OM VI Vol I

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OFFICE MANUAL PART-VI (Volume-I)

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CHAPTER-I
ORGANISATION OF ORDNANCE FACTORY BOARD AND ALLIED

ESTABLISHMENTS
Para
Organisation of Ordnance Factory Board 1
Organisation of Ordnance Factories 3
Responsibilities of Accounts Officer 4
Duties entrusted to Accounts Officer 5
Internal Audit by Chief Internal Auditor 6
Organisation Chart of Chief Controller of Accounts (Fys) and
Controller of Finance 7
Quality Assurance 10
Stock Verification 11
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CHAPTER-I
ORGANISATION OF ORDNANCE FACTOR BORD AND ALLIED
ESTABLISHMENTS
1. The Management of the Ordnance Factories is vested in the Ordnance

Factory Board. The Board consists of the Chairman and seven full time Members.
The Chairman is the Chief Executive. In his capacity as the Director General,
Ordnance Factories, he is the administrative head. Orders provide for the
association of three Members selected from other Ministries. The Organisation
Chart Ordnance Factory Board is at Annexure I to III.
2. Management of Ordnance Equipment Factory, Kanpur, Ordnance Parachute

Factory, Kanpur, Clothing Factory, Shahjahanpur and Clothing Factory, Avadi is
with the Additional DGOF (Ordnance Equipment Factory Group), Kanpur. For
purpose of co-ordination and uniformity of standards, the Additional DGOF, (OEF
Group) reports to the DGOF.
3. The Head of the Ordnance Factory is the Manager. In respect of all

activities, he reports to the concerned Member at OFB Head-quarters. Question
relating to functional matters like material procurement, problems affecting
personnel are referred to the functional Member in addition to the Member to the
Member of the Group of Factories. He is assisted by joint General Manager,
Deputy Manager, Works Manager, and Asstt. Works Manager. The Head of the
Production and Maintenance Section is the Foreman. Store Holders hold charges
of Store (Provision)/Stores (Stock Section). Head Clerks/Office Supdts. /Forman is
in charge of Administrative Sections like Cash Office, Estate Labour Bureau, Bill
Group etc. Rate and Estimating Section/Work Office which deal with production
matters is under the charge of a Foreman labour Officers attached to the
Ministry of Labour, co-ordinate and advice on all question concerning
labour problems and welfare. The security of the factory is the responsibility of
Defence Security Corps Personnel under the Commissioned Officer designated as
Security Officer. For looking after the health of employees, Medical Officers are
posted. The responsibility for control and proper management is ensured to the
Senior Medical Officer/Commissioned Office. They report to the Director Health
at OFB Headquarters. Similarly, the Chief Security Officer at OFB Headquarters
controls the work of the Security Officers in the Ordnance Factories. Employees
are broadly categorized as (i) Industrial Employees (ii) Non-Industrial Employees
(iii) Non-Gazetted Officers and (iv) Gazetted Officers. The Strength is fixed by
Headquarters' Office.
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In each factory, there are various shops (sections), which may broadly be
classified as "Productive" and "Non-Productive" (Service). The Productive Shops
actually turn out articles. The non-productive shops e.g. Main Office, Planning,
Gate, Store, Power, etc. are not directly engaged in manufacture but render
services to other shops. There are also certain sections in factories, which are of a
"mixed" character, the output of which is partly for production and partly for
service e.g. Tool Room, Mill Wright, and Repair Shop.
Each factory and its shops are identified for purposes of mechanical
accounting by specific code numbers. The code Numbers of Shops are allotted by
the Local Accounts Officer and those of factories centrally by the CC of A (Fys).
4. The Accounts Officer is responsible for making payments, maintaining

Financial and cost Accounts. He renders financial advice to the General Manager.
Provisional payments are sanctioned by the General Managers after obtaining the
advice of the Accounts Officer. In case of difference of opinion, the General
Manager can over rule the advice subject to his recording the reasons for the same
and intimating such cases to the Member concerned with a copy to Member
(Finance). Such cases should be very rare. The Head of Accounts Office is Joint
Controller of Accounts/Deputy Controller of Accounts/Assistant Controller of
Accounts / Accounts Officer. Controller of Accounts/Joint Controller of Accounts
are also posted as In-Charge of certain Branch Accounts Offices forming Groups
under their control vide Annexure IA to Para 7 of this Chapter. Apart from the
Gazetted Officers the responsibility for the efficient running of the sections is
vested on the Asstt. Accounts Officer/Section Officers who are assisted by Senior
Auditors, Auditors, Clerks etc
5. The duties entrusted to the Accounts Officers are:-
(i) Payment of all claims of Industrial employees.

