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Union of India - Section

Section 19A in The Sugar Development Fund Rules, 1983

19A. [] [Inserted vide GSR 699(E) dated 8.11.07.] Creation of buffer 'stock 'from 2006-2007 sugar season onwards.

(1)The Central Government may having regard to the stock of sugar held with the sugar factories, the prospects of sugar production, the requirement of sugar for consumption within the country and export and such other relevant factors as may be considered necessary, decide from time to time the quantity of sugar to be maintained as buffer stock and the period for which the buffer stock shall be maintained.
(2)The Central Government shall determine the share of each sugar factory having regard to the production of the sugar or the stock held by it or considering the both and the Chief Director (Sugar), Directorate of Sugar, Department of Food and Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution shall make factory-wise allocation of buffer stock on such basis as may be specified by the Central Government.
(3)
(a)On allocation of buffer stock, every sugar factory shall set apart the quantity allocated as buffer, stock and store, it in a separate and distinctly identifiable lots and stock within the factory premises;
Provided that the Chief Director (Sugar) may in exceptional circumstances and for the reasons to be recorded in writing, grant exemption to an occupier of the sugar factory from storage of buffer stock within factory premises.
(b)If an occupier contravenes the provisions of clause (a) of sub-rule (3) he shall be ineligible for buffer subsidy for the entire period and the buffer subsidy already paid shall be recovered with due interest thereon at the rate notified by the Department of Economic Affairs to be charged from private companies plus penal interest of 2.5% per annum.
(4)Every occupier of the sugar factory shall provide necessary safeguards against the damage, loss and deterioration in the quality of the sugar stored as buffer and against mixing it with other stocks:
(5)Every occupier of the sugar factory shall insure the buffer stock so set apart against such risk as may be required by the bank with which the buffer stock is pledged for the purpose of securing loan.
(6)
(a)Every occupier shall maintain the allocated buffer stock in good condition and in case of any damage or loss to the buffer stock, the occupier of that sugar factory shall replace the same with new stock at his own cost within thirty days of such damage or loss and shall furnish a certificate from the concerned Central Excise Authority for such replacement in Annexure-I of the Form-X, along with the claim.
(b)If an occupier fails to adhere to the time limit referred in clause (a) of sub-rule (6), he shall be deemed to have dismantled the buffer stock and shall be ineligible for buffer subsidy for subsequent period including the relevant quarter.
(7)
(a)No occupier of a sugar factory shall sell, remove, dispatch or dispose of any quantity of buffer stock without obtaining prior written permission of the Chief Director (Sugar).
(b)If an occupier contravenes the provisions of clause (a) of sub-rule (7), he shall be ineligible for buffer subsidy for the entire period and the buffer subsidy already paid shall be recovered with due interest thereon at the rate as notified by the Department of Economic Affairs to be charged from private companies plus penal interest of 2.5% per annum:
(8)
(a)An occupier shall be free to replace the allocated buffer stock with the production of the subsequent sugar season, without any break, to maintain the quality of the buffer stock and shall furnish a certificate from the concerned Central Excise Authority for such replacement in the Annexure-I of the Form-X along with the claim.
(b)If an occupier contravenes the provisions of clause (a) of sub-rule (8), he shall be ineligible for buffer subsidy for the entire period and the buffer subsidy already paid shall be recovered with due interest thereon at the rate as notified by the Department of Economic Affairs to be charged from private companies plus penal interest of 2.5% per annum.
(9)The Chief Director (Sugar) or any officer authorised by the Chief Director (Sugar) may inspect the maintenance of buffer stock in the factory and on inspection, if it is found that the sugar factory has violated any provision of these rules, the sugar factory shall be deemed not to have maintained the buffer stock during the entire period for which the buffer stock has been created and the buffer subsidy if any, paid shall be recovered with due interest thereon at the rate as notified by the Department of Economic Affairs to be charged from private companies plus penal interest of 2.5% per annum and the sugar factory shall become ineligible for buffer subsidy for subsequent period including the relevant quarter.
(10)All those sugar factories who have-
(a)maintained allocated buffer stock either in full or in part for the entire period for which the buffer stock has been created, unless permitted to dismantle under sub-rule (7);
(b)availed the additional credit where there are cane price arrears against the sugar factory, and utilised the same for the payment of the cane price arrears provided the bank has not declined to extend such credit to the sugar factory;
(c)submitted the utilisation certificates in respect of buffer subsidy, disbursed for earlier quartets as per time schedule specified in sub-rule (20) and the buffer subsidy disbursed including the advance buffer subsidy for buffer stock created vide notification number G.S.R S.O. 1326 (E) dated the 17th December, 2002; and
(d)not been specifically declared ineligible by the Chief Director (Sugar) for such buffer subsidy.
