Photos of ASSESSMENT PROCEEDINGS UNDER INCOME TAX ACT

ASSESSMENT PROCEEDINGS UNDER INCOME TAX ACT

ASSESSMENT PROCEEDINGS UNDER INCOME TAX ACT

CA MAHESH R PODDAR

AT CPE CIRCLE MEETING DATED 19^TH DECEMBER 2014

BRIEFLY DISCUSSING PROVISIONS OF SEC.143 AND THEN PRACTICAL ASPECTS OF SCRUTINY ASSESSMENTS

WHAT IS ASSESSMENT?

Ø  Procedure for determining tax liability and recovery of tax

Ø  Section 2(8): “Assessment” includes reassessment

Ø  “Assessment” is wide enough to include all types of assessments including penalty proceedings - C. A. Abraham v. ITO [41 ITR 25  SC)]

Ø  Quasi-judicial proceedings

Ø  Issue of notice

Ø  Sufficient opportunity of being heard

Ø  Speaking order

Ø  Rule of Evidence

Ø  Doctrine of res judicata

Types of Assessment

Ø  Inquiry before Assessment Section 142(1)

Ø  Summary Assessment Section 143(1)

Ø  Scrutiny Assessment Section 143(3)

Ø  Best Judgment Assessment Section 144

Ø  Reassessment Section 147

Ø  Search Assessment Section 153A

142(1) – Inquiry Before Assessment

A.O. can serve notice to the assessee for the following purposes:

·         Submit return of income

·         Produce such documents/accounts as may be required

·         Furnish information on required matters

If a person has not furnished his return of income within the due date given under section 139(1), the A.O. can serve a notice under section 142 (1)(i) at any time after the expiry of time limit given under section139(1)

143(1) – Summary Assessment

Adjustments allowed in the return of income filed only in case of:

Ø  Any arithmetical error; or

Ø  Incorrect claim apparent from the return Incorrect claim apparent from the return

If there is no refund, demand or adjustment, acknowledgment shall be deemed to be the intimation

No intimation after expiry of one year from the end of the financial year in which return is filed

Adjustments only through computerised processing

No intimation can be issued after issue of notice u/s 143(2)

- Gujarat Electricity Board 260 ITR 84 (SC)

Intimation u/s 143(1) is appealable under section 246A

Return can be revised even after return is processed u/s 143(1)

- S. R. Koshti v. CIT [276 ITR 165 (Guj)]

A.O. can make only such adjustments which are required as per the law on the face of the return -

- Circular No. 689 dated 24-08-1994

143(3) – Scrutiny Assessment

To ensure that the assessee has not

Ø  understated the income; or

Ø  computed excessive loss; or

Ø  underpaid the tax

A.O. shall issue notice to assess the income of the assessee

No notice can be served beyond 6 months from end of financial year in which return is furnished

Service of notice u/s 143(2) is a mandatory requirement for assessment u/s 143(3)

- DCIT v. Mahi Valley Hotels & Resorts [287 ITR 360 (Guj)]

If the notice is invalid for any reason the entire proceedings taken by him would become invalid/ void for want of Jurisdiction

- SC in 82 ITR 821

Objection as to non service of notice within specified time etc –to be taken before AO during asst. proceedings–as per section 292BB

Based on relevant material, A.O. shall determine tax payable or refund due

Order u/s 143 (3) to be passed within 21 months from end of relevant assessment year

Technical defect in notice or proceedings would not render proceedings invalid. However, jurisdictional defect cannot be cured

- CIT v. Norton Motors 275 ITR 595

A.O. cannot entertain any claim made otherwise than by way of revised return

- Goetze (India) Ltd. v. CIT 284 ITR 323

Notice u/s 143(2) can be issued even after summary assessment has been made

143(3) – Scrutiny Assessment

If revised return is filed during the assessment proceedings, a fresh notice is necessary

- Intracraft India v. CIT 154 ITR 662

Order u/s 143(3) should be passed within 21 months from the end of relevant assessment year. In case of reference to T.P.O., the time limit is extended to 33 assessment year.

A.O. should intimate the assessee in advance if he is unable to adhere to the schedule of hearing.

The information about cancellation or adjournment should also be displayed on the notice board

- [Instruction No. 1395 (F.No. 201/28/81-IT(A-II)) dated 15-05-1981]

A.O. should pass the order within 14 working days after the date of the last hearing

- [Letter no. 241/23/70 dated 23-10-1970]

Section 80A(5): Exemption under sections 10A, 10AA, 10B, 10BA and deductions under Heading-’C’ of Chapter VI-A such as sections 80-IA, 80-IB, 80-IAB, 80-IC, 80-ID, 80P, 80JJA, 80JJA, 80QQB and 80RRB, will be allowed only if the claim has been made in the return of income

144 – Best Judgement Assessment

Applicable cases:

·         Failure to file return of income

·         Failure to comply with notice u/s 142 ( 1 )

·         Failure  to comply with notice u/s 142 ( 1 )

·         Failure to comply with notice u/s 143(2)

·         A.O. not satisfied with correctness or completeness of accounts

Best judgment assessment only when there is cumulative failure of all the conditions - Mubarak Trading Company v. CIT [174 Taxmann 339 (Ker.)]

Assessment only after issuing show cause notice

No opportunity if notice u/s 142(1) was issued earlier

When income is estimated by applying net profit rate, there remains no scope for further disallowance of any expenditure

- [(2008) 301 ITR (AT) 171 (Kolkatta) (SB)]

A.O. is required to make the assessment to the best of his judgment. The estimate should be fair and honest and should have a reasonable nexus to the material and circumstances of the case – Brij Bhushan Kumar v. CIT 115 ITR

The question whether A.O. has committed any error in his judgment, can be decided only on the basis of the material gathered by him and not on the basis of any materials that are later produced by the assessee - CIT v. Rayala Corporation 215 ITR 883 (Mad)

A.O. should give his reasons for arriving at a particular figure of income so that the assessee may be enabled to appreciate the mental process leading to assessment and the figure assessed

- CIT v. Ranicherra Tea Co. Ltd. 207 ITR 979

Best judgment assessment under section 144 was valid when provisions of section 145(3) were attracted - Kachwala Gems v. JCIT 158 Taxmann 71 (SC)

PRACTICAL ASPECTS

SUBMISSION ON RECEIPT OF FIRST NOTICE

1.       COVERING LETTER

2.       PAPER RETURN

3.       COPY OF FINAL ACCOUNTS WITH SCHEDULES INCLUDING AUDIT REPORT IF ACCOUNTS ARE AUDITED

4.       LETTER OF AUTHORITY TO REPRESENT BEFORE THE ASSESSING OFFICER – REQUIRED EVERY YEAR SEPERATELY.

NEW CIRCULAR – LIMITED SCRUTINY/ DETAILED SCRUTINY

Central Board of Direr Taxes vide instruction no. 7/2014 dated 26.09.2014 (applicable for cases selected for scrutiny during f.y. 2014-15 via CASS) , has provided instructions regarding method of scrutiny in specific cases:

“2. Therefore, for proper administration of the lncome-tax Act, 1961 (‘Act’), Central Board of Direct Taxes, by virtue of its powers under section 119 of the Act, in supersession of earlier instructions/ guidelines on this subject, here by directs that the cases selected for scrutiny during the Financial Year 2014-2015 under CASS, on the basis of either AIR data or CIB information or for non re-conciliation with 26AS data, the scope of enquiry should be limited to verification these particular aspects only. Therefore, in such cases, an Assessing Officer shall confine the questionnaire and subsequent enquiry or verification only to the specific point(s) on the basis of which the particular return has been selected for scrutiny.”

Thus the circular is mainly speaking about cases where scrutiny is called for on the basis of either AIR data or CIB information or non reconciliation with 26 AS.

But further in the same circular it is also provided that,

“4. In case, during the course of assessment proceedings it is found that there is potential escapement  of income exceeding Rs. 10 lakhs (for  non-metro charges, the monetary limit shall be Rs. 5 lakhs) on any other issue(s) apart from the AIR/CIB/26AS information based on which the case was selected under CASS requiring substantial verification, the case may be taken up for comprehensive scrutiny with the approval of the Pr. CIT/DIT concerned. However, such an approval shall be accorded by the Pr. CIT/DIT in writing after being satisfied about merits of the issue(s) necessitating wider and detailed scrutiny in the case. Cases so taken up for detailed scrutiny shall be monitored by the Jt. CIT/Addl. CIT concerned.”

In any other case it would be thorough scrutiny where the A.O. can check and call for all the details as he may deem fit.

Generally A.O. receives a reason from CASS for which the case has been selected for scrutiny. In the same output file, it is also mentioned whether the case has to be assessed on limited basis of that reason or a comprehensive scrutiny has to be carried out.

RECEIPT OF QUESTIONNAIRE

On submission of above documents a questionnaire is raised by the assessing officer putting forth with the specific requirement of documents as he may require for completing the proceedings.

SUBMISSION ON RECEIPT OF QUESTIONNAIRE

1.       On receipt of questionnaire a detailed list of documents required from the assessee should be prepared.

2.       It should be immediately informed to the assessee so that the time limits and dates can be adhered to.

3.       While preparing reply, it should be done point wise as per the questionnaire received from the A.O. and a full reply with respect to question asked has to be prepared.

4.       A proper index of papers should be prepared and all the papers in the file should be numbered so as to help the assessing officer to locate the papers easily. This helps in completion of security assessment in cordial manner.

5.       Any document which are not being submitted at the time of hearing should be specifically noted and informed that those will be submitted in due time or those cannot be submitted.

6.       A proper covering letter should always accompany the submission.

7.       All supporting documents regarding the explanations given in the submission should be duly attached with reference page no.

Even if no documents are ready or able to be produced on the date of hearing, atleast a letter stating that should be submitted to the department informing the inability. If this is not done, a.o. is authorised to levy penalty.

               

MISTAKES IN ASSESSMENT OR NON ACCEPTANCE OF ADDITIONS MADE IN ASSESSMENT

There are two possibilities arising out of assessment

1.      Mistake apparent from record:

It can be made suo moto by the A.O. or can be done on the basis of application made by assessee

2.      Additions are made which are not acceptable

In such case appeal can be made to Commissioner of Income Tax appeals.