(ii) Payment of claims of contractors and all matters connected with the
provisioning, purchase utilization and disposal of material
(iii) Maintenance of Cost Accounts including accounting of Capital
Assets,
(iv) Scrutiny of Administrative Approvals, connected with recovery of
Licence Fees, leaves contracts.
(v) Payment of bills for advances of TA /LTC of all categories of employees
and Contingent Bills.
(vi) Preliminary scrutiny of pay bills of Gazetted Officer /NIEs/NGOs and
issue of cheques.
(vii) Local audit of the accounts of formations of the Inspectorates.
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Note: - In the case of factories and allied establishments located in Avadi
Group and Bengal Group, the final audit of pay bills of all categories of
employees other than gazetted officers and connected items of work are
dealt with finally by the Accounts Officers. The office of the Chief
Controller of Accounts (Factories) is however responsible for fixation of
pay of the staff of these units/factories decentralised also.
The duties of the Accounts Officer are multifarious and vary from task to
task as detailed in the preceding sub-pare. The Accounts Officer is functionally
responsible to the-Chief Controller of Accounts (Fys)/Member (Finance) in the
case of facts under OFB. In other cases he is responsible to the Controller of
Accounts/ (Fys). The Officers Staff are sanctioned by the Controller General
Defence Accounts. Cases requiring financial concurrence are sent direct by the
Accounts Officer the Finance Division. Detailed note is in pendix-1.
6. The Internal audit of the auditable documents of the OFB Hqrs office as
well as the factories under OFB is vested in the Chief Internal Auditor, who
functions direct y under Member/Finance, OFB. He is assisted by Accounts
Officers, Asstt. Accounts Officers, Section Officers and Staff. The Chief Internal
Auditor is independent of the General Managers of the factories and the Chief
Controller of Accounts (Fys).
7. The organisation charts of the Chief Controller of Accounts (Fys) and

Controller of Finance are so given in Annexure-II & III,
8. Member/Finance controls the accounting, financial and audit functions of

the Head quarters office and all factories under OFB. In addition officers dealing
with financial budgets and draft as (DDS) report direct to him
9. While the organisation chart gives an overall idea, the sections concerned
with production and cost management and control are:
(i) OFB
(a) Production Sections under various Operating Divisions and the P & MM
Division.
(b) Finance Division-all groups except group I.
(ii) CC OF A (Fys)
(a) PR Section deals with Cost control and Cost ascertainment.

(b) Store section deals with Material Management.
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(c) Pay/Tech-1I-decision cases of IEs.
(d) EDP Section-Cost Tabulation.
(e) Accounts Section-Financial Compilation.
10. Responsibility of quality assurance vests with inspectorates. The quantities
manufactured are inspected for quality assurance as indicated below:-
Works Inspection: - This is the inspection carried out by factory or service

inspector of "Components" and "Assembled" Stores during manufacture before
being submitted to the service inspector for final inspection.
Final inspection of items manufactured is carried out by Authority Holding
Sealed particulars: -
(i) For Army Stores- Director of Technical Development.

(ii) For Naval Armament Stores- Director of Naval Armament (Inspection).
(iii) Naval Stores - Director of Stores (Production).
(iv) Air Force Stores- D.T.D.P. & A.
Number of samples to be inspected at final inspection is entirely a matter for
Inspecting Authority to decide and may range from 1 per cent to 100 her cent.
11. The physical stock of raw material, plant and machinery, other capital
assets, inventory and other items are taken by DGOF's stock verifiers. They work
under the direction of OFB. Stock taking of components in shop and work in
progress is done by the respective sections.
12. Blank.
13. Blank.
14. Blank.
15. Blank.
16. Blank
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Annexure 'I'
ORGANISATION CHART ORDNANCE FACTORY BOARD
Chairman, O.F. Board

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Staff Function Members Secretary/O.F.B. Operating Division Members
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Member/P&M M Member/Personnel Member/Finance
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P&P Con.of DPS SP M&E CSO PER HRD DH TS CC of A Cof F CIA
Safety (Fys)
MIS Safety DPS SP Market- Sec- HR Medi- Q.C. Ref Ref
Group Group Grp Grp ing & urity Grp cal & to to
P&P Export Group Stnd Anne- Anne
Group Group M&E xurc xure
P.C. Safety II III
Group DPS
R&D
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Member; A&E Member/WV&E Member/M&C Addl. DGOF/OEF HQRS Addl.DG/AV HQRS
Kanpur Avadi
1. C.F. Aruvankadu 1. R.F. Ishapore 1.O.F. Katni 1. O.E.F. Kanpur 1. H.V.F. Avadi
2. H.E.F. Kirkee 2. S.A.F. Kanpur 2. O.F. Ambernath 2. O.P.F. Kanpur 2. O.F.P. Medak
3. O.F. Bliandara 3. G.S.F. Cossipore 3. M.S.F. Ishapore 3. O.C.F. Shahjahanpur 3. E.F. Avadi
4. O.F. Itarsi 4. O.F. Dum Dum 4. O.F. Muradnagr 4. O.C.F. Avadi 4. O.L.F. Dehradun
5. A.F. Kirkee 5. O.F. Tiruchirapali 5. O.F. Chandigrah 5. O.F. Hazratpur 5.T-72Project Avadi
6. O.F. Varaugaou 6. O.F. Kanpur 6. O.F. Bhusawal
7. O.F. Khamaria 7. F.G.F. Kanpur 7. O.F. Ambajhari
8. O.F. Chanda 8. G.C.F. Jabalpur 8. M.T.P.F. Ambernath
9. O.F. Dehu Road 9. V.F. Jabalpur 9. O.F. Dehradun
10. O.F. Bolanair 10. G.I.F. Jabalpur 10. H.A.P.P. Trichy
Annexure-II
CHIEF CONTROLLER OF ACCOUNTS (FACTORIES)
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Headquarter Office C of A(Fys)/Avadi- C of A(Fys)/T-72 C of A(Fys)/Jabalpur Group C of A(Fys)/Kanpur Group JT.CofA(Fys)/
Group Project Avadi Ambajhari group ,
----------------------- ------------------------ ---------------------- ------------------------------ ------------------------------------ ---------------------------
C of A(Fys), A.Os A.Os A.Os A.Os A.Os

