The Government's proposal to introduce a 5 per cent export duty on primary steel and HR (hot rolled) coils may provide the much-needed relief on raw material costs to the domestic steel pipe makers. But, the proposed export tax could adversely impact companies with a large export presence. Companies such as PSL and Maharashtra Seamless, which sell mainly in the domestic markets, would benefit significantly from the move, as they may get relief from upward-bound steel prices.

However, the move to impose a 10 per cent export duty on steel pipes is adverse for companies like Welspun Gujarat Stahl Rohren, with a high reliance on exports, as it may dent realisations. The company's ability to pass on the export duty through price hikes is also uncertain in a competitive scenario. The changes would come into effect from the day the Finance Bill is passed by Parliament.

Software companies, especially the mid- and small-sized ones, can now breathe easier with the Government initiating a move to extend the Software Technology Parks of India (STPI) scheme by one more year.

The proposal to extend the STPI scheme by a year till March 2010, may allow companies to continue with present tax incidence for one more year. The benefit is more pronounced for mid-tier and smaller IT services, given that they could not have easily used the option of moving to SEZs to keep their tax rates under check.
Tax benefits

Companies such as MindTree, Zylog Systems and Hexaware currently have a tax incidence of between 10 per cent and 12 per cent, around the MAT rate. They were all staring at a jump in incidence to 20-22 per cent, once the tax benefits under Section 10A (relating to STPI) were removed.

In light of uncertain IT spends of global clients and pricing pressures, which by themselves present challenges, a higher tax incidence would have further cut into these companies' profitability. Top-tier IT services companies such as Infosys, TCS and Satyam, which pay between 12 and 15 per cent of profits to the taxman, would also stand to benefit from this proposal. The extended time window may help them plan their migration to SEZs better.

CHINA

Growth prospects for the nation received a boost from World Bank, which in its quarterly report, had pointed out that China's gross domestic product (GDP) is expected to grow by 11.3 per cent in 2007, supported by strong -external trade and an investment-driven recovery in domestic demand. Earlier in its quarterly report released in May, the apex Bank has revised its projection for China's GDP growth rate from 9.6 per cent to 10.4 per cent. But belying all projections, China's GDP grew by 11.5 per cent in the first half of 2007 from the same period last year. Trends in steel prices in China were mixed. As per industry reports, China's exports of finished steel in August (5.38 mt) dropped by 9.4 per cent from the July level. This drop has led to a rise in inventories and the result has been a decline in steel prices in China with 12mm rebar prices falling by 60-70 yuan ($8-9) per tonne to 3,850-3,960 yuan per tonne in eastern China, while 6.5mm wire rod prices being around 3,850-3,890 yuan per tonne. At the same time, 3mm hot rolled coil lost 40-100 yuan per tonne to 4,320-4,350 yuan per tonne. However, as industry analysts point out the effects of higher inventories were less felt in South China, where high consumption continued to drive prices upwards, with 6.5mm wire rod touching 4,000-4,090 yuan per tonne (gain of 40-120 yuan per tonne) while HRC prices rose 70-150 yuan per tonne to 4,500-4,600 yuan per tonne. Meanwhile, profits growth of China's major steel companies have slowed with rise in coal and iron ore prices, according to CISA. Net profits of the nation's 77 large and medium-sized steel firms soared by 91 per cent y-o-y to 91.5 billion yuan (US$12.2 billion) in the first seven months, as per release from CISA. Combined sales of the 77 producers rose 35.3 per cent to 1.1 trillion yuan from January to July and six of the producers reported losses of 132 million yuan, down 61.2 per cent from the same period last year. Production costs jumped 8.34 per cent in the first six months. The iron ore price hikes alone added additional costs of 18.89 billion yuan to the steel sector as China imported 187.9 million tonnes of iron ore in the first six months, as per industry reports. Continuing with their efforts to rein in rampant growth, Chinese authorities have already announced the decision to reduce the number of approved iron ore importers in China from 118 to 112, through the reduction of the number of approved trading houses from 48 to 42. Analysts indicate that while, the move makes it easier to track/monitor market developments, at the same time, it is meant to be a gesture of China's decisiveness in regulating this key market, ahead of the start of talks on benchmark iron ore contract price. However, the new list will not be made publicly available by the government or major steel associations, even to those who have made it on to the list. The licensing regime was introduced in early 2005 and reduced the number of licensed iron ore importers to 138 from more than 500 in a bid to improve regulation of the market. China's iron ore imports have kept growing in the past few years, and market expects the country's imports to exceed 380 million tonnes in 2007. Up to August, China imported 250.81 million tonnes of iron ore, up 14.5 percent from the corresponding period of last year.

