the benefit of cenvat credit to the purchasing unit.

Therefore, it appears that, SSI exemption is allowed to units only to produce the consumer goods. Out SSI units can never be competitive in producing the competitive industrial inputs. The result is apparent in the sense that we are more dependent in inputs which either imported from China or other countries.

It is expected and need of the day that our SSI units must be supported and empowered enough to compete with the large industrial units and to produce the inputs which would result into more indigenous inputs. It is argued by one section of the economist that to produce industrial goods, an SSI unit may choose not to avail the SSI exemption benefit and starts paying duty of excise from whole of the turnover and avail cenvat credit accordingly. But, while arguing this, they forget to note, that SSI units do not have adequate infrastructure and facilities and therefore, even if he chooses to avail cenvat credit and pay duty of excise, they remain non competitive.

Summary of benefits extended through Budget 2010 to the SSI units:

-  Full cenvat credit is allowed during the initial first year.

- SSI units can pay duty of excise on quarterly basis. This benefit is available to all the SSI units whether or not they are availing SSI exemption.

But, it is to be seen, whether the above exemption is enough to encourage the SSI units?

Discussions to this article

[Jacob Joseph]

You have mentioned that quarterly payment is for all SSI unit. I think it is not correct. For this also it is given 4 crores turnover restriction of the previous year