Calcutta C.F. Aruvankadu H.V.F. Avadi V.F. Jabalpur Ordnance Fy. Kanpur Ordnance.Fy.
Cordite Fy. Avadi T-72 Avadi Grey Iron Foundry: Small Arms Fy. Kanpur Ambajhari.
Ordnance Fy. Trichy. Engine Fy. Avadi J abalpur. Field Gun Fy. Kanpur Ordnance Fy.
H.A.P. Trichy. A.V. HQr AV. Gun Carriage Fy. Ordnance Equipment Fy. Bahandara.
Jabalpur. Kanpur Ordnance Fy.
Ordnance Fy. Khamaria Ordnance Parachute Fy. Chanda.
Ordnance Fy. Katni Kanpur Ordnance Fy.
Ordnance Fy. Itarsi. Ordnance Clothing Fy. Bhusawal.
Shahjahanpur. Ordnance Fy.
Ordnance Equipment Fy., Varangaon.
Hazaratpur.
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C of A(Fys)!Bengal GroupC of A(Fys)/Dehradun C of A(Fys)IMedak C of A (Fys)/Bolangir C of A (F).s)/Kirkee Group
Group
---------------------------- -------------------------------- ------------------------ ------------------------------------ --------------------------------------
A.Os A.Os . A.O. A.O. A.Os

MS Fy., Ishapore O.L.F.Dehradun O.F.P. Medak Ordnance Fy., Bolangir Ammunition Fy., Kirkee
Ride Fy., Ishapore Ordnance Fy., Dehradun High Explosives Fy., Kirkee
Gun & Shell Fy.,CossiporeOrdnance Fy., Muradnagar Ordnace Factory. Dehu'Road .
Ordnance Fy. Dum Dum Cantt. Ordnance Cable Fy. Ordnance Fy., Ambarnath
Chandigarh. MachineTools Prototype Fy.
Ambarnath.
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Annexure -III
CONTROLLER OF FINANCE
FINANCE MAIN
C.O.F. (I) C.O.F.(II)
J.O.F.(I) J.C.F. (II)
A.F.A.(II) A.F.A. (II)
Finance/Budget Civil Trade Export Pricing Finance P.A.C.

&
Army Issue
Jt. Director/P.A.C.
Dy. Director Jt. Director/ Dy. Director/
Budget Finance M.I.S.
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APPENDIX-1
(Referred to in para 5)
ORGANISATION OF THE ACCOUNTS OFFICE
Head of Office: C of A (Fys)/Jt. C of A.(Fys)/D.C.A. (Fys)/Accounts Officer

depending on the volume of work, Accounts Officers, Asstt. Accounts Officers,
Section Officers and Staff are po3ted to the various sections. The Sections are:-
1. Labour Section, which deals with all claims of Industrial Employees. In the
Labour section there are two groups.
(A) Authorisation group deals with the initial fixation of pay as well as
subsequent changes, higher audit, audit decisions and complaints. Responsibility
for clarification of doubtful points and circulation of important orders devolves on
this section.
(B) Disbursement group deals with actual check and calculation of wages
and other items of work like posting of manufacturing warrants, pricing of day
work and piece work cards, audit of medical reimbursement, TA/LTC claims of
IEs, forwarding of fund schedules etc.
2. Material Section which deals with all aspects of work connected with the
accounting of Material, comprises
Material (Main) Section which deals with scrutiny of Purchase
Orders/Indents far material, Audit and payment of bills of contractors, Linking of
Store Transactions, Maintenance of Priced Store Accounts.
Material (Ledger) Section deals with all work connected with the
maintenance of the Priced Store Ledger including action on physical stock
verification reports rendered by OFB Stock `Verifier'.
3. Costing Section deals with maintenance of Cost Cards, Allocation of

