Micro Small & Medium Enterprises

This is an act for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto

“The investment in Plant and Machinery should be the original value irrespective of whether the Plant and Machinery are new or second hand. In respect of imported machinery, the following is to be included in calculating the value: a. import duty (excluding miscellaneous expenses such as transportation from the port to the site of the factory, demurrage paid at the port); b. shipping charges; c. customs clearance charges and d. sales tax or value added tax The following are excluded while calculating the investment in Plant and Machinery: (i) equipments such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores; (ii) installation expenditure for Plant and Machinery; (iii) research and development equipment and pollution control equipment; (iv) power generation set and extra transformer installed by the enterprise as per the regulations of the State Electricity Board; (v) bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation. (vi) Procurement or installation of cables, wiring, bus bars, electrical control panels (not mounted on individual machines), oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the Plant and Machinery or for safety measures. (vii) gas producer plants; (viii) transportation charges (excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of their manufacture to the site of the enterprise. (ix) charges paid for technical know-how for erection of Plant and Machinery. (x) such storage tanks which store raw materials and finished products only and are not linked with the manufacturing process, and (xi) fire fighting equipment. “

If the buyer fails to make payment of the amount to the supplier as required under section 15, then the buyer is liable to pay compound interest with monthly rests on the amount at three times of the bank rate notified by the RBI.

‘Buyer’ means whoever buys any goods or receives any services from a supplier.

Sub-section (n) of section 2 of the Act, defines a supplier. As per the definition, a supplier means a micro or small enterprise, which has filed a memorandum with the District Industries Centre. Further, “supplier” also includes: (i) the National Small Industries Corporation Ltd.; (ii) a company under the Small Industries Development Corporation of a state or a Union territory. (iii) any company, co-operative society, society, trust or body, engaged in selling goods produced by micro or small enterprises and rendering services which are provided by such enterprises.

“As per section 22 of the MSMED ACT, 2006, a buyer in its audited annual statements is required to furnish the following additional information : (a) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier as at the end of accounting year; (b) the amount of interest paid by the buyer in terms of section 16 along with the amount of the payment made to the supplier beyond the appointed day during each accounting year; (c) the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the Act. (d) The amount of interest accrued and remaining unpaid at the end of each accounting year; and (e) The amount of further interest due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23. “

“Section 27, of the MSMED Act, 2006 deals with fines/ penalties: Where a person intentionally contravenes or attempts to contravene or abets the contravention of the following: a. where a person fails, to file memorandum, as required under sub-section (1) of section 8 of the MSMED Act, 2006.b. fails to furnish such information as called by an officer appointed under section 26(1) of the MSMED Act, 2006. In case of first conviction, the fine may extend up to Rs.1,000 and in case of second and subsequent conviction, fine shall not be less than Rs.1,000 and can extend up to Rs.10,000. c.where a buyer contravenes the provisions of section 22 of the Act, 2006 i.e. fails to furnish additional information in his annual statement of accounts, sub section(2) of section 27 states that the fine shall not be less than Rs.10,000/-“