APPEAL AGAINST ASSESSMENT

I am only covering here the basic of filing of appeal.

1.      TO BE MADE WITHIN 30 DAYS OF RECEIPT OF ORDER

2.      SHOULD ATLEAST ACCOMPANY AT TIME OF SUBMISSION:

A.    APPEAL FORM DULY FILLED IN DUPLICATE (FORM 35)

B.      ORIGINAL NOTICE OF DEMAND

C.     SELF CERTIFIED COPY OF ORDER

D.    CHALLAN EVIDENCING PAYMENT OF APPEAL FILING FEES

E.      STATEMENT OF FACTS CAN BE SUBMITTED AT THE TIME OF HEARING

F.      GROUNDS OF APPEAL SHOULD BE VERY CLEAR CONTAINING THE DETAILS OF POINTS ON WHICH APPEAL IS SOUGHT LIKE ADDITIONS WHICH ARE NOT ACCEPTABLE

G.     A REQUEST SHOULD BE ADDED TO ADD, MODIFY OR DELETE ANY GROUNDS DURING THE APPEAL.

Care should be taken that all the evidences supporting to your grounds should be submitted along with the statement of facts. Further always try to submit all this evidences even during the time of assessment until and unless some addition is made without intimating during the assessment proceedings.

Photo of Vat Audit seminar

CST OR VAT, E-1, SALE IN TRNSIT

CST OR VAT, E-1, SALE IN TRNSIT

Date: 07/12/2014.

CA CHANDRAKANT B. CHOUGULE, M.COM;FCA;DISA(ICAI)

CST OR VAT, E-1, SALE IN TRNSIT

Section 3(a) of CST Act,1956 defines the interstate sale/purchase transaction.

Section 3(b) defines the interstate sale effected by transfer of documents of title to goods.

When the goods are in movement from one State to other.

The whole section 3 reads as under:

“3. When is a sale or purchase of goods said to take place in the course of inter-state trade or commerce — A sale or, purchase of goods shall be deemed to take place in the course of interstate trade or commerce if the sale or purchase —

1. occasion the movement of goods from one State to another; or 
2. is effected by a transfer of documents of title to the goods during their movement from one State to another...”

Terms and condition:

Cases-

1. Invoice raised from One state to another state, but goods delivery within same state then vat tax is applicable.
2. Invoice raised within state but material delivery to another state then cst tax is applicable.

CST is applicable on interstate sale & what is interstate sale is defined as under

Inter State Trade or Commerce In Sales Tax

A sale or purchase of goods shall be deemed to take place in the course of interstate trade or commerce if the sale or purchase--

1. Occasions the movement of goods from one state to another.
2. Is effected by a transfer of documents of title to the goods during their movement from one state to another.(sales In transit)

Movement from one state to another: In above case when goods are given to carrier or transporter for transportation the movement of goods starts at the time of delivery to carrier and terminated at the time when delivery is taken back from such transporter /carrier.

As per point two above CST is applicable if sale is done while goods movement from one state to another state. It’s called E-1 transaction or sale in transit.

suppose: X situated in Delhi purchased goods from Y in Punjab .Y booked the material on transport and send GR/RR(goods receipt note issued by transporter) to X.  X instead of receiving material from transport himself sold the material to Z in Delhi (same state) by endorsing RR/GR

in the name of Z. Z takes the delivery from the transporter .

In this case sale from Y to X is covered under CST and X to Z is also covered Under CST as sale in transit.

To complete the transaction X will issue C form to Y ,

Y will issue E-1 form to X

Z will issue C form to X

In the above case even X & Z both are situated in Delhi but the sale transaction is covered under "sale in transit" clause of CST act so CST will be applicable and vat is not be charged.

CST is applicable only if goods movement is from one state to other state.

If goods movement is started from one state and ends in same state then CST will not be applicable.

The Point is to be noted here that starts and end so if the start and end of movement of goods is interstate then CST will be apply but if start and end both in same state then vat will be applicable.  Suppose goods start movement from x state and moved through y state but movement of goods ends in x state then Vat will be applicable.

So location of the parties and billing is not important but movement of goods is important to decide whether CST is applicable or VAT is applicable.

Section 6(2) of CST Act gives exemption to subsequent interstate sale effected by transfer of documents of title to goods when the goods are in movement from one state to another. However such exemption to subsequent inter-state sale is subject to production of Form E-I, as obtained from prior vendor and ‘C’ form from buyer.

A simple example can be that, suppose A of Mumbai has sold goods to B of Ahmedabad. The goods are dispatched by lorry and L.R. is taken out by A (Mumbai) where in A is consignor and B (Ahmedabad) is consignee. If before taking delivery from transporter, B decides to sell his goods to ‘C’ of M.P., he can simply endorse the L.R. in name of ‘C’ and the sale will be complete. This is the second or subsequent interstate sale in the course of same movement. In this case A must have charged 4% CST in his bill. Being a second interstate sale effected by B to C, B is equally liable to pay CST on above transaction. However the intention of Government is not to levy multiple taxes on sale taking place in one course of movement.

Therefore the subsequent sale is given exemption. However it is subject to production of given forms. In above example, the sale by B to C will be exempt if B produces before his assessing authority Form EI issued by A of Mumbai and Form ‘C’ issued by C of M. P.
In light of above it is clear that the sale effected by transfer of documents of title to goods is eligible for exemption u/s. 6(2). These exempted sales are also referred to as “Sale in transit”.

The procedure for transfer of documents of title to goods and the relevant judgments therefore.

The ‘sale by transfer of documents of title to goods’ has been interpreted by judiciary in many cases, some of them are cited subsequently for reference.

Normally the sale is effected by endorsement of transport documents. On the backside of the document like, L.R. the vendor can put his signature and transfer the documents to buyer.

As held by Bombay High Court in case of Chhaganlal Savchand (62 ITR 133) the transfer of documents can be effected even by delivery of document.

It is also held by judiciary that transfer of documents can take place even by instruction. Therefore it is not necessary that the sale by transfer of documents takes place when the document is first taken out between first seller and his buyer and then transferred by the buyer to his buyer. The buyer of first seller can give instruction to dispatch the goods directly to his customer. If such instructions are given and accordingly the goods are dispatched to third party (i.e., buyer’s buyer) it is because of transfer effected by the buyer of first seller. The transfer takes place while booking the goods in transport and this is also a transfer during course of movement. This is known as notional or constructive transfer. Since this transfer is taking place during course of movement from one State to other it is eligible for exemption u/s. 6(2). In such case the first seller is consignor and the buyer’s buyer is consignee. However the commercial bills will be by first seller to his buyer and then by the first buyer to his buyer. In such a case to enable the first buyer to claim exemption, E-I form is to be issued by first seller to such first buyer.

Pre- determined sales are covered by above category of “in transit sale

It will be appreciated that even if the sale is predetermined by dealer’s  buyer to his buyer it does not make any difference. On the contrary it makes the case strong in the sense that there is real transfer of documents at the loading station itself and any possibility of make believe transfer gets avoided. Therefore predetermined sale cannot be an issue. The same will be clear from the judgment given below.

M/s. State of Gujarat vs. Haridas Mulji Thakker (84 STC 317)(Guj). In this case the facts are that the Gujarat dealer received order from another dealer in Gujarat. For supplying the said goods, the vendor dealer in Gujarat placed order on Maharashtra dealer and instructed to send the goods directly to the Gujarat purchasing party. Gujarat High Court held that the sale by Maharashtra dealer to Gujarat vendor dealer is first interstate sale and the one by Gujarat vendor dealer to Gujarat purchasing dealer is second interstate sale. Gujarat High Court also held that the second interstate sale is exempt u/s. 6(2) being effected by transfer of documents of title to goods. In this case though there was no physical transfer of L.R. etc. Gujarat High Court held that there is constructive transfer by instruction and hence duly covered by section 6(2). This judgment duly covers both issues, that there is no need for physical transfer and also that having predetermined parties does not affect the claim.

2. M/s. Fatechand Chaturbhujdas vs. State of Maharashtra (S.A.894 of 1990 dated.12-8-1991)

decided by Maharashtra Sales Tax Tribuna In this case the local party purchased goods from other local party and directed the same to be dispatched to outside State party. Even though local party was shown as consignor, taking the view that while placing order there is term for outside place dispatches, Maharashtra Sales Tax Tribunal held that the sale between two local parties is first interstate sale and the sale by local party to outside party is subsequent interstate sale, duly exempt u/s. 6(2). In short even if there is predetermined sale, there is no adverse effect on the sale to be claimed u/s. 6(2). On the other hand, in light of above judgments, the claim gets more authentic. The transfer of property to ultimate purchaser (consignee) gets synchronized at the time of booking the goods with the carrier and hence the subsequent sales take place by transfer of documents of title to goods as held by High Court in above case of 84 STC 317. The claim of exemption is to be allowed under above circumstances subject to production of required forms.

3. M/s. Duvent Fans P. Ltd. vs. State of Tamil Nadu (113 STC 431)(Mad.)
Local dealer purchased goods from other local dealer and directed to send them to his purchaser’s place in other State. Madras High Court held that the first transaction is first interstate sale and the second sale is also subsequent interstate sale exempt u/s.6(2) of CST Act. The above judgment is directly on issue and hence will govern the field.
In fact there are many judgments on this issue. However since the legal position about transfer of documents as well as predetermined sale is clear from above judgments, no further citations are given here for sake of brevity.

Latest Amendments in Maharashtra Value Added Tax Act 2002

Photo of DISCUSSION ON VARIOUS CENTRAL & STATE GOVT. INCENTIVES

The subsidy benefits under TUFS for 12th plan

Complied By CA N A Basude

9422415078

The subsidy benefits under TUFS for 12th plan would be as follows:

.

Weaving

(i) 6% IR and 15% capital subsidy on brand new shuttleless looms or 30% Margin Money Subsidy (MMS) on brand new shuttleless looms for powerloom sector;

(ii) 2% IR or 8% MMS on second hand imported shuttleless looms with 10 years vintage and with a residual life of minimum 10 years;

(iii) For 30% MMS – capital ceiling caps of RS. 5 crore and subsidy cap of Rs. 1.5 crore would be adhered to for encouraging adequate investments by the MSME sector.

