Steel Sector Seeks Govt Support On Lines Of Textiles, Sugar

NEW DELHI: India's steel industry, which is facing a crisis due to cheap imports and subdued prices, has sought a government support package on the lines of the ones extended to textiles and sugar sectors.

After lobbying for imposition of import duty, safeguard duty and anti-dumping duty on imports from China, South Korea and Japan, the over USD 100 billion industry has now approached the government for a comprehensive Steel Package.

The demand includes a year-long moratorium on payment of interest and principle amount as well as segregation of debt into two categories - Sustainable and Balance.

According to analysts, domestic steel companies are sitting on a debt burden of Rs 3 lakh crore and falling prices have led to steeply lower realisation making it difficult to service the debt burden.

Besides, cheap imports from China, South Korea and Japan among others have further exacerbated the situation leading to a decline in the share of the firms in the domestic market.

As per industry, the sector's share in gross non- performing assets as well as restructured standard advances of scheduled commercial banks is 10-11 per cent. Besides, an estimated 26 per cent of the total advances to the iron and steel sector are under stress.

In a presentation made to the Steel Ministry last week, companies said cheap imports and fall in prices of steel products are eating into their working capital funds and is impacting their debt servicing capacity.

That apart, investments to expand capacity has led to large borrowings and huge financial charges.

Appreciating the efforts taken by the government to help the sector, the firms in their presentation said that there is an "urgent need for a far more comprehensive relief (Steel Package) involving participation from all stakeholders, including the Banking sector".

The government has provided similar support to industries such as textiles and sugar, the presentation said.

Under the package, the one-year moratorium will be a short term measure to ensure continued operations, while various remedial measures are put into place.

Besides, segregating debt into Sustainable and Balance will help the industry in managing its financial burden.

While, Sustainable Debt will include long-term debt and working capital loans that are required to run the business as well as maintain cash flows to pay debt obligations.

The remaining -- termed as Balance Debt -- will be repaid over an extended period of time by converting it into Redeemable Preference Shares with a nominal rate of about 0.01 per cent.

"Considering the financial position of the companies due to various factors beyond their control, the industry would require a comprehensive package for its survival," the presentation explained.

 

Source :economictimes.indiatimes.com

Mines Ministry For Scrapping Export Duty On Iron Ore

NEW DELHI: The mines ministry has recommended scrapping of export duty on iron ore to bolster miners' revenues amid weakening prices and competition from overseas exporters. The recommendation to the finance ministry follows representations from the iron ore industry, which has been hit hard by slackening demand for ore and a fall in its price in the local and international markets.

Asenior official said the ministries of mines and steel have asked the finance ministry to withdraw the 10% export duty on iron ore. The industry has stated that high level of taxation along with factors like fierce competition from international companies, low global and international demand and declining commodity prices have hit iron ore industry in the state. Last week, trade associations in Goa urged Prime Minister Narendra Modi to withdraw export duty on low-grade iron ore , citing similar reasons. Goa mainly produces low-grade iron ore that is uneconomical for domestic steel mills.

"The industry has to contend with an extremely high percentage of taxes to the tune of over 40% for low-grade iron ore. Most of the taxes were levied or increased during the past years when commodity prices were booming. These taxes are no longer sustainable in the current situation of low prices, which do not support such level of taxation," said Goa Mineral Ore Exporters Association in its letter.

Iron ore producers in Goa are struggling to resume operations and exports of low-grade iron ore as commodity prices in general, and that of iron ore in particular, have crashed, according to the association. Prices of lowgrade iron ore have reduced to a fifth in the last four years.

 

Source :economictimes.indiatimes.com

Resale Price Method shouldn't be applied if exp. incurred by assessee didn't suggest that it was a d

IT/ILT: Where Tribunal held in earlier year in assessee's case that RPM was appropriate method as assessee was distributor, but prima facie facts of relevant year suggested that assessee was not merely a distributor, matter should be reconsidered afresh

Coal Exports From Australian State Of Queensland Up Despite Mining Backlash Sydney

Jan 11 Coal exports from Australia's Queensland state hit record levels for the second year in 2015, with shipments to India up sharply despite stalled attempts by Indian conglomerates to win approvals to dig new outback mines, data showed on Monday.