Provided that, a sugar factory shall be ineligible under clause(d) till the time the Chief Director (Sugar) declares it as eligible through a speaking and reasoned order.
(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.
(12)The buffer subsidy shall be calculated in the following manner, namely:-
(1)
(a)Interest subsidy on normal credit:
I (a)=| V x R x B x N1 x P1100 x 365 (366 for leap year)
(1)
(b)interest subsidy on additional credit.
I (b)=| V x R x B x N2 x P2100 x 395 (366 for leap year)
The total interest subsidy payable shall be I (a) plus 1 (b) OR the interest actually paid by the sugar factory, whichever is less.
(II) Insurance and Storage subsidy =| V x S x B x N3100 x 365 (366 for leap year)
Total buffer subsidy payable = (I) + (II)Where B is the buffer stock maintained by the sugar factory, N1 is the number of days for which the buffer stock has been maintained as certified by the Central Excise Authority in the relevant quarter, N2 is the number of days with effect from the actual date on which the bank credits the account of the sugar factory with additional credit till the end of the relevant quarter, N3 is the number of days for which the Insurance cover was taken for the maintained buffer stock and P1 is the percentage of normal advance relating to buffer stock and P2 percentage of additional credit.Explanation - For the removal of doubts, it is hereby clarified that during the 1st quarter of the creation of buffer stock, the buffer subsidy shall be payable from the date of creation of buffer stock as notified by the Central Government provided the allocated quantity was available with the sugar factory.
(13)The duly filled proforma as per Form-X for payment of the buffer stock subsidy shall be submitted to the Chief Director (Sugar) on quarterly basis starting from the 1st day of creation of the buffer stock.
(14)The admissible buffer subsidy shall be payable to the sugar factory for the purpose of making payment for the cane price including cane price arrears for the sugar season in which the buffer stock has been created and of the subsequent sugar season in the following order of preferences, namely:-
(a)If the sugar factory has cane price arrears for any of the said sugar seasons as per the cane price arrears position available on the date of processing of the claim or on the date of financial concurrence, whichever is less, for that quarter as also Sugar Development Fund or Levy Sugar Price Equalisation Fund over dues, then the buffer subsidy to the extent of cane price arrears for the said sugar season shall be paid to sugar factory notwithstanding the Sugar Development Fund or Levy Sugar Price Equalisation Fund over dues and if the buffer subsidy amount is higher than the cane price arrears at that point of time then the buffer subsidy amount in excess of cane price arrears shall be adjusted against the Sugar Development Fund over dues and the balance against Levy Sugar Price Equalisation Fund over dues.
(b)If the sugar factory has no cane price arrears for the said sugar seasons as per the cane price arrears position available on the date of processing of claim of that quarter but it has Sugar Development Fund or Levy Sugar Price Equalisation Fund over dues then the buffer subsidy amount payable to sugar factory shall be adjusted against the Sugar Development Fund over dues and the balance against Levy Sugar Price Equalisation Fund over dues.
(15)The sugar factory shall have a separate bank account for crediting the buffer subsidy amount received and the subsidy shall be utilised as provided in these rules.
(16)
(a)The buffer subsidy received by the sugar factory shall be utilised for making payment of cane price including cane price arrears for the sugar season in which the buffer stock has been created and of the subsequent sugar season.
(b)The payment towards cane dues shall be made within one month of receipt of the buffer subsidy:
Provided that if the sugar factory does not have cane price arrears of any of the said sugar seasons as on the date of receipt of buffer stock subsidy claim or the buffer subsidy received by the sugar factory is in excess of the Cane price including cane price arrears pertaining to the said sugar seasons then buffer subsidy amount or the amount in excess of the cane price including cane price arrears may be utilised for any other purpose.
(17)
(a)Every occupier shall avail additional credit on creation of buffer stock, when there are cane price arrears at any time during the period for which the buffer stock has been created or extended and the additional credit so given by the banks shall be utilised only for the purpose of making payment of the cane price including cane price arrears of sugar season in which the buffer stock has been created and of the subsequent sugar season within one month of crediting such amount.
(b)If any Bank authority which is the principal banker of the sugar factory for extending loan towards working capital, declines to extend the additional credit for whatsoever reason, the sugar factory shall be eligible to get the Buffer subsidy to the extent of normal credit calculated in accordance with item (1) (a) of sub-rule (12) and such sugar factory shall submit a certificate from the concerned bank in this regard as per Annexure-III to Form-X.