Processing

 5% IR and 10% capital subsidy for specified processing machinery. CETP/ETP will not be considered for support under TUFS.

Garmenting

 5% IR and 10% capital subsidy on specified machinery for garmenting units.

Technical Textiles (including non-wovens)

5% IR and 10% capital subsidy on specified machinery required in manufacture on technical textiles.

Handloom and silk sector

 5% IR or 30% capital subsidy on benchmarked machinery.

MSMEs including jute sector

 5% IR or 15% MMS– subsidy ceiling to be Rs. 75 lakh.

i) Other segments – i.e.,

i) cotton ginning and pressing;

 ii) wool scouring;combing and carpet industry;

 iii) synthetic filament yarn texturising, crimping and twisting;

iv) viscose staple fibre and viscose filament yarn;

v) knitting and fabric embroidery;

 vi) weaving preparatory machines;

vii) made-up manufacturing;

viii) CAD, CAM and design studio and

 ix) jute industry –     5%IR

Investments like factory buildings, pre-operative expenses and margin money for working capital are eligible for benefit of reimbursement under the scheme only for apparel and handloom sector with 50% cap of total new eligible investment under RR-TUFS. Land is altogether excluded from eligible investments under TUFS. This benefit, however, shall not be available for textile units under the Scheme for Integrated Textile Park (SITP).

Period of interest reimbursement – Interest reimbursement will be for a period of 7 years including 2 years of moratorium / implementation.

l) Eligibility of restructured / rescheduled cases – subsidy in restructured cases will be restricted to the quantum approved of subsidy as given in the initial loan repayment schedule.

Duration of the scheme –

The scheme in the R-TUFS form was extended for the first year of the 12th Five Year Plan i.e. upto 31.3.2013. The proposed parameters would be applicable from 01.04.2013. Term loans sanctioned during the financial year 2012-13 would be eligible for subsidy as per parameters of RTUFS. However, the subsidy caps as per the proposed norms would be applicable on all subsidies dispensed on and are after 01.4.2013. In respect of the cases pertaining to sectors where there is no change in admissible extent of subsidies and are pending for issuance of UID due to non-availability of sectoral cap in the previously extended scheme up to 31-03-2013, to be considered for issue of UID under the continued TUFS scheme. However, cases pertaining to spinning, weaving sectors etc where there are changes in subsidy pattern, would be required to apply afresh as per revised terms and conditions under continued TUFS.

SCOPE OF THE SCHEME

TUFS benefit is available for TUFS benchmarked machinery covering the following

activities:-

a. Cotton ginning and pressing.

b. Silk reeling and twisting.

c. Wool scouring, combing and carpet industry.

d. Synthetic filament yarn texturising, crimping and twisting.

e. Spinning.

f. Viscose Staple Fibre (VSF) and Viscose Filament Yarn (VFY).

g. Weaving, knitting and fabric embroidery

h. Technical textiles including non-wovens.

i. Garment / design studio / made-up manufacturing

j. Processing of fibres, yarns, fabrics, garments and made-ups.

k. Production activities of Jute Industry.

ELIGIBILITY CRITERIA FOR ASSISTANCE

1. DEFINITION OF TECHNOLOGY UPGRADATION

Technology Upgradation would mean induction of state-of-the-art or near-state-of-theart technology. But in the widely varying mosaic of technology obtaining in the Indian textile industry, at least a significant step up from the present technology level to a substantially higher one for such trailing segments would be essential. Accordingly, technology levels are benchmarked in terms of specified machinery for each sector of the textile industry. Machinery with technology levels lower than that specified will not be permitted for funding under the TUF Scheme.

2. ELIGIBLE MACHINERY

Installation of the following types of machinery in a new unit or in an existing unit by way of replacement of existing machinery and / or expansion will be eligible for coverage

under TUF scheme:

2.1 Cotton Ginning and Pressing Annex– MC -1

2.2 Spinning/Silk Reeling & Twisting/ Annex – MC -2

      Synthetic filament yarn Texturising, Crimping & Twisting

2.3 Wool scouring, combing and carpet industry Annex – MC – 3

2.4 Manufacturing of viscose filament Annex - MC - 4

      yarn and viscose staple fiber

2.5 Weaving / Knitting Annex - MC - 5

2.6 Technical Textiles and non-woven Annex - MC - 6

2.7 Garment / Made-up manufacturing Annex- MC - 7

2.8 Processing of fiber / Yarn / Fabrics / Annex- MC - 8

      Garments / made-ups

2.9 Jute industry Annex - MC - 9

2.10 Process control equipments for various sectors Annex - MC - 10

2.11 Machinery eligible under 30% / 8% Margin Money Annex- MC - 11

Subsidy (MMS-TUFS) for weaving/ power loom sector

2.12 Machinery eligible under 10% capital subsidy Annex - MC - 12

for processing sector.

2.13 Machinery eligible under 10% capital subsidy Annex - MC - 13

for technical textiles including non-wovens.

2.14 Machinery eligible under 10% capital subsidy Annex - MC - 14

for garment sector

2.15 Machinery eligible under 15% capital subsidy Annex- MC - 15

for weaving / powerloom sector

2.16 Machinery eligible for CAD, CAM and design studio Annex - MC - 16

Note: The lending agencies should ensure that make and year of manufacture of all the above

eligible machinery are clearly indicated on machine / name plate attached to machine.

GENERAL ELIGIBILITY CONDITIONS

TYPE OF UNITS:

(1) Existing unit with or without expansion and new units.

(2) New units must set up their entire facilities only with the appropriate eligible technology.

 (3) A unit can undertake one or more activities listed at I.

SCOPE OF THE SCHEME

hereinbefore under the Scheme.  Textile / Jute units with 100% foreign equity.

TYPE OF TEXTILE MACHINERY ELIGIBLE:

(1) Under the TUF Scheme, only new machinery will be permitted unless otherwise specified.

(2) However, the following imported second hand machinery are also eligible under TUFS: Air jet, Projectile, Rapier and Water jet shuttleless looms fitted with or without electronic jacquard / electronic dobby and with or without high speed direct beam warper with creel and/or sectional warping machine with auto stop and tension control of upto 10 years’ vintage and with a residual life of minimum 10 years. The value cap per machine would be decided by Technical Advisory-cum-Monitoring Committee (TAMC).

(3) A certificate from a Chartered Engineer of the exporting country certifying the vintage and residual life of the imported second hand machinery duly countersigned by the Indian Embassy / Consulate in the exporting country must be furnished to the lending agency at the appropriate time as determined by the lending agency. Such a certificate is compulsory for any import of eligible second hand machinery under this scheme irrespective of the value of such import.

(4) Balancing equipment or equipment required for de-bottlenecking the production process will also be eligible for funding under RR-TUFS.

(5) Waste reduction equipment or devices will be eligible for funding under the RR-TUFS.

(6) The size of the technologically upgraded facilities of an existing unit or size of the new unit must be of a minimum economic size (MES). MES for eligible segments of the industry should be any unit which is financially viable as per viability analysis of the financial institutions or banks. MES for stand-alone new spinning units will be 8000 spindles.

(7) Accessories / attachments / sample machines / spares received along with the machinery upto the value of 20% of the machinery cost eligible under RRTUFSor actual value whichever is lower will be eligible.

(8) Investment in acquisition of technical knowhow including expenses on training and payment of fees to foreign technicians.

(9) Machinery eligible for one segment is eligible for other segments / activity also unless its eligibility is specifically restricted for a particular segment.

(10) Eligibility of any other textile machinery equal to or higher than the benchmarked technology not listed in the annexures or developed in the course of the operation of RR-TUFS will be, suo motto or on reference, specifically determined by the TAMC constituted by the Government.

OTHER INVESTMENTS ELIGIBLE:

1) (i) The following investments for apparel sector and handloom sector will also be eligible to the extent necessary for the plant and equipment to be installed for Technology Upgradation and the total of such investments will not normally exceed 50% of the total investment in such plant and machinery (land is altogether excluded from eligible investment under RRTUFS):

(a) factory building including renovation of factory building;

(b) Preliminary and pre-operative expenses;

(c) Margin money required for working capital, specifically required for the technology upgradation;

(ii) In case apparel / handloom unit is engaged in other activity, the eligible investment under this head will only be related to plant & machinery eligible for manufacturing of apparel / handlooms.

2) Lending in excess of the limits prescribed above in respect of the items included in subparas (1) of this para (i.e. para 3.3) shall attract the normal lending rates.

CUT-OFF DATE:

Only such loans as sanctioned by the lending agencies on or after 01/04/2012 will be eligible to be considered for grant of benefits under this scheme.

COVERAGE OF INVESTMENT PRIOR TO SANCTION OF THE LOAN:

Advance / token payment up to the margin money for machine cost can be paid by the unit prior to the date of sanction of term loan. However, machines purchased on or after date of sanction of term loan will be eligible under RR-TUFS subject to fulfillment of other terms and conditions.

BENEFIT OF OTHER SCHEMES:

Textile / Jute units are permitted to avail of benefits of other schemes, in addition to RR-TUFS, unless specifically provided otherwise. In case of doubt, the matter may be referred to the Textile Commissioner for clarification.

DETERMINATION OF ELIGIBLE INVESTMENT UNDER CERTAIN CONDITIONS:

If a loan is not fully covered under TUFS, i.e., it consists of both the TUFS and non-TUFS components, then disbursements and repayments are required to be apportioned proportionately between the TUFS and Non-TUFS components, for the purpose of working out interest reimbursements payable.

SECTOR - SPECIFIC ELIGIBILITY CONDITIONS:

COTTON GINNING AND PRESSING:

a) Only composite (cotton ginning with pressing) units will be eligible for coverage under the Scheme. However, independent ginning or pressing units will be eligible to modernise under the scheme provided they forward -integrate or backward - integrate with the pressing and ginning facility respectively, of eligible technology level.

b) Only double roller gins or saw gins will be eligible.

c) Baling Press Standards should be in conformity with the amended BIS specifications.

d) A unit with existing 2-stage manual bale pressing machine will not be compelled to replace it, while going for other modernisation, as per TUFS.However, a unit replacing the bale pressing machine or installing bale pressing machine for the first time will be required to install only single stage automatic bale pressing machine.