The state's exports rose 2 percent to 220 million tonnes in 2015 from the previous record of 216 million tonnes in 2014, and continue to grow, according to the Queensland Resources Council lobby group.

India's Adani Enterprises, which wants to ship millions of tonnes of coal a year to India, has been a target of environmental opposition since starting work on a new mine in the state's Galilee Basin six years ago.

GVK Hancock, along with more than a half-dozen other companies, is also seeking approvals to dig a mine in the basin, a 247,000-square kilometre (153,000-sq mile) expanse in north-eastern Australia.

Tim Buckley, an Australia-based director of the Institute of Energy Economics and Financial Analysis, said despite the increase, coal exporting countries such as Australia face a market in structural decline as India exploits more of its domestic coal reserves and switches to cleaner forms of energy.

"The supply is excessive, demand is weaker than expected, the last thing we need is more supply," Buckley said.

The International Energy Agency forecasts India would increase overall thermal coal imports to 204 million tonnes by 2020, a 73-percent rise over its 2014 estimate.

From one Australian port alone, Gladstone, exports to India were up by a fifth in the second half of last year, data showed.

Some 80 percent of the coal mined in Queensland is metallurgical grade used to make steel.

The state's biggest producer of metallurgical coal, a company jointly owned by BHP Billiton and Mitsubishi Corp, is expected to show a year-on-year rise in December quarter output when data is released on Jan. 20.

 

Source :.reuters.com

Thrust On Sezs To Revive Exports

SEZs have the potential to revive exports, which have contracted for the twelfth month running. Global demand is weak, though the recent devaluation of the yuan could benefit exporters.

"Incentivising manufacturing in SEZs would help in the Make in India initiative and also boost exports. We have taken up the issue with the finance ministry and are hopeful that the budget would address the concerns," a senior commerce ministry official said.

The commerce ministry has pitched for the exemption of the 20-per- cent minimum alternate tax (MAT) on SEZs to make merchandise globally competitive.

The Finance Act, 2011 broadened the scope of MAT by bringing SEZ developers and units under its ambit, significantly diluting the benefits offered by the economic enclaves.

Finance minister Arun Jaitley in his budget speech for 2014-15 said that manufacturing was of paramount importance for the growth of the economy. He said the government was committed to revive SEZs and make them effective instruments of industrial production, economic growth, export promotion and employment generation.

Exemption from MAT is offered to certain individuals whose adjusted total income does not exceed Rs 20 lakh. The limit of Rs 20 lakh is inadequate considering the huge amount of investments made in the export sector.

The commerce ministry is also working on streamlining the SEZ policy to bring more clarity and improve the competitiveness of exporters in the global market, which is mired by a currency war and falling orders.

During April-November this fiscal, exports declined 18.46 per cent to $174.3 billion. Imports stood at $261.8 billion and the trade deficit was $87.5 billion.

The SEZ revival package is likely to include incentives to investors to make use of the land and other facilities lying idle in the existing zones.

Other sops may include removal/lowering of MAT and dividend distribution tax as well as the permission to SEZ units to sell in the domestic market by paying the same duty applicable to imports from countries with which India has a free trade agreement (FTA).

SEZs, which are tax-free enclaves, have to pay duties for sales in the domestic market. This make the products costlier compared with imports from FTA partner countries that come in at zero or lower-than- regular duties.

As on March 2015, India had 202 operational SEZs across the country, which contributed close to a fourth of overall exports at $310 billion. Although fiscal concessions and tax sops are allowed to SEZs under the SEZs act, the Centre continued with MAT for years.

The finance ministry has justified MAT by saying that the government was forgoing considerable revenues, which were estimated at Rs 26,534 crore in 2014-15.