Overheads, Accounting of Capital sets and Compilation of Annual Accounts.
4. General/Administration Section deals with the administration of office and

issue of cheques.
The following items of work are distributed to any of the above sections at
the discretic4i of the head the Accounts Office:
(i) Preliminary scrutiny of pay bills for gazetted officers/NIEs/NGOs of the
factory/allied inspectorates and issue of cheques, transmission of the bills to
the office of the Chief C of A/Fys for post audit.
(ii) Issue of Licence Fee Bills for specified type of quarters and allied work.
(iii) Local audit of accounts of Inspectorates.
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(iv) Payment of bills for advance of Traveling Allowances/LTC advances.
(v) Payment of overtime bills of staff of factory and allied inspectorates.
(vi) Maintenance of Provident Fund Accounts of NGOs/NIEs/IEs and
payment of claims thereof.
Note l. - In the case of Bengal and Avadi Group of Fys, pay bills of
NIEs/NGOs etc. are dealt with finally by the AO concerned. Main Office is
concerned with pay fixation cases only. Thus the pay section of the Office of the
Chief C of A/Fys is concerned with.
(i) Pre-audit of pay bills of all categories of employees in the Ordnance Fact
jry Board A.D.T.D., Calcutta.
(ii) Post audit of pay bills of all categories of employees in the
Ordnance/Ordnance Equipment Factories (other than those in the Bengal
and Avadi Group of Factories). In the case of Gazetted Officers post audit of
the pay bill of the officers in the decentralised factories is also to be
done.TA claims of all categories of employees other than I.Es is audited by
T Section of the Office of the Chief C of A/Fys.
Note 2.- In the case of a new and small Accounts Office separate sections need
not be formed but reference file should be maintained separately according to the
nature of work required to be done in each section so that if office expands there
will be no difficulty to form separate sections.
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CHAPTER-II
BASIC CONCEPTS INCLUDING EVOLUTION OF COST ACCOUNTING
Para
Basic concept of Cost Accounting 17
Development in "Costing" in the Professional Field 19
Cost Accounting Technique 26
Over Heads 29
Reports to Head Quarters 30
Mechanisation of accounts 31
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CHAPTER-II
BASIC CONCEPTS INCLUDING EVOLUTION OF COST ACCOUNTING
17. Cost Accounting is a tool which allows cost to be trimmed by reducing to a

minimum wastage of capacity, materials, services and manpower. It facilitates
close control on inventories. Cost control and Production control are the two wings
of Management control. One is complementary to the other and not a substitute.
The controls are necessary for the efficiency of the ongoing activities. Just as
questionable payments lead to the sickness of a company, so also erroneous and
belated documentation and cost compilation lead to incorrect cost figures, wrong
decisions and avoidable wastage of all resources. To fill in forms correctly, the
staff members should have a fair understanding of the overall system and their role
in the setup. Legibility and accuracy are important prerequisites .r4 to filling of
forms. Clumsy entries and incorrect calculations pose major problems.
Supervisory staff entrusted with the work of Production and Cost control should
be conversant with the subjects like General Management, Industrial Engineering,
Personnel Management and Human Relations, 'Work Study, Time and Motion
study, Job Evaluation, Factory Planning and Plant Layout, Material Utilization,
Material Handling, Production Planning and Control, Plant Engineering and
Maintenance, Wage Administration Techniques, Productivity Measurement,
Product Development and Design, Cost Control, Quality Control, Marketing and
Operation Research. The system of cost accounting should be devised so as to
meet the needs of the business. Promptitude in presentation of cost results is
preferable to delayed presentation with 100% accuracy. Approximate figures
furnished in time, facilitate prompt action. "Objective Outlook" and "Positive
Attitude" on the part of personnel will yield results which will ensure optimum
production at economic costs. Financial Accounting is "Compliance Accounting".
It ensures adherence, to standard rules and procedures and gives an accurate record
of all financial transactions. 'Cost Accounting on the other hand presupposes the
existence of proper link among cost centres, budget centres and responsibility
centres. Cost Accounting facilitates:
(i) The ascertainment of the cost of each product r manufactured.