SPINNING/SILK REELING & TWISTING/WOOL SCOURING & COMBING

/ SYNTHETIC FILAMENT YARN TEXTURISING, CRIMPING &TWISTING

a) Cotton ring spinning system:

(i) New stand alone / replacement / modernization of spinning machinery will be eligible for 2% IR and spinning units with forward integration with matching capacity in weaving / knitting / processing / garmenting will be eligible for 5% IR. For qualifying for matching capacity, linearity in value chain must be established. If matching capacity is claimed in processing, it must include complete processing range and not just yarn dyeing.

(ii) In the cotton ring spinning system, for new units the MES will be 8000 spindles. For capacity expansion and modernisation of the units there will be no MES.

(iii) In case of modernization of existing obsolete spindleage through technology upgradation, replaced old and obsolete spindles should ordinarily be scrapped and made completely unserviceable unless their operations are established to be viable.

(iv) (a) The cotton ring spinning units are permitted to install back-up facilities for de-bottlenecking, viz., cone winding machine, cards,draw frame, speed frame, blow room etc. without increase in the

spindleage, provided the unit is at or above the MES level, viable and such investments brings up the unit to the desired benchmark technology level as a whole.

(b) Auto doffer system for ring frame as a retrofit is covered under the scheme which may be retrofitted / installed as a new or existing frame irrespective of any make / manufacturer.

(v) Installation of compact spinning machine for setting up of new capacity or for modernisation / replacement of existing ring frames is permitted without any stipulation of MES. In situ upgradation of existing ring frames by changing the existing drafting system to compact spinning drafting system is also covered under RR-TUFS.

(vi) Post spinning / twisting of yarn processing plant on stand alone basis to produce two fold twisted yarn or singeing yarn without putting up yarn spinning unit are covered.

b) Open end/Dref/Parafil/Selfil/Airjet spinning system:

These spinning systems being, by and large, specialized yarn making systems, modernisation, capacity expansion or new units will be permitted.

c) Worsted spinning system :

(i) Technology upgradation of existing capacity and expansion/new units with appropriate eligible technology will be permitted.

(ii) Independent wool scouring and combing units will also be eligible for funding under the TUFS.

d) Woollen/shoddy spinning system:

(i) Woollen system of spinning includes semi-worsted system of spinning.

(ii) Technology upgradation in existing units and capacity expansion/new units in these sectors with appropriate eligible technology will be permitted.

e) Silk reeling & twisting:

(i) Technology upgradation in the existing capacity and expansion/new units with appropriate eligible technology will be permitted.

(ii) The replaced obsolete reeling/twisting machinery should normally be dismantled unless their operations are established to be viable.

f) Synthetic filament yarn texturising, crimping and twisting:

Replacement of existing obsolete machinery, capacity expansion or installation new units with appropriate eligible technology will be permitted.

g) Carpet industry:

Technology upgradation of existing capacity and expansion / new units with appropriate eligible technology will be permitted.

VISCOSE FILAMENT YARN AND VISCOSE STAPLE FIBRE:

Replacement of existing obsolete machinery, capacity expansion or installation of new units with appropriate eligible technology will be permitted.

WEAVING, KNITTING AND NON-WOVEN / TECHNICAL TEXTILES/FABRIC EMBROIDERY MANUFACTURING UNITS :

6% IR and 15% capital subsidy (CS) is available only for brand new shuttleless looms whereas second hand imported shuttle-less looms of prescribed vintage shall be entitled for 2% IR.

I. Essential for non-woven weaving units:

i) An appropriate configuration of looms and machinery conforming to minimum economic size, if prescribed.

ii) In case of technology upgradation in an existing unit, the replaced old and obsolete looms should ordinarily be scrapped and made unserviceable unless their operations are established to be viable.

II. Decentralised (MSME) weaving sector:

1. In-situ upgradation of existing ordinary looms/semi automatic looms/automatic looms to benchmark shuttle-less looms with or without dobby/jacquard, is permitted to decentralized powerloom sector.

2. Replacement of an ordinary loom by a looms of benchmarked technology features is permitted.

3. New units in the decentralized powerloom sector are permitted to install shuttle-less looms with benchmarked technology features under TUFS.

III. Handloom weaving:

1. Handloom sector is eligible for taking the benefits of TUFS for all machinery listed in the GR on TUFS and permitted for other sectors including powerloom and mill sector. In handloom sector only weaving activity is different from powerloom and mill sector while other activities particularly processing are same.

2. Handlooms with specified benchmark features have been covered.

b) Essential for woollen units :

i) An appropriate configuration of looms and machinery conforming to minimum economic size, if prescribed.

ii) In-house weaving preparatory at least matching with the weaving capacity (in the case of MSME units, weaving preparatory is not essential).

iii) In case of technology upgradation in an existing unit, the replaced old and obsolete looms should ordinarily be scrapped and made unserviceable unless their operations are established to be viable

c) Independent weaving preparatory units :

An independent MSME / non-MSME (woollen or non-woollen) weaving preparatory unit will install weaving preparatory machinery as listed in Annex – MC -5.

d) Knitting units:

Replacement of existing obsolete machinery, capacity expansion or installation of new units with appropriate technology is permitted under TUFS

e) Technical textiles / Non-wovens manufacturing units

(a) Machines required to manufacture technical textiles and non-wovens, as listed in Annex – MC -6 are eligible for coverage under TUFS.

(b) Since some of the machinery of technical textiles are common the technical textile units intending to avail of 10% capital subsidy will have to obtain a registration number from Office of the Textile Commissioner prior to becoming eligible for 10 percent capital subsidy.To obtain registration number technical textile units have to submit the information in prescribed format TFR – I.

GARMENT / MADE-UP MANUFACTURING :

a) Woven and / or knitted garment and/or made-up manufacturing or combination thereof will be eligible.

b) Garment / made-up manufacturing and other accessory equipments as required are to be installed out of the list in Annex – MC -7.

DESIGN STUDIO:

Design studio set up by the textile, readymade garment and jute industry with eligible machinery / equipments, software and testing equipment is covered under TUFS.

PROCESSING OF FIBRE / YARN / FABRICS / GARMENTS / MADE-UPS

Processing machinery including essential quality control equipments listed in Annex – MC - 8 for fibre / yarn / fabrics / garment / made-up processing and finishing will be eligible.

JUTE TEXTILES

a) Jute softening & carding, drawing, spinning and weaving:

New machinery of eligible technology as listed in Annex- MC -9 will be permitted.

b) Spinning and weaving/knitting of jute blends:

(i) Eligibility conditions for units spinning jute blends will be the same as for cotton spinning system detailed in para 4.2.

(ii) Eligibility conditions for units weaving/knitting jute blended fabrics will be the same as for non-woollen weaving and knitting as detailed in para 4.4.

c) Jute-blended garment/made-up manufacturing :

Eligibility conditions for units manufacturing jute-blended garments and/or madeups will be the same as for non-jute garment/made-up manufacturing detailed in para 4.5.

d) Processing of jute products

(i) Processing machinery as listed in Annex – MC - 9 are eligible.

(ii) Quality control and pollution control equipment eligible for TUFS funding will also be eligible as listed in Annex – MC -9.

e) Processing of jute-blended products:

Eligibility conditions will be the same as for processing of non-jute textile products as detailed in para 4.7.

f) Material handling:

The machinery for material handling as listed in Annex – MC-9 are essential for modernising jute units.

LOANS UNDER THE SCHEME

Under the Technology Upgradation Fund Scheme, loans will be provided subject to terms and conditions given below:

a) Amount of loan :

The assistance will be need-based. There will be no minimum or maximum limit for individual loans.

b) Promoter’s contribution :

To be decided by the lending agency on the basis of its existing norms.

c) Rate of Interest :

(i) Rupee loan :

Effective rate of interest to the concerned borrower will be lower than the prevailing commercial rates of interest charged by the lending agencies concerned; the Ministry of Textiles will reimburse the 5% (6% for brand new shuttleless looms) under the scheme to all segments except spinning machinery of new stand alone / replacement / modernization of spinning units, where the interest reimbursement will be limited to 2%. For Rupee loan for installation of imported secondhand shuttleless loom interest reimbursement will be 2%.

(ii) Foreign Currency Loan:

As applicable for normal Foreign Currency loan. However, cover for exchange rate fluctuation not exceeding 5% (6% for brand new shuttleless looms) per annum would be provided under the scheme. In case of spinning machinery, the exchange rate fluctuation will be limited to 2% for new stand alone / replacement / modernisation of spinning machinery. For Foreign Currency loan for installation of imported secondhand shuttleless loom interest reimbursement will be 2%.

(iii) Period of interest reimbursement :

(a) 1. Interest reimbursement will be available for a period of 7 years including 2 years of implementation / moratorium. The implementation and moratorium period can be more than two years but interest reimbursement for implementation and moratorium period will be limited to two years only. The implementation and moratorium period is considered from the date of disbursement of first installment of loan under TUFS.

2. Quarter-wise interest reimbursement under TUFS will be restricted to the quantum as per the loan repayment schedule of 7 years or actual, whichever is lower, submitted by lending agencies to the Office of the Textile Commissioner for obtaining the unique ID number as per the procedure in Para IV. The foreign exchange fluctuation / forward cover premium will also follow the same system.

3. Subsidy due in a financial year under the Scheme shall have to be claimed in the same financial year.

4. Banks are free to give loan for more than 7 years but subsidy will be given only for a period of 7 years including implementation /moratorium period of maximum upto 2 years. (b) If an account becomes a non-performing asset (NPA), the interest reimbursement would not be available for that period. The interest reimbursement will be available from the date of coming out of the NPA category. Quarter-wise interest reimbursement under TUFS will be restricted to the quantum as per the loan repayment schedule of 7 years or actual, whichever is lower, submitted by lending agencies to the Office of the Textile Commissioner for obtaining the unique ID number as per the procedure in Para IV.

Other conditions, viz., period of loan, security, conversion option, Debt-

Equity-Ratio etc.

Eligible units will be of minimum economic size. Other conditions will be such as determined by the lending agency as per its existing norms.

Financial norms of eligible unit.

The units with a good track record, viable and having positive net-worth are eligible.