USA

Reports released by the U.S. Census Bureau show that preliminary August steel imports were $2.8 billion (2.9 million tonnes) compared to the preliminary July totals of $2.6 billion (2.6 million tonnes), The July to August change in steel imports, based on metric tonnage, reflected increases primarily in blooms, billets and slabs; line pipe greater than 16 inches in diameter; and reinforcing bars. The year to date final statistics through July 2007 showed steel imports of 16.2 million tonnes compared to 20.5 million metric tonnes through June 2006. The largest commodity decreases were in blooms, billets, and slabs and hot rolled sheets. The largest commodity increase was in line pipe greater than 16 inches in diameter. Prices for steel products imported into the United States remained steady, but are poised for a northward move. U.S. producers are reportedly seeking price increases ranging from $20 to $30 a tonne on flat-rolled products, leading to an almost immediate increase in pipe and tube prices. Reinforcing bar prices, which have held steady in recent times, may also face an upward push. Already, rebar prices are under pressure from continued weakness in the U.S. housing market. Current prices are around $580 a tonne, but many larger-volume deals reportedly are being done at prices below that figure. At the same time, flat-rolled prices are showing signs of strengthening. The increases sought by producers effective with Oct. 1 shipments appear to be gaining traction in the market, lifting spot market prices for hot-rolled sheet, for example, to about $530 a tonne, up $20 a tonne in the past month. The domestic pipe and tube mills are raising their prices in response to the hot-rolled increase. Arcelor Mittal Long Carbon North America is boosting wire rod prices for October shipments by $30 per tonne, in view of rising input prices, the second time since the $55 per tonne price hike, announced for May shipments. Though analysts are doubtful as to the sustenance of such a hike, yet as some point out, the hike may to some extent, help in tiding over the crisis situation of the wire rod segment, owing to steady rise in its raw materials and help recovery of margins. Commercial Metals Co. is set to raise prices on merchant products and structural steel by $10 per tonne, effective with shipments of October 1. Though reinforcing bar prices will remain same, with base prices around $598 per tonne. The announcement follows similar moves announced by Nucor Corp., who also has plans to hold reinforcing bar prices steady for shipments effective Oct. 1. Though raw materials surcharges will go up by $17 per tonne to $133 per ton ($6.65 per hundredweight), but will be offset by a similar decrease in base prices.

WORLD CRUDE STEEL PRODUCTION

IISI data shows that world crude steel production for August 2007 was 108.07 mt, a rise of 5.3 per cent compared to the same month of last year and 869.72 mt during the first eight months of 2007, a growth of 7.2 per cent compared to same period of last year. China produced 41.58 mt of crude steel in August 2007, which is 13.6 per cent higher than for the same month last year and for the January-August 2007 period, the nation produced 320.52 mt of crude steel, a growth of 17.7 per cent. Comparable figures for the EU-27 stand at 15.2 mt (decline of 2.2 per cent) and 140.6 mt (2.1 per cent growth) respectively while those for the United States are 8.5 mt (0.5 per cent growth) and 65.2 mt (a decline of 3.5 percent).

THE DOMESTIC MARKET

Provisional data on major performance parameters for the Indian steel (finished, non-alloy) industry shows the following results for April-September 2007 with regard to same period of last year. Data source: JPC

è    Production by the Main Producers at 8.4 million tonnes (mt) saw a growth of 2.3 per cent over the 8.21-mt of last year.

è    Production of the Steel Majors was up by 18.7 per cent: 6.25 mt during the period as compared to the 5.27 mt of same period of last year.