(ii) Location of products which earn profits as well as other products and their
contribution to the fixed expenses.
(iii) Area where economy is possible.
(iv) Close control on inventory by selective analysis.
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18. While the profit earned is the index 'of efficiency of commercial concerns,
the yardstick for Ordnance Factories which are captive Manufacturing
Organisation; dependent entirely on the requirement of the Armed Forces, is
different. In private industries, estimates of incomes/funds are made first. The
effective way of allocating the income and using it for the economic operation of
the business is determined thereafter. In the case of Government, budgeting of
expenditure is made first. Ways and means are explored to meet the expenditure
(Taxation, Loans deficit financing etc.). In the case of Ordnance Factories,
expenditure is sanctioned for each financial year under Revenue and Capital
Heads. Actual expenditure should be within the sanctioned amount as modified
from time to time. To ensure this, proper monitoring is done. Availability of
finance is thus ensured. This easy availability of funds stands in the way of res-
traint and use. Accordingly the production planning procedure, cost accounting
technique and production oriented financial budget have been constantly reviewed,
with a view to ensuring economic utilisation of resources by adopting the latest
techniques in "Production and Cost Management". With the help of control
accounts, linking of financial with cost accounts is ensured. Figures reflected in
the cash compilation statements show actual expenditure against different heads
viz. Pay and Allowances, Purchase of Stores etc. These will however, not directly
agree with the cost accounts as these are framed on accrual basis and reflect value
of consumption of stores etc. Thus undisturbed Pay and Allowances will not be
reflected in the Cash Expenditure Statements. Provisioning of Materials is made,
in advance of requirements; payments made including advance payments for
purchase of stores are reflected. In 'cost accounts, only consumption of materials is
shown. As materials constitute about two thirds of the cost of production and about
66 per cent of the expenditure under Revenue Head, detailed check is exercised at,
the time of purchase in accordance with the basic concept that effective control on
holding of inventory is possible at the time of procurement. The budget for
purchase of material is carefully framed based on anticipated production. In most
of the private industries cost information is treated s "confidential". This does not
apply to industries selected by Govt. of India where audit cost, has been made
compulsory. In the case of Ordnance Factories, the cost accounts are audited by
the officers of the Organisation of the Comptroller and Auditor General. The
Annual Accounts for any financial year is printed after completion of audit. Apart
from Manufacturing (Production) accounts and "Trading and Profit 'Loss Account"
(Finished Stock Accounts), Balance sheets in the form of statements of Assets and
`Liabilities are made out. In addition information about the cost of "Principal
Items of Manufacture" under the different elements of cost vie.- Labour, 'Material
and overhands, comparative cost of similar ;items manufactured in different
factories; overhead expenses under various , work orders enhance the utility of the
publication. The Introductory chapter in the Printed Annual Accounts sums up the
activities under various heads such as cost of production, 'holdings of inventories,'
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progress, of projects etc. `Graphical charts make the study interesting. In order to
appreciate the significance of the various cost statements and reports, it is
necessary to know: -
(i) the evolution of "Cost and Production Management" in Ordnance Factories

with reference to the "development of the subject in the professional field
(ii) the existing procedure and
(iii) the problems of different levels in implementing the procedure.
Developments in "Costing" in the "Professional Fields"
19. The Institute of Cost and Management Accountants (Loadon) and the
Institute of Cost and Works Accountants of India are the two professional bodies.
In the early part of the century ascertainment of the cost of product for fixing
selling price was the prime, object. There was no difficulty unknown in direct
costs, viz.'direct labour and direct material. The problem was in regard to the
collection and distribution of indirect expenses. These were recovered on the basis
of direct labour. Subsequently to facilitate .comparison between firms
manufacturing the same item, "Uniform Costing Method", were introduced. To
ensure, equitable distribution of overheads the Machine Hour Rate Method was
adopted. Marginal Costing techniques were used for taking decision on vital
matters like:-
(i) Making or buying a product.

(ii) Continuing the manufacture of a product where no profit is earned.
(iii) Utilising spare capacity.
20. Standard costing and Budgetary control procedures ware adopted for pin-
pointing areas of control: Linear programming, programme. Evaluation and
Review Techniques (PERT).and Critical Path Method, (CPM) are the, advanced "
techniques; for production planning, progress and control. Management
accounting techniques enable forecasting of future trend by taking into account
various factors viz. policies, organization facilities, operating method, market
conditions, personnel management etc. Full use is made of Electronic Data Pro-
cessing Machines' for speedy availability of tabulations.
21. The cost of a product is analysed: as under: -
Direct Labour- Labour that can be, charge ' direct to the job
Direct Material-Material required for the job.
Direct Chargeable Expenses-Expenses that can be charged direct.
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Constitute Prime Cost
Prime Cost
Prime Cost+Indirect Expenses

of the Factory Sections.
(Work Overhead) =Works Cost.
Works Cost +Indirect Expenses

of Administration Sections =Cost of Production
Cost of Production plus selling

and distribution expenses =Cost of Sales.
Cost of Sales plus Profit =Selling Price;
22. The methods of "Costing" vary, according to the type of industry. The
methods are job costing/ batch costing/multiple costing/Departmental; cogling,
Process costing, Unit Rate costing, Operation costing, etc. In the Ordnance
Factories, the costing system suitable to the manufacturing activities is adopted.
Thus process costing method is followed in chemical factories like High
Explosive Factory, Kirkee.
Uniform costing technique is employed to facilitate inter-departmental cost