Contingency provisions:

The contingency provision (non-firmed up cost) to the extent of 5% maximum (on actual basis) may be covered under RR-TUFS in respect of plant and machinery and other investments eligible under RR-TUFS subject to a value cap of Rs.5 crore of eligible machinery.

Transferring the TUFS loan from one bank / FI to another bank / FI as well as closing down one term loan account under TUFS and availing of fresh term loan:

The outstanding principal amount under TUFS loan account from one bank / FI can be transferred to another bank / FI subject to the condition that portfolio (i.e., balance principal amount) remains unchanged and the overall repayment period does not exceed 7 years. However, this facility will be provided only once during the tenure of the loan. The quarter-wise subsidy submitted by the original bank will however remain unchanged. Instances of under selling of loan /component or any similar such arrangement is not permitted.

Conversion of rupee term loan into foreign currency loan and vice-versa:

Conversion of rupee term loan (RTL) into foreign currency loan (FCL) and vice-versa on annual basis is permitted under TUFS. The base rate of exchange will be the rate prevailing on the date of conversion of rupee term loan into FCL. The tenure of the loan amount will remain the same subject to the 7 years repayment period and avail ability of foreign currency line of credit with the lending agency.

Coverage of forward premium:

The cost of forward cover premium for Foreign Currency Loan under TUFS limited to 6%/5% / 2% per annum as the case may be on the base rate of exchange as an option, which may be exercised only once in the each financial year of the project is covered.

Coverage of lease finance:

Interest portion of the lease finance taken by the manufacturers from Nodal Agencies/co-opted PLIs for eligible machinery and equipments has been covered under TUFS. The coverage of lease finance will be subject to normal leasing norms but lease period will be limited to 7years.

Coverage of machinery on hire-purchase:

The Subsidy under the Hire -Purchase Scheme are covered under RR- TUFS subject to the project promoted by Special Purpose Vehicle (SPV) meeting the technology and other eligibility parameters laid down under the Scheme. This scheme will be monitored / operationalised through Office of the Textile Commissioner. A detailed operational guideline on hire-purchase is at Annex – B.

Approval of nodal agency for the loan sanctioned by co-opted PLI with their own prudential norms without effecting the technology norms under TUFS:

The projects under TUFS which are sanctioned by co-opted PLIs as per their own prudential norms and in compliance with the technology norms of TUFS should be approved by Nodal Agencies.

Co-guarantee provided by yarn supplier / master weaver:

Grant of TUFS loan to small scale powerloom units on the strength of co-guarantee provided by the yarn supplier / master weavers with sound financial position and ability to meet banking norms are to be decided by FIs / banks. However, if in such cases term loans/finance was provided by the FIs / banks, benefits under TUFS would be available as per approved guidelines.

Deferred Payment Guarantee (DPG) scheme - Operational Guidelines:

The DPG in respect of rupee loan only is covered under TUFS. The operational guidelines are at Annex-C.

Coverage of ECB under RR-TUFS

ECB availed of from overseas branch of an Indian bank / foreign bank having Indian branch (being co-opted PLI) will be eligible for RR-TUFS benefits prescribed for foreign currency loan under the scheme, i.e., 2% / 5% / 6% cover as the case may be for exchange rate fluctuation from the base rate or forward cover premium limited to 2% / 5% / 6% per annum.

Margin Money Subsidy @ 30% (brand new shuttleless looms) / 8% (secondhand imported shuttleless looms) under TUFS (MMS@30% or 8%-TUFS) for Powerloom sector –Operational Guidelines:

MMS-TUFS@30% (brand new shuttleless looms) or 8%(secondhand imported shuttleless looms) for powerloom sector will be operationalised by Office of the Textile Commissioner and detailed operational guidelines are at Annex – D and the application form for claiming the subsidy is at FR-1.

Margin Money Subsidy @ 15% under TUFS (MMS@15%-TUFS) for I MSME Jute & Textile sector –Operational Guidelines:

MMS-TUFS@15% for MSME Jute & Textile sector will be now operationalised by Office of the Textile Commissioner only and detailed operational guidelines are at Annex – E and the application form for claiming the subsidy is at FR -1.

Additional incentive in the form of 10% capital subsidy for the processing machinery, garmenting machinery and technical textile machinery and 15% capital subsidy for brand new shuttleless looms under TUFS:The detailed operational guidelines are at Annex – F and Annex – G respectively.

30% capital subsidy for the handloom sector under TUFS:

1. An additional option has been provided to Handloom Sector to avail of either 30% capital subsidy or the existing 5% interest reimbursement under TUFS.

2. The detailed operational guidelines including list of specified handloom machinery will be issued by the Office of the Development Commissioner (Handlooms), New Delhi.

30% capital subsidy for the silk sector under TUFS:

1. An additional option has been provided to Silk Sector to avail of either 30% capital subsidy or the existing 5% interest reimbursement under TUFS.

2. The detailed operational guidelines including list of specified silk machinery will be issued by the Central Silk Board, Bengaluru.

V. IMPLEMENTATION/MONITORING/APPRAISAL MECHANISM

1. Stage I: Implementation

(i) There would be an online pre-authorization system for each eligible application by the Textile Commissioner, Mumbai. Applications would be processed on a first come first served basis, subject to eligibility and availability of funds.

(ii) Request for UID shall be entertained only upto one year from the date of sanction of term loan, except for application permitted in para (iii) below.

(iii) For cases where the term loan has been sanctioned during the financial year 2012-13,the lending agencies are allowed to submit application for UID under RR-TUFS upto 31-03-2014 on the online system of the Office of the Textile Commissioner.

(iv) For obtaining a Unique ID number, the nodal banks / nodal agencies after determination of eligibility and admissible amount under TUFS for each case decide the eligibility and allot ECN (Eligibility Certificate Number) for each case and thereafter submit information online in the prescribed format to the Textile Commissioner, Mumbai,. The co-opted PLIs of Nodal Agencies will submit information online in the prescribed format to the Textile Commissioner, Mumbai after obtaining ECN from their concerned Nodal Agencies. The format for applying for unique ID number is at FR-2. The lending agencies are required to furnish quarter-wise subsidy requirement for entire period of 7 years or actual period whichever is lower. Quarter-wise interest reimbursement / capital subsidy will be restricted to the quantum as submitted in this format to the Office of the Textile Commissioner. Quarter-wise interest reimbursement / capital subsidy can be lower than the amount given in this format but cannot be higher than this amount.

(v) If the UID applications are found in order in all respect, the same will be processed for allotment of UID and the Textiles Commissioner Mumbai will issue a Unique ID number to pre-authorize the loan application for submission of subsidy claim by the lending agency in the online system. The correctness of the information submitted for UID will be the responsibility of the Lending Agency concerned.

(vi) If there is any apparent discrepancy, the UID application will be referred back to the concerned Lending Agency for rectification and re-submission. The re-submitted application will be considered again on first-come-first-served basis.

(vii) Mere creation/submission of UID application in the online system will not entitle for UID Number and for subsidy under TUFS.

(viii) Any application sanctioned by the Bank without the Unique ID number by the Textiles Commissioner, Mumbai would not be eligible for release of subsidies under the TUFS scheme.

(ix) The Textiles Commissioner will stop preauthorization as soon as the available subsidy cap is reached in the segment, as mentioned in Para 6(i).

(x) In order to ensure data integrity and prevent any possible misuse of the scheme, the data furnished by lending agencies through FR-2 over web portal of Textile Commissioner shall be treated as frozen and subsidy payments shall be considered strictly as per the frozen data.Lending agencies, therefore, shall be well advised to be doubly careful while furnishing the details in application for UID as the experience of previous operation of the scheme had brought out several lapses which ultimately jeopardize the borrowers. As a safeguard, for any mistakes still cropping in, the genuine cases of deviations in data submitted by lending agencies would be entertained by the Textile Commissioner only if recommended by CMD of the lending agencies and counter recommended by the Dept. of Financial Services, Ministry of Finance within the overall figures of committed liabilities with approval of IMSC.

2. Stage II: Monitoring Process

(i) The TAMC will monitor and review the progress of the scheme and apprise the Ministry and IMSC periodically.

(ii) The IMSC under the Chairmanship of Minister of Textiles would review the scheme and ensure compliance of the subsidy cap.

ANNEX – MC11

LIST OF MACHINERY ELIGIBLE UNDER MMS@30%/8%-TUFS

a. Main machinery.

S. No. Type of Machinery

1. Pirn Changing Automatic Loom

2. Shuttle- less Looms*

3. Dobby

4. Jacquard

5. Pirn Winding

6. Sectional Warping Machine

7. Warping Machine

8. Sizing Machine

9. Two for one twister (TFO)

10. Prewinder / rewinder

* Specifications for brand new Rapier Loom, Projectile Loom, Airjet looms and Waterjet Looms are given below:

S.No   Type of loom                                                           Specifications

1.         Rapier Loom                                   Weft insertion rate not less than 650 mtrs. per minute with or

                                                                  without electronic dobby / electronic jacquard

2 Projectile Loom                                        Weft insertion rate not less than 750 mtrs. per minute with or

                                                                  without electronic dobby / electronic jacquard

3 Airjet Loom                                             Weft insertion rate not less than 1200 mtrs. per minute

                                                                  without electronic dobby / electronic jacquard

                                                                  Weft insertion rate not less than 900 mtrs. per minute

                                                                  with electronic dobby / electronic jacquard

4 Waterjet loom                                           Weft insertion rate not less than 1000 mtrs. per minute

                                                                 without electronic dobby / electronic jacquard

                                                                 Weft insertion rate not less than 800 mtrs. per minute

                                                                  with electronic dobby / electronic jacquard

b. List of accessories of automatic pirn changing loom, 190 cms width

Sr. No.                                     Accessories Price (Rs.)

1 Warp Beam                               (1) 6000.00

2 Cloth Roller                              (1) 1000.00

3 Motor                                      (1) 10000.00

4 Heald Frame           (6 Nos. fortappet and 16 for dobby)12900.00 (for tappet)34400.00 (for dobby)

5 Heald Wires (8000)                        6666.00

6 Drop Pins (6000)                           5000.00

7 Shuttle                               (1 No.) 1500.00

c. List of accessories of shuttleless rapier loom, 190 cms width

Sr. No.                                  Accessories Price (Rs.)

