Section 19A(11) in The Sugar Development Fund Rules, 1983
(11)The interest, insurance and storage subsidy payable to sugar factories for maintenance of buffer stock shall be admissible at the following rates, namely:-(a)interest (R) at the rate as specified by the Department of Economic Affairs, Ministry of Finance, to be charged from the private companies or actual rate of interest for the quarter (excluding additional or penal Interest) charged by the bank on advance given to sugar factory against the buffer stock, whichever is less.Explanation. - The rate of interest specified by the Department of Economic Affairs Ministry of Finance, as on the date of creation of buffer stock shall be taken into account and shall remain the same during the period for which the buffer stock has been created or extended.(b)Storage and Insurance (S) at the flat rate of 1.5% per annum on the value of stock as may be notified by the Central Government.(c)The buffer stock subsidy towards storage and insurance shall be payable only for the period during which the sugar factory has obtained the insurance coverage of the buffer stock as the storage and insurance subsidy are clubbed together.(d)The value of the stock (V), zone-wise, shall be as may be notified by the Central Government and shall remain the same during the period for which the buffer stock has been created or extended irrespective of the replacement of the buffer stock with production of subsequent sugar seasons.Please see Notification GSR 738(E) dated 29.11.07 for value of stock for calculation of buffer stock subsidyExplanation. - For the removal of doubts, it is hereby clarified that the valuation of the buffer stock (V) by the Central Government is only for the purpose of calculation of buffer subsidy so as to simplify the procedure and the valuation of the stock would continue to be done by the banks at market rates as per their banking practices.