è    For the Other Secondary Producers, production level saw a growth of 5.7 per cent reaching 12.55 mt during April-September 2007 as compared to the 11.88 mt of same period of last year.

è    Thus, for the Secondary Producers group as a whole, production level stood at 18.8 rnt during April - September 2007, which is a growth of 9.7 per cent over the 17.14 mt of same period of last year.

è    After accounting for own consumption /inter plant transfers (2.4 mt), total production for sale of finished non-alloy steel was at 24.8 mt during April-September 2007, which was a growth of 6.6 per cent compared to the 23.26 mt of same period of last year.

è    Steel exports increased by 7.4 percent as it reached an estimated 2.6 mt during April-September 2007 compared to 2.42 mt of same period of last year.

è    India remained a net exporter of steel as imports were at an estimated 2.45 mt during April-September 2007 and increased by 28.2 per cent compared to the 1.911 mt of same period of last year.

è    Real consumption of finished non-alloy steel grew by 8.7 per cent, reaching 21.55 mt during April-September 2007 as compared to the 19.82 mt of same period of last year.

At the end of the second quarter of current fiscal, the Indian steel scene continues to be on a stable footing. Performance - wise, the observed parameters do seem to be in accordance with this spirit of stability, during the first half of the first year of the 11th plan period. Developments, progress, achievements during this year would go a long way in giving form to the future of Indian steel and overcoming perceived hurdles in the road to 2020. Given that, even as industry makes an all-out effort to confront situations arising at different fronts, we take a Look at some issues, which are topical in the current context.

STEEL CONSUMPTION-The near-10 per cent growth in domestic steel consumption during the first half of the year indicates stability in the end-use segments for steel, supported additionally by reports of steady growth in the manufacturing and infrastructure segments and provides the basis for future optimism about the sustenance of, and further growth of steel demand in the near future. Based on available data, calculations show that India's per capita steel consumption stood at 39 kgs in 2006, much below the desired level and indicates indirectly, the potential of growth of domestic steel demand. Exploring and realizing such potential is an activity that is of utmost importance today. One heartening sign in this regard, is the effort launched to augment the steel consumption potential of the Indian rural market by industry stalwarts, who are not only coming up with newer ideas on product development to fit the rural lifestyle but also resorting to innovative marketing means to promote their product. However, the fact remains that there is room for more growth to be achieved and concerted efforts should be put in place to align the demand side with the supply side, poised to grow vigorously in the days that lie ahead. The repercussions of any mismatch of steel demand and supply are well known.

STEEL PRICES- Fluctuations in observed trends in domestic steel prices have been attributed to factors like demand-supply mismatch, hike in input costs and also to global factors. In fact, it is true that in this globalised mode of operation, international developments have the potential to exert a strong influence - a fact, often missed out by some. Domestically, as of now, steel prices are heading north once again, the price rise being observed across broad categories, albeit more in flat than long products. Industry analysts point out to both strong demand and rising costs as the causal factors, besides of course, international ones. HR Coils at September-end were around an average of Rs 35,000 across markets, higher by nearly six per cent in some centers in the country. According to latest Steel Benchmarker report, in same time period, the U.S. hot-rolled band price stood at $576 a tonne, f.o.b. the mill, up $4 (0.7 per cent), the increase being the third consecutive increase in U.S. hot-rolled band pricing in recent times. Both Western Europe and the world export market demonstrated similar trends. Hot band prices moved to $680 a tonne, ex-works, in Western Europe, up $10 (1.5 percent) from $670 a tonne previously while world export prices for hot band stands at $574 a tonne, f.o.b. the port of export, up $11 (2 percent). China however, registered a decline: current hot band price in China stands at $477 a tonne, ex-works, down $10 (2.1 percent) from $487 a tonne two weeks ago but this, in view of rising supply-soft demand does not come as a surprise.

 CAPACITY EXPANSION- The statistics on upcoming steel capacity in the country are impressive no doubt and there seems to be fresh announcements with each passing day. However, though certainly encouraging, it does seem to plausible to assume that not all the proposed ventures would register their presence at one go and more importantly, commercial operation are dependent to quite an extent, on the acquisition/availability of the necessary raw materials in the right quantity/quality, besides of course, meeting the intrinsic requirements as posed by availability of land, clearance of environment/pollution control and other key aspects. Thus, a monitoring of their progress and pace is indeed the need of the hour-for there is the need to know the correct structure the supply side of steel would assume in the coming days.