1 Warp Beam                              (1) 6000.00

2 Cloth Roller                             (1) 1000.00

3 Heald Frame     (6 Nos. For tappet and 16 for dobby) 12900.00 (for tappet) 34400.00 (for dobby)

4 Heald Wires (8000)                       6666.00

5 Drop Pins (6000)                         5000.00

d. Other equipments

New Humidification Plant/ Air Compressor/ De-mineral Plant or Reverse Osmosis Plant,beam gaiting and knotting machine are also eligible subject to a maximum of 10% of the total cost of the eligible machinery for a project. However, subsidy for a project under the scheme will be restricted to Rs.60 lakh / Rs.1 crore whichever is applicable.

ANNEX – MC 12

LIST OF PROCESSING MACHINERY ELIGIBLE UNDER TUF SCHEME FOR

10% CAPITAL SUBSIDY AND 5% INTEREST REIMBURSEMENT

1) Automatic Dye Weighing and Dispensing System.

2) Process house and dye Kitchen management system for whole process house.

3) PLC controlled Shearing / Cropping machine.

4) PLC based yarn / fabric Singeing machine with auto mixing of air & fuel for temperature and flame control with or without pre and post brushing and desizing unit.

5) Singeing machine for tubular fabrics

6) Knit tubular mercerizing machine or bleaching cum mercerising machine.

7) Ammonia mercerising machine for fabrics, including ammonia recovery plant

8) Fully automatic Yarn / fabric mercerizing machine with Caustic Recovery Unit (without caustic recovery unit if unit already has it)

9) Knit fabric continuous bleaching plant

10) Baloon Padder

11) Slit opener with open width squeeze mangle for knitted fabric.

12) Open-width continuous scouring and bleaching range with microprocessor attachments and automatic chemical dosing.

13) Soft package precision winding machine

14) Arm hank dyeing machine

15) Automatic cabinet type yarn dyeing machine

16) PLC based Package Dyeing machines (cheese, cone.Tops, fibres, dyesprings, yarn beam)

17) PLC controlled Fully Automatic Flat Bed Printing machine with pneumatic blanket control

18) PLC based Soft flow Dyeing Machine

19) PLC based Rapid Jet Dyeing Machines

20) PLC based Fully Automatic Jigger with Servo / Microprocessor control

21) Compact continuous dyeing and finishing machine for tapes / narrow width woven fabric

22) Open width Pad-dry and / or Pad-Steam continuous dyeing range with micro processor based energy control and water monitoring

23) Indigo dyeing range

24) Industrial washing / drying machine for garments / made ups/Industrial tumble dryers/Washers.

25) Digital / laser / len engraving / screen making system for rotary screens

26) PLC based fully Automatic Rotary Screen Printing Machine with magnetic / Air flow squeegee system, automatic design setting, and quick change over facility/ flying design change (FDC) system with or without on-line washing arrangement

27) Ink jet printing machines (For textile processing units only).

28) High Speed Micro inkjet engraver with UV exposing unit.

29) Continuous transfer printing machine (cylinder based) for synthetics.

30) Thermosoling range (For Synthetics only).

31) PLC based continuous crabbing machine.

32) PLC based scouring and milling machine.

33) Loop ager with arrangement for moist and superheated steaming.

34) Powder dot coating / laminating machine for fabrics.

35) Continuous weight reduction machine through micro wave technique (for Polyester goods only)

36) Multichamber Washing range with minimum 5 chambers

37) Multi cylinder drying range with individual cylinder drives with or without padding mangle

38) Multi chamber stenter (minimum 4 chambers) with arrangement of Thermic fluid /gas heating.

39) Compressive Shrinking range

40) PLC based continuous decatising machine.

41) Airo Machine (for durable mechanical finishes)

42) Weft Straightner with electronic controls

43) PLC controlled Calendering Machine having Racolan sleeve

44) PLC based Compacting machine

45) Relax / Radio frequency / Radiant gas fired / Loop dryers

46) Sand blast machine for denims

47) Machine for Softening/Stone wash effect on fabric/garments.

48) Robotised automatic roll packing machine.

49) Plasma Treatment machines

50) Continuous Pressing and Setting Machine / Super finish machine

51) AC invertor driven PLC based Fabric inspection machine with fault analyzer and report generator

52) Hand held spectrophotometer for shop floor colour matching

53) PLC based oil / gas fired boiler (Steam /Thermic fluid) with automatic control on combustion efficiency

54) Reverse Osmosis, Nano Filteration, Multiple effect / stage Evaporators / Mechanical Evaporator.

55) On line/Off line Chemical concentration indicator & controlling system for textile processing machines.

57) Fabric Profile System to monitor and control the speed of stenter machine while heat75 setting/drying/finishing for process and quality improvement.

58) Fabric Centering & Spreading system.

59) Automatic Fabric Straitening system for high speed ranges.

60) Monitoring System for Weight/Denier reduction process.

61) On line monitoring system for treated liquid effluent quality and quantity.

62) Stack monitoring system for energy conservation and emission quality.

63) Testing equipments in Quality Control Lab accredited by National Accreditation Board for Lab (NABL) India and set up in the textile & jute unit.

64) Wool Carbonising Line / Plant.

65) Automated Warehouse system for textile products.

ANNEX – MC15

LIST OF BRAND NEW SHUTTLELESS LOOMS ELIGIBLE FOR 15% CAPITAL SUBSIDY AND 6% INTEREST REIMBURSEMENT UNDER TUFS

a. Eligible brand new shuttleless looms

Sr. No. Description of the brand new shuttleless looms

1 Projectile looms

2 Airjet looms

3 Waterjet looms

4 Rapier looms

Specifications for brand new Rapier Loom, Projectile Loom, Airjet looms and Waterjet Looms are given below:

S.No   Type of loom                                                           Specifications

1.         Rapier Loom                            Weft insertion rate not less than 650 mtrs. per minute with or                                                                                  without electronic dobby / electronic jacquard

2           Projectile Loom                             Weft insertion rate not less than 750 mtrs. per minute with or

                                                                  without electronic dobby / electronic jacquard

3           Airjet Loom                                         Weft insertion rate not less than 1200 mtrs. per minute

                                                                  without electronic dobby / electronic jacquard

                                                                  Weft insertion rate not less than 900 mtrs. per minute

                                                                  with electronic dobby / electronic jacquard

4           Waterjet loom                                Weft insertion rate not less than 1000 mtrs. per minute

                                                                 without electronic dobby / electronic jacquard

                                                                 Weft insertion rate not less than 800 mtrs. per minute

                                                                 with electronic dobby / electronic jacquard

ANNEX – B

OPERATIONAL GUIDELINES FOR PILOT PROJECT ON TECHNOLOGY

UPGRADATION OF POWERLOOM SECTOR ( HIRE-PURCHASE)

1. The Hire Purchase Scheme in which risk and rewards incidental to the ownership of the asset is transferred to purchaser but not the actual ownership until end of the period. As per the theme of the scheme, the hirer (SPV) would procure the machines and then provide them on hire-purchase basis to the weavers. Ultimate ownership will transfer only at the end of the term of hire-purchase. The operational guidelines of the Hirepurchase scheme under RR-TUFS are as follows:

2. Duration of the scheme

2.1 The operation of Hire-purchase scheme under RR-TUFS will be implemented from the date of the resolution to 31st March, 2017.

3. Eligible Project

3.1. The scheme is applicable to the projects of powerlooms units promoted by Special Purpose Vehicle (SPV) meeting the technology and other eligibility parameters laid down under the Scheme.

4. Quantum of subsidy

4.1 30% Subsidy on machinery under RR-TUFS.

4.2 3% additional upfront credit risk cover where the beneficiary provides at least 50% collateral security to the SPV. Else this 3% benefit will be passed on to the SPV, where no collateral security is offered, to create a debt security pool

4.3 2% Extra costs towards additional interest and administrative expenses to enable the SPV to meet initial loading of instalments due to extended tenure of Hire-Purchase i.e.10 years than the loan repayment period of 7 years.

5. Eligible machinery

5.1. It would cover installation of new indigenous or imported Shuttleless looms only; with or without dobby or jacquard, accessories for loom and preparatory machines. Preweaving Machinery such as warping, sizing, Two for One Twister, Three for One Twister attached to weaving unit etc.

5.2 The New Humidification Plant/ Air Compressor/ De-mineral Plant or Reverse Osmosis plant, Beam Gaiting and Knotting Machine are also eligible subject to a maximum of 25% of the total cost of the eligible machinery..

6. Minium Size of Project

6.1. Minimum economic size of project to be sanctioned under this scheme is proposed at 48 looms. This group of 48 looms will be further divided in a minimum economic size of

4 looms per weaver. This size is defined on the basis of capacity of each weaver to handle 4 looms efficiently. Thus the project cost will be divided in 12 equal parts. The shuttleless looms installed in the project would be available to powerloom weavers on hire-purchase for a period not more than 10 years along with proportionate shed area.

7. Lending Agency

7.1. NBFCs registered with RBIs as category A and B, all banks including cooperative banks / SFCs /SIDCs and SIDBI are eligible for funding under the scheme.

8. Financial norms

8.1. Financial norms like security debt-equity ratio, previous years profit position, networth etc. will be as per existing norms of lending agency. However, they should not be stricter than TUF norms.