Source :.telegraphindia.com

Oil Nears $32/Bbl: Don't Rejoice Too Much; Low Price For Too Long Can Backfire On India

Benefit of composition scheme in Kerala VAT couldn't be denied by imposing new conditions in mid of

CST & VAT : Kerala VAT - Where for assessment years 2005-06 and 2006-07, assessee applied for payment of tax on compounded basis at lower rate under section 8(a)(i) and in meanwhile section 8(a)(i) was amended on 28-8-2005 with effect from 1-4-2005 and assessee in order to satisfy conditions laid down in amended section 8(a)(i) applied for cancellation of its central sales registration for assessment year 2005-06 after 28-8-2005 and for assessment year 2006-07 at commencement of said year, asses

No addition on basis of docs seized from brother if such docs weren't corroborated

IT: Addition to assessee's income merely on basis of papers seized from possession of assessee's brother was unjustified when material sought to be relied on was not corroborated

Ignorance of law is not reasonable cause to waive penalty under service tax

Service-tax: Where delayed payment was not due to any bona fide confusion occurring in prevalent statue and related provisions were quite crystal clear, penalty cannot be waived merely on ground of ignorance of law, as it is not a reasonable cause under section 80

In combination, acquisition of less than 10% of voting rights shall be treated as investment

COMPETITION ACT/INDIAN ACTS & RULES : Competition Commission of India (Procedure in Regard to The Transaction of Business Relating to Combinations) Amendment Regulations, 2016 – Amendment in Regulations 5, 6, 9, 13, 14, Schedule I & Form I and Omission of Regulation 31

SEBI establishes its local office at Jammu

SEBI : Establishment of Local Office of Sebi at Jammu

Leather Association allowing outsiders in its trade-fair on negligible fee was entitled to sec. 11 r

IT : Where assessee-association was formed with an object to promote leather trade, in view of fact that assessee's receipt of rent from non-members by allowing them to keep their stalls in trade fairs organised by assessee was negligible in comparison to total trade receipts, assessee's case could not be said to be covered under proviso to section 2(15)

Penalty levied on co. as its directors tried to evade service tax with help of internal auditors

Service Tax: Where internal auditor of company perpetrated fraud by booking 'service tax due' as 'income'/'commission' in books of account and it was found that directors of company were aware thereof, company was liable to evasion penalty for consequent non-payment of service tax

Educational institution won't disqualify for sec. 10(23C) registration just due to existence of prof

IT: At stage of registration, under section 10(23C) authority is only required to examine nature, activity and genuineness of institution and mere existence of some profit does not disqualify applicant if sole purpose of its existence is not profit making but educational activities

Conditions of section 147 can't be skipped when an assessment made under sec. 143(1) is sought to be

IT: Requirements of section 147 cannot be dispensed with when an assessment made under section 143(1) is sought to be reopened

No addition of whole exp. on birthday bash of grandson if invitation given by son and daughter-in la

IT: Interest on loan, which was taken subsequent to purchase of property, cannot be allowed as deduction under section 24(b)

Services used for transportation of employees in connection with business are eligible input service

Cenvat Credit : Services by way of hiring of vehicles to be used by employees: (a) for their movement within refinery premises or (b) for outward travelling in connection with business, is eligible for input service credit

Exclusive tie-up of super specialty hospital with a stem-cell bank isn't ant-competitive

Competition Act : Private super specialty hospital's exclusive tie-up with a stem-cell bank for collection of stem-cells from patients availing maternity services in the hospital and not allowing other stem cell banks to collect stem cells from its maternity services patients has no adverse effect on competition in the facts of the instant case

High value shown in stock statement sent to banks couldn't be held as unexplained investment

IT : Where revenue failed to establish that there was any difference in quantity of stock and Assessing Officer didn't make any enquiry in respect of explanation of assessee that stock belonging to another entity was included in stock statement submitted to bank, addition for unaccounted stock was liable to be deleted

Exp. incurred by ice-cream manufacturer on aborted project of manufacturing dairy products was busin

IT: Expenditure incurred by assessee, engaged in manufacturing of ice-creams, on aborted project of 'Mawa', which was covered by nature of assessee's declared business of dairy/milk products, and was under same management and control, was allowable deduction