comparison and to quote for "Cost plus Contract". "Standard Costing Methods"
provides for dispensation of cost records for each item of production. By analysing
the' Variances, the difference between estimates and standards are known. The
percentage of variance is applied to Standard cost for arriving at the, actual cost.
23. The principles of cost control and cost ascertainment are applicable: to all
types of business including agricultural firms, commercial banks, educational
institutions, offices etc. The systems are devised so as to locate areas where
controls possible and present figures which will ' give an idea of the overall
efficiency of the organisation, management accounting covers a wider scope.
Systems may be sound. Implementation may be defective. Management
accounting is concerned with areas not covered by financial and cost accounting.
24. To appreciate the cost accounting procedure in the Ordnance Factories

Organisation, it is essential to know about the development of the organisation as
wall as the techniques of "Production and `Cost Control" which very employed
from time to time to meet the requirements of the organisation.
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Code No. Ordnance Factory Organisation

for Mechanical
Accounting
107 (i) Gun Carriage agency for manufacturing and

repairing Gun Carriage was established at Cossipore in
1801. This was renamed as Gun & Shell Factory
Cossipore in 1901.
102 (ii) Harness & Saddler Factory, Kanpur (Now,

designated as Ordnance Equipment Factory, Kanpur)
'was established in 1854. [For other factories, details are
as under;
Code Nos. Factories Year/period

for of Estt. Mechanical
Accounting
101 (iii) Ammunition Factory 1869

Kirkee (AFK)
104 (iv) (a) Gun Carriage Factory 1904-1920

Jabalpur (GCF)
106 (b) Cordite. Factory

Aruvankadu (CFA)
105 (c) Rifle Factory

Ishapore (RFI)
108 (d) Ordnance Clothing

Factory
Shahjahanpur (CFS)
103 (e) Metal & Steel Factory

Ishapore (MSF)
5 Factories
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116 (v) (a) Ordnance Factory 1939-1945
Kanpur (OFC) Second World War
112 (b) Ordnance Factory Katni

(OFKAT)
113 (c) Ordnance Factory .

Khamaria (OFK)
109 (d) High Explosive Factory Kirkee
111 (e) Ordnance Factory Ambarnath (OFAM)
117 (f) Small Arms Factory

Kanpur (SAF)
115 (g) Ordnance Factory

Muradnagar (OFM)
114 (h) Ordnance Factory

Dehradun (OFD)
110 (i) Ordnance Parachute Factory
Kanpur (OPF)
9 Factories
118 (vi) (a) Ordnance Factory 1947-1962

Bhusawal (OFBh)
119 (b) Machine Tool Prototype

Factory Ambarnath (MTPF)
121 (c) Ordnance Factory

Bhandara (OFBA)
120 (d) Clothing Factory Avadi

(OCFA)
122 (e) Ordnance Cable Factory

Chandigarh (OCFC)
5 Factories
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123 (vii) (a) Ordnance Factory 1962

Dum Dum (OFDC) onwards
128 (b) Ordnance Factory .

. Tiruchirapally (OFT)
129 (c) Ordnance Factory

Chanda (OFCH)
126 (d) Ordnance Factory

Varangaon (OFV)
127 (e) Ordnance Factory'

Ambajhari (OFAJ)
131 (f) Vehicle Factory Jabalpur (VFJ)
138 (g) Grey Iron Foundry Jabalpur (GIF)
212 (h) Field Gun Factory Kanpur, (FGK)
140 (i) Ordnance Factory. .

Itarsi (OFIT),
125 (j) Heavy Vehicles, Factory

Avadi (HVF)
142 (k) Ordnance Factory Dehu -

Road (OFDR)
130 (I) Ordnance Equipment

Factory Hazaratpar
(OEFH)
214 (m) Ordnance Factory Medak

(OFP Medak)
243 (n) T-72 Factory Avadi
267 (o) Heavy Alloy Penetrated

Project Trichy (HAPP Trichy)
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269. (p) Engine Factory Avadi
270 (q) Opto Electronic Factory

Dehradun (OLF Dehradun)
271 (r) Ordnance Factory

Project Bolangir
18 Factories
25. These factories are engaged in the manufacture of arms, ammunitions,