IRON ORE- Present status indicate that in all likelihood, meeting input requirements for the steel industry may not suffer any major blockade, given the reserve base, production trend and the pace of on-going exploration works in the Indian iron ore industry. But a the same time, specially considering economic and cost issues, it is also imperative that steel industry reduces its dependency on lump ore and start making gainful use of iron ore fines as well -currently pelletisation and other facilities are almost at the nascent stage and needs development also to enhance the competitive and efficiency levels of steel plants. This would serve another key purpose, viz. development of a new market for Indian iron ore industry. No doubt the strength in Chinese demand is driving up exports of fines currently but what is accentuating the situation is that the material hardly finds any use in the present-day operation of Indian steel industry. Development of pelletisation /sintering as a wide-spread/integral activity in steel making would enable domestic iron ore producers an opportunity to cater to a fresh component in their demand in the domestic market, which is significantly missing now.

INDIAN ECONOMY HIGHLIGHTS

v    Provisional data released by the CSO show that the core sector comprising of the six infrastructure industries, reported a 6.6 per cent growth during April-August 2007-08 as compared to the 8.3 per cent growth of same period of last year. Petroleum Refinery Products (10.4 per cent) was the sector to record the highest percentage growth among the total six sectors during this period.

v    Provisional CSO data show that the Index of Industrial Production (IIP) recorded a 9.8 per cent growth during April-August 2007 compared to the 11 per cent growth in same period of last year. This growth was fueled by a combined show of strength from the following segments: Manufacturing (10.3 per cent), Electricity {8.3 per cent) Basic Goods (10 per cent), Capital Goods (21.3 per cent), Intermediate Goods (9.3 percent) and Consumer Goods (6.2 per cent), with Consumer Non-Durables (9.3 per cent) posting a stronger grwoth.

v    Provisional figures from the DGCI&S show that overall exports, in dollar terms, during April-July, 2007 increased by 18.2 percent. Overall imports increased by 30.7 per cent. Oil imports increased by 5.3 per cent and Non-oil imports increased by 43.7 per cent. The trade deficit for April-July, 2007 was estimated at US$ 25,620 million, which was higher than the deficit at US$ 15,841 million during April-July, 2006.

Anti-dumping duty on import of Flat base Steel Wheels

Whereas, in the matter of import of Flat base Steel Wheels [hereinafter referred to as the subject goods], falling under tariff item 8708 70 00 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) originating in, or exported from, the People's Republic of China {hereinafter referred to as the subject country), the designated authority, in its preliminary findings vide notification No. 14/8/2005-DGAD dated the 12th January, 2007, published in the Gazette of India, Extraordinary, Part 1, Section 1, dated the 12th January, 2007 had come to the conclusion that -
(a) The subject goods had been exported to India from the subject country below its normal value;
(b) The domestic industry had suffered material injury;
(c) Injury had been caused by dumped imports from the subject country, and had recommended imposition of provisional anti-dumping duty on all imports of the subject goods originating in, or exported from, the subject country;
And, whereas, on the basis of the aforesaid findings of the designated authority, the Central Government had imposed provisional anti-dumping duty on the subject goods vide notification of the Government of India, Ministry of Finance (Department of Revenue), No. 51/2007-CUSTOMS, dated the 29th March, 2007, published in Part II, Section 3, Sub-section (i) of the Gazette of India, Extraordinary, vide number G.S.R. 260(E), dated the 29'" March, 2007:
And, whereas, the designated authority in its final findings vide Notification
No. 14/8/2005 -DGAD, dated the 28th November, 2007, published in the Gazette of India, Extraordinary, Part I, Section 1, dated the 29th November, 2007, had come to the conclusion that-
(a) The subject goods had entered the Indian market from the subject country at prices below their normal value;
(b) The dumping margin of the subject goods imported from the subject country were substantial and above deminimis;
(c) The domestic industry suffered material injury;
(d) Injury had been caused by dumped imports of the subject goods from the subject country,
And had recommended the imposition of definitive anti-dumping duty on imports of the subject goods originating in, or exported from, the subject country.
Now, therefore, in exercise of the powers conferred by Sub-section (1) of Section 9A of the said Customs Tariff Act, read with Sub-section (5) of the said Section 9A and Rules 18 and 20 of the Customs Tariff (Identification, Assessment and Collection of Antidumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, the Central Government, on the basis of the aforesaid findings of the designated authority, hereby impose? on the goods, the description and specification of which is specified in column (3) and column (4) of the Table below, falling under tariff item of the First Schedule to the said Customs Tariff Act specified in the corresponding entry in column (2), originating in the countries specified in the corresponding entry in column (5), and produced by the producers specified in the corresponding entry in column (7), when exported from the countries specified in the corresponding entry in 'column (6), by the exporters specified in the corresponding entry in column (8), and imported into India, an anti-dumping duty equal to the amount specified in the corresponding entry in column (9), in the currency specified in the corresponding entry in column (11), and as per unit of measurement specified in the corresponding entry in column (10) of the said Table.
2. The anti-dumping duty imposed under this notification shall be levied with effect from the date of imposition of the provisional anti-dumping duty, that is, the 29th March, 2007.