8.2. Projects availing subsidy should at least function for a minimum period of 10 years under the scheme

9. Role of SPV

9.1. It is suggested that a model where hirer (SPV) – Purchaser coordinated approach can bring feasibility and workability to the scheme. Here the hirer (SPV) is envisaged to be an SPV led by a group of weavers or a strong anchor that could be a large textile manufacturer or a cooperative acting as master weaver or any entrepreneur where the purchaser would also have a small equity stake. It is envisaged to promote SPVs bringing out equity capital and giving high-tech looms to small weavers on hire-purchase basis with enhanced benefits on looms, common facility centres and infrastructure.The project will be implemented through a special purpose vehicle duly registered under the Companies Act, 1956 as private limited / limited company as the case may be to implement the project. The SPV can be promoted by a group of weavers, the machine manufacturers, master weavers, corporate houses, financing companies etc. The responsibilities of SPV would include identification of user/member beneficiaries, identification of land, project preparation and submission to the Government for approval, managing the required bank finance on the credential of potential promoters/investors; dovetail other schemes viz. SITP, TUFS etc to get infrastructural and building incentives and subsidy on machinery respectively, execution of the project and its management. SPV should ensure the availability of working capital in cases, where powerlooms are not functioning on job work basis. The SPV will work as catalyst for fund generation and repayment.SPV would ensure that the benefits under this Scheme should reach the weavers in a closed/ controlled environment like SITP, Mega clusters Scheme.SPV will generate funds by collecting maintenance charges from members and operating common facility such as Pre-Weaving activity. The infrastructure and building would remain with the hirer (SPV) till completion of the hire-purchase agreement and/or may be transferred to the weavers/ individual rent holders subject to settlement of hirepurchase costs. SPV may act as a facilitator to bring job work and marketing of the product. The SPV will be responsible for maintaining the infrastructure and factory

building on chargeable basis from the purchaser. Common facilities like Preparatory,Humidification plant, Compressor, Electricity etc. can be owned by the SPV itself and the cost can be covered under hire- purchase installments. It was also felt that the individual small weaver may not be in a position to enter direct marketing and therefore it is suggested that the SPV/Large Corporate/Master Weaver may supply weaver’s beams to the weavers and get it converted into fabrics by paying job charges (pick rate) and take back the fabrics for further processing in upward value chain and final sale. At the end of the hire- purchase period, the ownership of the looms along with the building will be transferred to the weavers. This model with 10 years instalment period could be viable and work for long.

10. Safeguard against Mis-utilisation

10.1. Indigenous loom should bear machinery details like serial number of the machine, Model and Year of Make which should be visible, by way of casted / engraved/tamper proof name plate as the case may be, on the machines. Imported machine shall have serial number, model and year of make.

10.2 Weaver-beneficiary will be identified on the basis of available documents such as Powerloom permit, Information Memorandum filed to District Industries Centre,Acknowledgement issued by Textile Commissioner etc. In case of new weavers,training/skill development certificates may be insisted.

10.3 Shuttleless looms installed in the project would be hired out as maximum of 4 looms per powerloom weaver/entrepreneur on hire-purchase basis to avoid cornering major share by any single entrepreneur.

10.4 In case of default by SPV care can be taken by use of Escrow Account for deposit of hire-purchase rentals by the purchaser. Further action can be taken against the defaulting members separately as separate records will be available. Legal action against SPV will be easier to financial institutions as the ownership of assets will rest in the hands of SPV only and lease agreements would be accepted only in the format where the machines can be acquired by financial institution from SPV directly without intervention of defaulting weavers.

10.5 The Textile Commissioner will monitor the progress of the scheme.

11. Monitoring/ Implementation of the scheme

11.1 The appraisal would involve office of the Textile Commissioner conducting inspection of the unit through Joint Inspection Team (JIT) to verify the progress of the project, installation/ commissioning of machinery and sending the JIT report along with all the related documents to the Powerloom Development Cell, Office of the Textile Commissioner, Mumbai. This cell would then scrutinize/ examine the JIT report and release the subsidy to the eligible units through its escrow bank account after successful installation and commissioning of machinery under the project.

11.2 The indigenous manufacturers supplying the machines under the scheme have to register with the office of the Textile Commissioner. The standard of looms necessary for registration shall be prescribed by the Office of the Textile Commissioner time to time.

11.3 The Textile Commissioner will monitor the progress of the scheme.

11.4 The hire-purchase agreement can be framed in multiple manners by each party depending upon state laws but ultimately it should contain the following clauses as stipulated:

(i) The risk attached with running of machines will be on the purchaser and he will be entitled to benefits arising from running of the same.

(ii) The ownership of machine will be transferred at the end of the hire-purchase term to the purchaser. Until then, the purchaser will have only user rights attached to the same and SPV will remain owner of the assets.

(iii) The machine will be subject to the charge created on the same by the financial institutions/ SPV for providing finance for the machine. No permissions will be required to be taken from purchaser in case a default is conducted by him in repayment of the finance amount.

(iv) The purchaser will be depositing the hire-purchase charges to the ESCROW account opened for the purpose.

ANNEX – D

OPERATIONAL GUIDELINES FOR IMPLEMENTING 30% MMS UNDER TUFS (MMS@30%-TUFS) FOR BRAND NEW SHUTTLELESS LOOMS AND 8% MMS (MMS@8%-TUFS) FOR SECOND HAND IMPORTED SHUTTLELESS LOOMS FOR POWERLOOM SECTOR

1. An option has been provided to the powerloom units to avail of 30% Margin Money Subsidy under TUFS (MMS@30%-TUFS) for brand new shuttleless looms in lieu of 6% interest reimbursement and 15% capital subsidy / 15% Margin Money Subsidy and 2% IR or 8% MMS (MMS@8%-TUFS) on second hand imported shuttleless looms. The operational guidelines are as follows:

2. Duration of the scheme

The operation of this scheme will be co-terminus with RR-TUFS.

3. Eligible units

3.1. The scheme is applicable to MSME powerloom units i.e., the units having investment in plant & machinery as per Micro, Small & Medium enterprises development Act 2006. However, filing of Entrepreneurs Memorandum with concerned District Industries Centre is a pre-requisite for availing of assistance under the scheme.

3.2 The eligibility of the powerloom unit is subject to a capital ceiling of Rs. 500 lakh and ceiling on margin money subsidy of Rs. 150 lakh for brand new shuttleless. Powerloom units exceeding capital ceiling of Rs. 500 lakh would not be eligible for assistance under 30% MMS-TUFS / 8% MMS-TUFS. Such units are advised to avail of 6% / 2% interest reimbursement under TUFS respectively.

3.3 UID from Office of the Textile Commissioner is compulsory under this scheme. After obtaining UID, unit/Bank has to submit claim application for subsidy through office of the Textile Commissioner as per the procedure under this scheme.

4. Quantum of subsidy

4.1 30% margin money subsidy will be available on investment in TUF compatible specified machinery subject to a ceiling of Rs.1.5 crore on subsidy amount to each unit.

4.2. Powerloom units availing of 30% MMS / 8% MMS would not be eligible under the NEF scheme.

5. Eligible machinery

5.1. The eligible machinery for 30% MMS-TUFS include brand new shuttle less looms.

5.2 The eligible machinery for 8% MMS-TUFS include second hand imported shuttle less with 10 year vintage and with a residual life of minimum 10 years.

6. Bench marking of price under the scheme:

The indigenous machinery manufacturers shall be benchmarked. A list of eligible machinery manufacturers is at Appendix-I.

7. Lending Agency

NBFCs registered with RBIs as category A and B, all banks including cooperative banks / SFCs /SIDCs and SIDBI are eligible for funding under the scheme.

8. Financial norms

8.1. Promoters contribution of 15% is to be ensured by the lending agency.

8.2. Financial norms like security debt-equity ratio, previous years profit position, networth etc. will be as per existing norms of lending agency. However, they should not be stricter than TUF norms.

8.3. Powerloom unit availing of 30% MMS / 8% MMS should at least function for a minimum lock-in period of three years under the same ownership from the date of disbursement of subsidy to ensure that repayment period including moratorium period for the term loan should be minimum of three years.

9. Release of subsidy

Following mechanism will be adopted for the release of subsidy to Machinery Manufacturers/ Entrepreneurs/ Banks.

9.1. Machinery Manufacturers

9.1.1 The powerloom unit will approach the lending agency for a term loan with their project proposal. The lending agency would advise the office of the Textile Commissioner of the sanction of the loan in the prescribed format as at Appendix-II.

9.1.2 The MSME entrepreneur would submit application for claim to Office of the Textile Commissioner in the prescribed format as at FR 1.

9.1.3. The powerloom entrepreneur would release his initial advance of minimum 15% contribution directly to the machinery manufacturer for the cost of the machine. The lending agency would release the loan to the machinery manufacturer when machinery is ready for dispatch. In case, with the loan amount, 70% of the cost of the machinery is not met, the powerloom weaver would make good the remaining amount to the machinery manufacturer from his own resources.

9.1.4. The machinery manufacturer/powerloom entrepreneur would install and commission the loom on receiving 70% of the cost of the machinery. After satisfactory commissioning of the loom, the machinery manufacturer would inform the office of the Textile Commissioner.

9.1.5. In case of imported machinery, the powerloom weaver would inform the office of the Textile Commissioner after commissioning of the looms.

9.1.6. Textile Commissioner would constitute inspection teams on regional basis to inspect and certify the commissioning of the machinery. It would be ensured that Certification Committee issues a certificate within 15 days from date of intimation by the machinery manufacturer.

9.1.7. The 30% subsidy / 8% subsidy would be released by the office of the Textile Commissioner to the machinery manufacturers/ units Bank Account after receipt and examination of certification from the inspection team.

9.1.8. In respect of TUFS compatible imported looms and machinery, the powerloom weavers will need to open a LC in Bank to make the purchase. In such cases, the 30% subsidy / 8% subsidy would be released directly to the powerloom weaver’s bank account after receiving installation and commissioning report of the imported looms and machinery.

9.1.9. Interest subsidy/capital subsidy/Margin Money subsidy on the basic value of the machineries and exclude the tax component/custom duty for the purpose of valuation.

9.1.10. In case powerloom entrepreneur avails of bridge finance from the lending agency for the 30% / 8% MMS to be given, the 30% / 8% subsidy would be released by the Textile Commissioner directly to the lending agency.

9.1.11. The subsidy will be released subject to Stage I of monitoring process of Para IV relating to Implementation / Monitoring / Appraisal mechanism.

9.2. Banks

9.2.1. The Powerloom units may avail of 30% MMS / 8% MMS on ‘front ended’ basis along with bank finance. The operational guidelines for releasing of 30% / 8% subsidy are as follows:

9.2.2. The powerloom unit will approach the lending agency for term loan and bridge finance for 30% / 8% MMS with their project proposal. After sanctioning of the loan the lending agency shall advise the O/o the Textile Commissioner the sanction of the loan in the prescribed format at Appendix - III.

9.2.3. Under the scheme, the lock in period for term loan would at-least is of 3 years.

9.2.4. The powerloom entrepreneur would release his initial contribution of minimum of 15% directly to the machinery manufacturer.