vehicles, tanks, clothing items and various equipments for the Army. They render
miscellaneous services to Army, Navy and Air Force. Spare capacity is utilized by
undertaking work for private parties to the extent possible. These are called "Civil
Trade Items". The Ordnance Factories employ about 1, 75,000 personnel of all
categories. The cost of production has gone up from Rs. 71 crores in 1962-63 to
Rs. 2651 crores in 1990-91.
The figures will indicate the vast expansion during the period from 1962-63
to 1990-91. To cope up with the increased activities; the need for comprehensive
review of the cost accounting system and the scope for utilising the new tool of
Management Accounting, was stressed by different parliamentary committee. A
Committee consisting, of experts from Private and Public Sector headed by
the then Financial Adviser (Defence Services) examined the system thoroughly
and made recommendations in 1944 for simplifying' the system and making it
purposeful. At the same time, the organisation set up was examined and -it was
decided that functional integration of the work of Account and Factory would
result in the batter involvement of the personnel in "Production and Cost Control".
This integration took plate-in April 1979. The objectives sought to be achieved by
the formation of ordnance factory. Board is contained in Annexure "B".
Cost Accounting Techniques
26. Little is known about, the system of accounting prior to 1911. Probably,
there was a sort of Budgetary System with limited objectives. From 1911-1937,
the cost of Production was ascertained under 6 elements via, Direct Labour, Direct
Material, Non-Productive Charges, Power and Machinery Charges, Store Indirect
Charges and General Charges. Non-Productive and General Charges were levied
as a percentage on total Direct Labour. Power and Machinery Charges as
percentage of Machine Labour and Store Indirect Charges as a percentage of
Direct Material consumed. Check on utilisation of Direct' Labour and Direct Mate-
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rials, was done with reference to postings on Manufacture and Material Warrants.
These warrants were based on standard estimates for the job. Issues from
production to the Army were priced at rates taken from the Priced vocabulary of
Stores issued by the Ministry of Finance. These rates were based' on imported cost
or latest cost of manufacture or purchase rate form indigenous sources. This
procedure was discontinued from 1941 and issues to Army were treated .as "free"
issues. But wit effect from 1-4-1987 issues to Army is treated as "Payment-Issues".
The issues to private bodies were based on agreed rate for issues to entitled
categories of personnel, the overheads were categorised as "Fluctuating" and
"Fixed" overheads. Fixed overheads were not recovered. As the employees were
on daily rates and could be retrenched according to load position, the wages and
salaries could then be treated as fluctuating.
27. From 1938, the overheads were divided into variable overheads comprising
of Non-Productive, Power and Machinery and Stores Indirect 'charges and Fixed
Charges. As the Ordnance Factories were geared for meeting peak production in
items of war, it was decided to recover only a 'percentage of fixed charges. The
peak capacity was defined as the production in two shifts of 10, hours each for 25
days in a month. 45% of this was taken as Datum Load. Recovery was made with
reference to the fixed charges and direct labour at data load. Due to the outbreak of
war the system was held in abeyance during 1939-49. From 1949 onwards there
were vast changes in the pay Structure and service conditions of all employees.
The industrial employees were on regular monthly gates of pay. Essential
maintenance workers other than unskilled workers were eligible for incentive
`bonus from 1972 onwards. Productivity Linked Bonus is being paid to all
categories of eligible employees drawing emoluments (i.e. pay plus dearness
allowances upto Rs. 2,500 per month) from March 80 onwards. Pay and
allowances, overtime to supervisory and other categories of employee is paid on
the same basis as factory workers. The Dearness Allowance paid to Industrial
Employees, was treated as an item of overhead initially. Subsequently this is
treated as a part of Direct/ Indirect Labour Charges.
28. In the field of Material accounting, the Tissues were originally priced on the
First-in-First out principle. Then the monthly average rate was adopted. This gave
way to the working of the "Weighted Average Rate" after each receipt transaction.
Based on the recommendation of the cost committee, the rates are now worked out
on the basis of the Average Monthly Rate. Provisioning was made on the basis of
"Store Holders Inability Sheets". This has been replaced by "Material Planning
Sheets" prepared on computer. Priced Store Ledgers were maintained on Hollerith
Machines. These were replaced by Priced Provision cum Ledger Sheet maintained
on Remington machines from 1940 onwards. At HVF, Avadi the ledgers are
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maintained with the help of the computer. Ascota machines are also used for
maintaining the ledgers in some factories.
Overheads
29 From 1956 onwards central and shop committee were formed for framing
budgets and watching actual against estimates. The Board of Management with
DGOF as Chairman, DDGOF (Administration), DDGOF (Production), C of A
(Fys) and DFA (Fys) as members met and discussed various issues affecting cost
and production control viz. standard costing, ascertainment and recovery of
preliminary expenses, development charges, deferred revenue, floor time keeping,
even flow of documents, speedy closure of warrants etc.
Reports to Headquarters
30. The production activities of the Factories were reflected in the "Monthly
Financial Activities Reports". The format was reviewed in 1973 and "Quarterly
Financial Review" covering all aspects of production and cost control was intro-
duced. There were other reports like "Concurrent Review of Production Costs" for
selected warrants, "Analysis of Stock Holdings", "Interim Provisional Annual
Accounts" which enabled the authorities to have an idea of the working of
Ordnance Factories with the formation of the Ordnance Factory Board and the
implementation of the recommendation of the "Cost Committee", there is greater
awareness of the need for timely and proper rendition of these statements. Queries
from the OFB on the information furnished as well as redesigning of certain
forms connected with the Management Information Systems indicate the great
importance attached to such issues as Inventory Control, Production Planning,
Labour Utilisation, Optimum production at economic costs, utilisation of unused
capacity etc.
Mechanisation of Accounts
31. Defence Accounts Department introduced the compilation of data by use of