[F.No.354/10/2007-TRU]

Anti-dumping investigations concerning imports of Flat Base Steel Wheels originating in/exported from China PR.

Having regard to the Customs Tariff Act, 1975 as amended in 1995 (hereinafter referred to as the Act) and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, (hereinafter referred to as the Rules) thereof:

2. WHEREAS on the basis of an application filed by M/s. Kalyani Lemmerz Ltd, Pune and Wheels India Ltd, Chennai (herein after "referred to as the Applicant) the Designated Authority (hereinafter referred to as the Authority), in accordance with the Act and Rules made there under, issued a public notice dated 31st May 2006, published in the Gazette of India, Extraordinary, initiating Anti-Dumping investigations into alleged dumping of flat base Steel Wheels (herein after referred to as subject product/goods), originating in or exported from China PR (herein after referred to as subject country).
   
3. The Authority notified its preliminary findings vide Notification dated 12th January 2007 and amendments dated 21st February 2007 and 12th March, 2007 recommending provisional antidumping duty on import of subject goods from the subject country and acting upon such recommendations of the Authority, the Department of Revenue, vide its notification No.51/ 2007-Customs dated 29th March 2007, imposed provisional anti-dumping duty on the subject goods.
   

5. As recorded in the preliminary findings, the product involved in the current investigation is flat base steel wheels of size 16" to 20" nominal diameter used in tubed tyre applications in commercial vehicles. A wheel is an assembly of rim and disc with a demountable ring, which is mounted on the axles of vehicles and fitted with tyres to enable vehicle movement. Commercial vehicles classified as light, medium and heavy vehicles comprise of buses, lorries including trucks, trailers and tempos. Wheels are defined under heading 8708.70 in Chapter 87 of the Customs Tariff Act and ITC HS classification. The Customs classification, however, is indicative only and is in no wav binding on the scope of the present investigation. There is no issue raised by any interested party in this regard.
   
6. There is no difference in the subject goods produced by the domestic industry and the subject product imported from the subject country. The product is being directly imported by the consumers, who use the domestic and imported product interchangeably. The two are technically and commercially substitutable. The products produced by the domestic industry and imported from the subject country are identical in all essential characteristics and therefore, are like articles within the meaning of the term under the Rules. No issue has been raised by any interested party in this regard.
   

8. In addition to comments relating to various aspects of the case, both the domestic industry and the participating exporter from China PR have raised the issue of excessive confidentiality claimed by the other party. The domestic industry has argued that (a) the exporter has made a lot of submissions without simultaneously providing a non confidential version; (b) the exporter has not disclosed a lot of information nor given any reason for claiming confidentiality (c) neither in law nor in fact can the business licence of a company be claimed confidential as the exporter had done and (d) given the manner of exporter response, they should be allowed to comment on the information provided to the Authority to rule out the possibility of the exporter filing incorrect information.. The exporter, however, has argued that the domestic industry has not provided a proper n on-confidential version of its cost of Production and other details or of submissions made subsequent to the initial application.
   