9.2.5. The lending agency would release the term loan as well as bridge finance to the machinery manufacturers when machinery is ready for dispatch.

9.2.6. The machinery manufacturer would continue with casting / engraving of the ninedigit identification code for each machinery.

9.2.7. The machinery manufacturer/ powerloom entrepreneur would install and commission the machinery and inform the lending agency about commissioning of the machinery.

9.2.8. Lending agencies visits the unit either before or after disbursement of the loan.During this visit, the lending agency would ensure the casting/engraving of the nine-digit identification code on the indigenous machinery as per the guidelines.

9.2.9. After this visit, the lending agency will inform the O/o the Textile Commissioner that the party has installed the machinery and they have released the payment including the bridge finance on account of the 30% margin money subsidy in the prescribed format. The lending agency, along with this declaration will also send the copies of all related documents, which should invariably have all the specification of the machinery and also the 9-digit identification code to the office

of the Textile Commissioner.

9.2.10. Based on the documents so received from the lending agency, the O/o the Textile Commissioner would release the margin money subsidy to the lending agency.

9.2.11. 30% / 8% margin money subsidy will be worked out on the basis of invoice price exclusive of all taxes, in respect of indigenous machinery. The lending agency should provide bridge finance to the extent of 30% / 8% of eligible investment.

9.2.12. In respect of brand new / second hand imported machinery, the 30% / 8% margin money subsidy will be worked out on the basis of CIF price.

9.2.13. In case the lending agencies give bridge finance more than the eligible 30% / 8% margin money subsidy, the excess amount will have to be recovered from the powerloom weaver or it can be converted into a normal term loan by the lending agency.

9.2.14. Advance / token payment of the machine cost can be paid by the unit prior to the date of sanction of term loan. However, machines purchased on or after date of sanction of term loan will be eligible under TUFS subject to fulfillment of other terms and conditions.

9.2.15. Textile Commissioner would constitute a team comprising of senior officers of the Head office to periodically inspect on random basis the machinery installed/commissioned as well as the original record of the bank pertaining to the loan to the beneficiary.

10. Safeguard against mis-utilisation

10.1. To prevent mis-utilisation of the scheme, casting of a unique mill no, machine code no, and engraving of the running serial number would be done on each machine.There would be a nine-digit identification code for each machinery. The nine-digit identification code will include the following:

• The first three digits (000) of the identification code will indicate unique three digit mill No. for each manufacturer which has been allotted by the Textile Commissioner. The unique three digit mill no. will be casted in the specified cast components by the machinery manufacturers.

• The next two digits (00) of the identification code will indicate the type of the machinery. The two digit number for different type of machinery has been specified by the Textile Commissioner. The details of the two digit numbers are given in the

ANNEX– E

OPERATIONAL GUIDELINES OF MARGIN MONEY SUBSIDY @ 15% UNDER

TUFS FOR SMALL SCALE TEXTILE AND JUTE UNITS

1. An option has been provided to the small scale textile and jute units to avail of 15% Margin Money Subsidy under TUFS (MMS@15%-TUFS) in lieu of 5% IR. The operational guidelines of the MMS@15%-TUFS are as follows:

Duration of the scheme

2. The operation of MMS@15%-TUFS will be co-terminus with RR-TUFS.

Eligible units

3. The scheme is applicable to MSME of eligible segments mentioned in I. SCOPE OF THE SCHEME in GR of TUFS. The definition of MSME would be as per Micro, Small & Medium Enterprises Development Act 2006. However, filing of Entrepreneurs Memorandum with concerned DIC Centre is a pre requisite for availing of assistance under 15% MMS.

4. The eligibility of the MSME is subject to a capital ceiling of Rs. 500 lakh and ceiling on margin money subsidy of Rs.75 lakh. MSME exceeding capital ceiling of Rs. 500 lakh would not be eligible for assistance under 15% MMS – TUFS. Such units are advised to avail of 5% interest reimbursement under TUFS.

5. UID from Office of the Textile Commissioner is compulsory under this scheme. After obtaining UID, unit/Bank has to submit claim application for subsidy through office of the Textile Commissioner as per the procedure under this scheme.

Quantum of subsidy

6. 15% margin money subsidy will be available on investment in TUF compatible machinery subject to a ceiling of Rs. 75 lakh on subsidy amount.

7. MSME availing of 15% subsidy will not be eligible for 10% / 15 % capital subsidy in specified processing, garmenting, brand new shuttleless looms and technical textile machinery.

8. Unit after availing assistance under 5% Interest Reimbursement cannot avail assistance under MMS@15%-TUFS. They may however continue to get assistance under 5% Interest Reimbursement.

Norms and eligible machinery

9. Technology and other norms of TUFS are equally applicable to MMS@15%-TUFS cases for determining the eligibility under the scheme.

10. The eligible machinery under MMS@15%-TUFS are at Annex – MC 1, MC 3 to MC 10 and MC 16 of GR of TUFS.

11. Make and year of manufacture should be clearly indicated on machine / name plate attached to the machine.

Eligible value for subsidy

12. The margin money subsidy will be worked out on the basic value of the machinery excluding the tax component for the purpose of valuation. In other words, for indigenous machinery the basic price and for imported machinery CIF price would be considered for working out subsidy.

Lending Agency

13. All Nodal Banks, IDBI Bank, SIDBI and its all co-opted PLIs are eligible for funding under the scheme.

Financial norms

14. The promoter’s contribution of 15% is to be ensured by the lending agency.

15. Financial norms like security debt-equity ratio, previous years profit position, networth etc. will be as per existing norms of lending agency. However, they should not be stricter than TUF norms.

Mechanism for release of subsidy

16. The scheme would be operated by Office of the Textile Commissioner.

17. The eligible MSME unit will approach the lending agency for a term loan with their project proposal. The lending agency would advise the Office of the Textile Commissioner after sanction of the loan in the prescribed format as at Appendix-I.

18. The MSME entrepreneur would submit application for claim to Office of the Textile Commissioner in the prescribed format as at FR 1.

19. The MSME entrepreneur would release his promoter’s contribution of 15% directly to the machinery manufacturer. The lending agency would release the loan to the machinery manufacturer when machinery are ready for dispatch. In case, with the loan amount, 85% of the cost of the machinery is not met, the MSME entrepreneur would make good the remaining amount to the machinery manufacturer from his own resources.

20. The machinery manufacturer would install and commission the machinery on receiving 85% of the cost of the machinery. After satisfactory commissioning of the machinery, the machinery manufacturer / MSME entrepreneur would inform the Office of the Textile Commissioner.

21. In case of imported machinery, the MSME entrepreneur would inform the Office of the Textile Commissioner after commissioning of the machinery.

22. Textile Commissioner would constitute inspection teams on regional basis to inspect and certify the commissioning of the machinery. It would be ensured that Certification Committee issues a certificate within 15 days from date of intimation by the machinery manufacturer.

23. The 15% subsidy would be released by the Office of the Textile Commissioner to the unit’s bank account after receiving the report from the inspection team. The Office of the Textile Commissioner would ensure that 15% subsidy is released within one month of issue of the certificate by the Certification Committee.

24. In respect of TUFS compatible imported machinery, the MSME entrepreneur will need to open a LC in Bank to make the purchase. In such cases, the 15% subsidy would be released directly to the MSME entrepreneur’s bank account after receiving installation and commissioning report of the imported machinery.

25. In case MSME entrepreneur avails of bridge finance from the lending agency for the 15% margin money subsidy to be given, the 15% subsidy would be released by the Textile Commissioner directly to the lending agency.

26. Advance / token payment of machine cost can be paid by the unit prior to the date of sanction of term loan. However, machines purchased on or after date of sanction of term loan will be eligible under TUFS subject to fulfillment of other terms and conditions.

Safeguard against mis-utilisation

27. To prevent mis-utilisation of margin money subsidy, it is expected that unit should atleast function for a minimum period of three years from the date of disbursement of subsidy. To monitor the functioning of the unit for three years the lending agency should keep the minimum repayment period including moratorium period as three years.

28. After sanction of the assistance lending agencies will get an agreement executed by the small scale unit on behalf of Government of India. A copy of the draft agreement to be executed by the eligible PLI with MSME unit is at Appendix- II.

29. Textile Commissioner would also constitute a team comprising of senior officers of the Head office to periodically inspect on random basis, the machinery installed /commissioned.

Monitoring of the progress of the scheme

30. The TAMC will monitor the progress of the scheme.

Grievance Committee

31. Grievance of the MSME entrepreneurs after purchase of machinery under the scheme, would be considered by a grievance committee under the chairmanship of the Textile Commissioner comprising of representatives of industry associations and TMMAI and ITMMA.

Annex – G

OPERATIONAL GUIDELINES OF CAPITAL SUBSIDY @ 15% UNDER TUFS FOR

BRAND NEW SHUTTLELESS LOOMS

1. An additional incentive of 15 percent capital subsidy in addition to 6 percent interest subsidy has been provided for specified weaving machinery i.e. brand new shuttleless looms.

Duration of the scheme

2. The operation of capital subsidy @15% under TUFS will be co-terminus with RR-TUFS.

Eligibility

3. The 15% capital subsidy will be available only for such projects where term loans have been sanctioned by the nodal agencies / nodal banks / co-opted PLIs.

4. The capital subsidy on brand new shuttleless looms would be available to all the textile units eligible for loaning under TUFS.

Quantum of subsidy

5. The 15% capital subsidy will be available on brand new shuttleless looms and will be worked out on the basic value of the machinery and exclude the tax component for the purpose of valuation. In other words, for indigenous machinery the basic price and for imported machinery CIF price would be considered for working out subsidy.

6. The 15% capital subsidy will not be available for a project as a whole but only on the specified machinery. The project as a whole including the specified machinery will continue to be eligible for 6

percent interest incentive on the TUF compatible investment.

Release of capital subsidy

7. The capital subsidy would be released by the lending agencies at the time of disbursement of

term loan for the specified machinery.

8. The capital subsidy can also be adjusted against promoter’s contribution.

9. To prevent mis-utilisation of capital subsidy, it is expected that unit should at least function for

a minimum period of three years from the date of disbursement of subsidy.