(18)Every occupier shall furnish the following documents in Form-X to work out the admissible claim of the sugar factory, namely:-
(a)certificate from the Central Excise Authority certifying the quantity as per Annexure-I to the Form-X and the period for which buffer stock has been maintained and its replacement, if any;
(b)certificate from the bank certifying the rate of interest charged by it on amount of loan extended against hypothecated buffer stock and the amount of interest paid or payable by the sugar factory to the bank and amount of additional credit extended by the bank as per Annexure-II to the Form X.
(c)certificate from the concerned State Government Officer responsible for enforcement of payment of price of sugarcane by the sugar factories certifying utilisation of buffer subsidy paid for earlier quarters and the buffer subsidy disbursed for buffer stock created vide notification number G.S.R. S.O. 1326 (E) dated the 17th December, 2002 and utilisation of additional credit extended by the bank as per Annexure-IV of the Form-X;
(d)a self certified photocopy of the insurance policy of the concerned Insurance agency along with a certificate from that insurance agency certifying that the buffer stock of this sugar factory is covered under the insurance policy as per Annexure-V of the Form X;
(e)certificate from the bank certifying crediting of buffer subsidy amount in a separate bank account as per Annexure-III of the Form-X;
(f)any other document in addition to documents referred to in clauses (a) to (e), which the Central Government may require.
(19)The time limit for submission of the claims and requisite documents along with duly filled form-X for making admissible claim for the relevant quarter shall be three months from the end of the relevant quarter but within permissible extended period of another three months subject to the following deduction in their admissible claim for the relevant quarter, namely:
(i)0 to 3 months - Nil
(ii)3 to 6 months - 10% of the subsidy amount payable and thereafter no claim shall be admissible:
Provided that the Central Government may for a valid reason to be recorded in writing, extend the period of submission of claims by such period as it deems fit.Explanation - For removal of doubts it is hereby clarified that the relevant date for determining the date of receipt of the claim shall be the date on which the claim in the form - X along with the requisite documents is received by the Chief Director (Sugar) and any document or clarification or revision, furnished by the sugar mill subsequent to the submission of the claim shall be deemed to have been received on the date on which the original claim was received.
(20)Every occupier of the sugar factory shall submit the utilisation certificate for buffer subsidy disbursed to him within three months of the disbursal of the buffer subsidy from the concerned State Government Officer who is responsible for enforcement of payment of cane price by the sugar factories and the concerned bank, certifying that the buffer subsidy amount has been utilised for making payment of cane price including cane price arrears for the sugar season in which the buffer stock has been created and of the subsequent sugar season or the buffer subsidy amount has been utilised as referred to in sub-rule (16) and also the utilisation certificate of the last amount of buffer subsidy disbursed in respect of last buffer stock, failing which the buffer subsidy for the relevant quarter shall become inadmissible and shall be recovered from such sugar factory with interest at the rate as notified by the Department of Economic Affairs plus penal interest of 2.5% per annum:Provided that the Central Government may extend the period of submission of utilisation certificate by a further maximum period of three months, if it is satisfied there is sufficient cause for the delay in submission of utilisation certificate.
(21)If any sugar factory fails to adhere to these rules and the Central Government decides to recover the buffer subsidy amount paid to the sugar factory, then the buffer subsidy amount shall be recovered from the concerned sugar factory along with interest at the rate as notified by the Department of Economic Affairs plus penal Interest of 2.5% per annum either from the levy sugar price differential payable to the sugar factory or any other claim or subsidy payable to the sugar factory by the Central Government in accordance with law.
(22)The Central Government may order dismantling of the buffer stock in phases or in one go and the buffer stock subsidy shall cease to be payable to the extent of dismantling of the buffer stock.
(23)This rule shall be applicable for the buffer stock created for the sugar season 2006-07 and onwards.
(24)Where the Central Government is of the opinion that it is necessary or expedient so to do, it may by order and for reasons to be recorded in writing relax any of the provisions of this rule.Explanatory Memorandum. - Under these rules, the Central Government reimburses the interest, insurance and storage charges to the sugar factories for the quantity taken on buffer as subsidy. The subsidy amount is to be used primarily for the payment of cane price including the cane price arrears of the sugar season in which the buffer stock is created and the subsequent sugar season. These rules will not adversely affect any person on account of being admissible for buffer subsidy for buffer stock created from 2006-07 sugar season onwards.[Chapter-IX] [Inserted vie GSR 443(E) dated 21.6.02.] Defraying Expenditure on Internal Transport and Freight Charges to the sugar factories on export shipments of sugar.