9. The Authority noted the degree and extent of cooperation and information submitted by the participating exporter and that non-confidentiality issues have been subsequently addressed by filing non-confidential versions of submissions made. The submissions filed by the exporter have been accepted though certain claims made have not been accepted, but the non-acceptance of certain claims or rejection of certain information by the Authority does not render the exporter non-cooperative. The information, which is by nature confidential or which has been provided on a confidential basis by the interested parties' along with non-confidential summary thereof, has beer treated confidential.
   

11. The domestic industry has claimed that the Chinese Government provided support to the steel industry in the form of grants of cash and land, transfer of ownership rights on noncommercial terms, equity-conversion of and waiver of debt, inaction on non-performing loans, grant of preferential loans, directed credit and tax incentives including exemptions, targeted infra-structure development, manipulation of raw material prices and value of the Chinese renminbi (RMB), subsidies on inputs like coal, metallurgical coke, electricity, etc. Therefore, steel prices in China were not the result of any natural advantage enjoyed by that country but of ad-hoc interference in the industry by the Govt, to make steel cheaper. Such adhoc systems of subsidies that were not sector/industry/ product region-specific and lacked well laid-down objective eligibility criteria typified State interference and did not lend themselves to countervailing duty investigations. Economic decisions of Chinese firms were, thus, not made in response to market signals and were with significant state interference. Besides, the United States has reportedly sought WTO ruling against Initially, the manufacturing process was stated to be an assembly of disc, rim and ring, as established by statement of cost of production, which showed that 93% of the cost was on account of the raw material, steel, which could only be the case if the production process was an assembly line operation. Besides, the company had earlier claimed that the material of production of disc was steel coin but later claimed that the raw material used was HR coil. In addition, though China's steel subsidies.    
    
12. The exporter has rejected these contentions, stating that the submissions of the domestic industry lacked merit, as they had not provided evidence about the alleged subsidies to the steel industry. Further, Chinese electricity prices were comparable to prices prevailing in a number of market economy countries. Ad-hoc subsidies, by nature, would be specific to industries/enterprises and have restricted availability, so that they were counter-vailable. Besides, subsidies did not make an economy non-market, as all countries grant them. The domestic industry could file a separate petition-seeking levy of countervailing duties depending upon the subsidies.
    

23. The domestic industry has further stated that the transformation of the company from very small and with a very low capital to one of the largest wheels producers in China over 10 years as well as the large investments of over RMB 110 million made in subsidiaries when possessed of income of less than RMB 10 million was evidence of Govt. support. Besides, the capital employed was enhanced to RMB 90 million, 85% contributed by one person alone, which considering profits in 2004, represented 53 years of profits. Therefore, the source of these funds must be investigated.
    
24. The exporter has denied the charge of suppressing information. The Authority had been informed of the company having been originally sponsored by the Association but invested by three private individuals. At the time of the company's incorporation, the promoters sought the Association's sponsorship, feeling that a collective form of organization was socially more acceptable to labourers and others. But as the Association was not investing funds, an agreement on funds to be invested by the promoters and their role was entered into with the Association. The investors brought in substantial additional capital and expanded capacity after it became private. The capital and asset base of the company before-transformation were insignificant, as seen from the financial statements at the time of conversion and the asset valuation reports. Even if they had benefited under the erstwhile status, the carryover effects would be negligible considering the current capital and assets base of the company. Further, the WTO law did not require that a transformation from state ownership should be made only by offering it to the public at large and not to specified individuals. In any case, the promoters held the company right from the beginning and only their association with the sponsor was cut off. As regards source of funds, the Authority could examine the same to the extent necessary,
    

Nirman Bhawan
New Delhi-110011,
Dated: 1 October 2007

OFFICE MEMORANDUM

Subject:   Amendments   to   the   Small   Industries   Cluster   Development Programme (SICDP).

