(PUBLISHED IN EXTRAORDINARY GAZETTE OF INDIA IN PART - II)
(SECTION 3 SUB-SECTION (ii) DATED 1ST January, 1993)

MINISTRY OF INDUSTRY
(DEPARTMENT OF INDUSTRIAL DEVELOPMENT)
New Delhi, the 1^st January, 1993.

NOTIFICATION

S.O. 2(E) - whereas the Central Government considers it necessary with a view to ascertaining which ancillary and small scale industrial undertakings need supportive measures exemptions or other favourable treatment, under the Industries (Development and Regulation) Act, 1951 for the purposes specified in Section 11-B of the said Act:

And whereas the draft Notification was laid before each House of Parliament for a period of 3-0 days as required under Sub-Section (3) of Section 11-B of the said Act.

And whereas no modification in the proposal Notification has been suggested by both Houses of Parliament.

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 11-B and Sub-section (1) of Section 29-B of the said Act, the Central Government for the purposes of further specifying the requirements which shall be complied with by the industrial undertakings to enable them to be regarded as an ancillary or a small scale industrial undertaking for the purposes of the said Act, makes the following amendments in the Notification of the Govt. of India in the Ministry of Industry (Department of Industrial Development) No. S.O. 232 (E) dated the 2nd April, 1991 namely: -

In the said Notification, in the Table, in paragraph - II the existing note shall be numbered as Note - I thereof and after Note - I, as so numbered, the following explanation and Note shall be inserted, namely: -

Explanation: - For the purposes of this Note: -

1. "Owned" shall have the meaning as derived from the definition of the expression "owner" specified in clause (f) of Section 3 of the Industries (Development & Regulation) act, 1951 (65 of 1951).

2. "Subsidiary" shall have the same meaning as in clause (47) of Section 2, read with Section 4, of the Companies Act, 1956 (1 of 1956).

3. The expression "controlled by any other industrial undertaking" means as under: -
   

   1. where two or more industrial undertakings are up by the same person as a proprietor , each of such industrial undertakings shall be considered to be controlled by the other industrial undertaking or undertakings.

   2. where two or more industrial undertakings are set up as partnership firms under the Indian Partnership Act, 1932 (1 of 1932) and one or more partners are common partner or partners in such firms, each such undertaking shall be considered to be controlled by the other undertaking or undertakings.

   3. where industrial undertakings are set up by companies under the Companies Act, 1956 (1 of 1956), an industrial shall be considered to be controlled by other industrial undertaking if: -
      

      1. the equity holding by other industrial undertaking in it exceeds 24% of its total equity, or
      2. the management control of an undertaking is passed on to the other industrial undertaking by way of the Managing Director of the first mentioned undertaking being also the Managing Director or Director in the other industrial undertaking or the majority of Directors on the Board of the first mentioned undertaking being the equity holders in the other industrial undertaking in terms of the provisions of (a) and (b) of sub-class (iv).

   4. The extent of equity participation by other industrial undertaking or undertakings in the undertaking as per sub-clause (iii) above shall be worked out as follows: -
      

      1. the equity participation by other industrial undertaking shall include both foreign and domestic equity.
      2. equity participation by other industrial undertaking shall mean total equity held in an industrial undertaking by other industrial undertaking or undertakings, whether small scale or otherwise, put together as well as the equity held by persons who are Directors in any other industrial undertaking or undertakings.
      3. Equity held by a person, having special technical qualification and experience, appointed as a Director in a small scale industrial undertaking, to the extent of qualification shares, if so provided in the Articles of Association, shall not be counted in computing the equity held by other industrial undertaking or undertakings even if the person held by other industrial undertaking or undertakings even if the person concerned is a Director in other industrial undertaking or undertakings.

   5. Where an industrial undertaking is a subsidiary of or is owned or controlled by any other industrial undertaking or undertakings in terms of sub-clause (I) sub-clauses (ii), or sub-clause (iii), and if the total investment in fixed assets in plant and machinery of the first mentioned industrial undertaking and the other industrial undertaking or undertakings clubbed together exceeds the limit of investment specified in paragraph I or II of this Table as the case may be, none of these industrial undertakings shall be considered to be a small scale or ancillary industrial undertaking.

Note - 2

1. In calculating the value of plant and machinery for the purposes of this Notification, the original price thereof, irrespective of whether the plant and machinery are new or second hand, shall be taken into account.

2. In calculating the value of plant and machinery, the following shall be excluded, namely: -
   

   1. The cost of equipments such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumables stores:
   2. the cost of installation of plant & machinery:
   3. the cost of Research and development (R&D) equipment and pollution control equipment:
   4. the cost of generation sets, extra transformer, etc., installed by the undertaking as per the regulations of the State Electricity Board:
   5. the bank charges and service paid to the National Small Industries Corporation or the State Small Industries Corporation;
   6. the cost involved in procurement or installation of cables, wiring, bus bars, electrical control panels (not those mounted on individual machines), oil circuit breakers/miniature circuit breakers, etc., which are necessarily to be used for providing electrical power to the plant and machinery/safety measures:
   7. the cost of gas producer plants:
   8. transportation charges (excluding of taxes e.g. Sales tax, Excise etc.) for indigenous machinery from the place of manufacturing to the site of the factory:
   9. charges paid for technical know-how for erection of plant and machinery:
   10. cost of such storage tanks which store raw-materials finished products only and are not linked with the manufacturing process: and
   11. cost of fire fighting equipments.

3. In the case of imported machinery, the following shall be included in calculating the value, namely: -
   

   1. import duty (excluding miscellaneous expenses as transportation from the port to the site of the factory, demurrage paid at the port):
   2. the shipping charges:
   3. Customs clearance charges: and
   4. Sales tax.