In implementation of the announcement made by the Government of India on 27.02.2007 regarding the Package for Promotion of Micro and Small Enterprises (MSEs), the following amendments to the Guidelines of the Small Industry Cluster Development Programme (SICDP) are approved with immediate effect:

1. The "Small Industry Cluster Development Programme (SICDP)" has been re-named as Micro & Smail Enterprises Cluster Development Programme (MSE-CDP)

2. The Scheme of Integrated Infrastructural Development (IJD) has been subsumed under MSE-CDP/with all its existing features and funding pattern, i.e., Government of India assistance shall be limited to Rs. 2 crore i.e. 40% of the project cost not exceeding Rs. 5 crore per centre. The assistance will also be available for setting up of New Clusters/Industrial Estates.

3. Government of India assistance shad be available upto 90% of the cost (subject to ceiling of Rs. 9 crore)/ for clusters developed exclusively for Micro and Small Enterprises operated and/or owned by women under MSE-CDP.

4. Government of India assistance shall be available to Associations of Women Entrepreneurs under MSE-CDP for establishing exhibition centres at central places display and sale of products of Women-owned Micro and Small enterprises.

5. The Budget Head of the scheme will remain unchanged.

6. This issues with the concurrence of the Integrated Finance Wing vide their Dy. No. 1241/FR/07 dated 14.9. 2007.
   
7. The SICDP guidelines issued by the Office of DC (MSME) through its OM No. TM/UND/2005 dated March 14, 2006 shall be revised accordingly and will be placed on the website of Office of DC (MSME), i.e. dcmsme.gov.in.

The undersigned is directed to refer to the Board's circular No. 621/12/2002 dated 21.02.2002 on the above subject. Para 8 of this circular provides the time limit for filing refund claim to be one year from the date of purchase of the goods by the diplomatic mission or consular office, as per the provisions of Section 1 IB
l. of the Central Excise Act, 1944 read with explanation (B)(e). As per the prescribed procedure, such refund claims are received initially by the Ministry of External Affairs (MEA), and are forwarded with required certification to the offices of the jurisdictional Assistant/ Deputy Commissioner of Central Excise. The claim is processed and refund Cheques are sent to MEA for onward transmission to the diplomatic missions/posts. However, certain instances were brought to the notice of the Board, wherein even though refund claims were submitted to the MEA by the diplomatic missions within one year, but the claims became time-barred, as there was a delay in forwarding the said claims to the jurisdictional Assistant/ Deputy Commissioner of Central Excise.

2. In order to avoid recurrence of such instances, Board has devised a new procedure for processing of these claims. The revised procedure is that the refund claims would continue to be filed by the foreign missions with the MEA. However, vide notification No. 30/2007-CE (NT) dated 30.07.2007, the officer receiving the said claims has been designated as Assistant/ Deputy Commissioner of Central Excise for the limited purposes of receiving the claims under Section 1 IB of the Act. It would mean that the time limit of one year of filing refund claim would be the date of filing the claim with the authorized officer of MEA. This would eliminate the issue relating to expiry of the statutory limit of one year by the time the claim is received by the Assistant/ Deputy Commissioner of Central Excise.
   
3. Further, a refund claim is required to be sanctioned within three months of receipt of claim and in case of delay in payment of refund beyond 90 days, interest is required to be paid by the department under Section 11BB of the Act. As per the revised procedure, the statutory time limit of 3 months for sanction of refund (beyond which interest is payable) would start from the date of receipt of copy of refund application by the MEA. However, in order to ensure that the jurisdictional central excise officers have sufficient time to process/verify the claim, a time limit of 30 days has been fixed for MEA to forward such refund claims to the concerned Assistant/ Deputy Commissioner of Central Excise along with their recommendation. In case, there is delay in forwarding of such applications by the MEA beyond 30 days, which in turn results in the sanction of refund claim beyond 3 months, then MEA would have to bear the incidence of interest payable 10 the foreign missions in terms of Section 11BB of the Central Excise Act. The interest payable by the MEA would be limited to the number of days beyond the
   

5. The field formations maybe suitably instructed.   
   
6. Hindi version of the circular will follow.   
   

Attention is invited to Policy Circular No.9 (RE2005)/2004-09 dated 14.06.2005. In Para 3 therein, it has been stated that where more than one names are mentioned in export documents, the exporter shall give documentary evidence to prove that such mentioning was mandatory and legally required.
An issue has been pointed out by FIEO regarding disallowing goods manufactured by supporting manufacturers in case supporting manufacturer is a status holder and authorities calling for documentary proof of more than one name in export documents.
The issue has been examined in detail and it is decided that:

1. Policy Circular No.9 (RE2005)/2004-09 dated 14.06.2005 has clarified, and it is being made explicit herein, that a shipment shall be taken into account of applicants' export performance only if export proceeds are received in free foreign exchange by applicant directly from overseas.
   
2. Further, in terms of clause (v) of Note 1 of Para 3.2.7.1 (vii) of DFCE for Status Holders Scheme under EXJM Policy (RE2003), supplies from one status holder to another is not eligible for entitlement. Representation have been received from FIEO that supporting manufacturers who happen to be status holders and aremanufacturing goods on behalf of applicant exporter, are being treated as 'suppliers' leading to making such exports ineligible. The issue has been examined and it has been decided that 'suppliers' and 'supporting manufacturers' are distinct categories and cannot be clubbed together. Hence goods manufactured by supporting manufacturer cannot be made ineligible under the above referred clause, although supporting manufacturer may happen to have a status certificate.   
   
3. Once condition 1 and 2 above are satisfied, applicant can count a shipment in his export performance and the same would be entitled for benefits under the reward schemes.

[Issued from F.No. O1/94/180/308/AM-07/PC-I]

NMDC's lease was scheduled to expire only in 2007
The State Government has recommended awarding licence to Essar Steel.

In an unexpected move, the Chhattisgarh Government has withdrawn lease rights for an estimated 100 million tonnes of iron ore reserves in the Bailadila mines from public sector National Mineral Development Corporation (NMDC) prior to its expiry.

It has instead recommended to the Ministry of Mines to issue a prospecting licence to Essar Steel.

Informed sources said that NMDC's lease was scheduled to expire only in 2007, but the Chhattisgarh Government, on the grounds that the public sector was not making use of its lease rights said that the lease was in the lapse category and sent a notice to NMDC, terminating the lease.

Following the termination, the State Government has recommended to the Ministry of Mines to award prospecting licence to the private sector producer Essar Steel.

Final decision

The Mines Ministry, however, was yet to take a final decision on the State Government's recommendations, official sources said.

The NMDC Chairman, Mr B. Ramesh Kumar, told Business Line that the move came despite the company approaching the tribunal under the Ministry of Mines with the objective of developing the mines.

NMDC had the lease rights for Bailadila deposit three, part of deposit two and some pockets in deposit six, deposit seven, deposit eight and deposit nine, all of which came under the boundaries earmarked in the lease document.

In July 2006, the company had announced it was "envisaging development of Bailadila deposit three with an initial capacity of three million tonnes per annum."

However, the Chhattisgarh Government decided to go ahead with the Essar Steel plans and recommended the iron ore reserves for use as captive mine for Essar's proposed greenfield steel plant in the State.

Greenfield steel plant

The Essar group had earlier announced setting up a 3.2-million-tonne greenfield steel plant in Bastar district.

The Indian Steel Alliance (ISA) has urged the Government to allow steel companies to raise external debts and use them to retire their domestic debts. Though a similar demand has come from other sectors also, the ISA is of the opinion that this is particularly necessary for the steel sector so as to mobilise resources for greenfield ventures.

The industry experience has been that numerous announcements of setting up new steel plants have not gone down well with foreign investors and they have not responded favourably to external commercial borrowing (ECB) proposals for funding such projects.

Memorandum

In this context, ISA has urged the Government to allow the companies to leverage on their existing operations to raise funds for their greenfield expansion in a situation where domestic institutional exposure is already very high.

To achieve this, the ISA in its pre-budget memorandum submitted to the Ministry of Steel has urged for relaxation of the end use restrictions on ECBs and permit the companies to retire their rupee debt and to enable them to raise project finance afresh.