Hollerith Machines in 1934, when little was known about the subject in India.
Necessity for timely rendition of the various tabulations by using the up-to-date
technique available has been under constant review. Tabulations required for
production control, Material Provisioning, Cost ascertainment and control wage
sheets, Financial Budgetary Control, Fund Accounts of all employees of Ordnance
Factory Board and allied Establishments (excluding Accounts Personnel) are
processed with the help of different type of computers installed in the offices of
the DGOF, Chief Controller of Accounts (Fys), Calcutta and Vehicle Factory,
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Jabalpur, Heavy Vehicles Factory Avadi, and certain Accounts Offices.' Scope for
improving the input data and tabulations is under constant review.
32. Cost Accounting is a dynamic subject. This would be clear from the;
development that have taken place in the professional field as well as in the
Ordnance Factories Organisation. Efficient functioning of the Cost Department
depends on knowledge, the officer and staff possess about the various
manufacturing process in the factory as well as the lay-out of the factory and the
keenness evinced by production personnel for cost information. Similarly
employees concerned with the production activities should visit Accounts Office to
appreciate fully the use of the various documents made out, by them and the utility
of the various Cost Report, and Returns. Favorable' variances which are indices of
progress and efficiency are as important as adverse variances, which bring out
short coming and inefficiency. It is the function of the cost Department to cover
both these aspects so that creative action can be taken for 'utilising opportunities
and, corrective actions for improving a deteriorating situation.
33. BLANK,
34. BLANK.
35. BLANK.
36. BLANK.
37. BLANK.
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ANNEXURE "B"
OBJFCTIVFS OF THE ORDNANCE FACTORY BOARD
(i) To accept and meet on schedule, production targets from the Defence
Services where necessary, call for the utilisation of facilities at levels of not less
than 80% of installed capacity. Such installed capacities should b: calculated on
the basis of Scrutiny by high level expert groups.
(ii) To maintain war reserve capacity, both physical and in terms of human skills
so that it can be brought into effect at short notice.
(iii) To provide the user with a high level of service in regard to spares, technical
advice, fault analysis and rectification.
(iv) work to quality standards which meet fully the user's specification.
Incidentally the users in heir turn must also ensure that the specification Have
direct elevance to the end use of' the product.
(v) To work to predetermined cost estimates.
(vi) Flowing from its close selling, contracts with the users of the product, to
design and develop new products technologies/processes making maximum use of
indigenous R&D capability both with in the and outside the DGOF and the
Defence Research and Development Organisation (DRDO).
(vii) To build cadres of professional and forward looking managers in all field
(e.g. production per' sonnet) which in addition to meeting the defence needs are
able to contribute to the larger resources of managerial skills for other sectors
of enquiry.
(viii) To maintain close co-ordination and cooperation between the DGOF and its
customers and suppliers.
(ix) To establish close links between DGOF arid outside bodies such a; State
Government. I.I.Ts, and Universities, National Laboratories, public and private
sector corporations, Institutes of management, professional association and
consultancy organisation so 'that ranging over a wide range of disciplines, ranging
from engineering to finance and personnel, that is exchange of knowledge,
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awareness of mutual capability and potential and where possible interchange of
personnel.
Internal
(x) To examine utilisation of installed capacity where necessary by

diversification of production to meet the demands of the civil product and for this
purpose build up an effective marketing organisation.
(xi) To minimize costs not only based on maximum utilisation of installed

capacity as stated earlier bat work to tight norms in areas such as material wastage,
overheads, materials management, labour capital expenditure ;and working capital.
(xii) To create a planning organisation and capability which sets out demanding
but realistic short and long time bound targets in all major fields or activity such as
production, quality, capacity utilisation, cost of production, design and develop-
ment training of personnel and project implementation. These targets can then be
broken down into tasks for all individual down to the supervisory level within
DGOF.
(xiii) To create an organisation structure for the DGOF which gives these
individuals the necessary authority, resources and freedom of action to hold them
accountable for results in all key areas.
(xiv) To streamline procedure and increase delegation of powers combined with

the retention of the, essential checks and balance to ensure that effective
monitoring is possible at all levels.
(xv) To develop personnel recruitment, selection training and promotion policies

which lay stress on merits and competence based on objectives and rational
criteria and which enables individuals at all levels and in all disciplines to aspire to
the highest position.
(xvi) To develop as strong in house research, design and development

organisation which can ' interact closely with all research organisation like the
DRDO, National Laboratories, suppliers and the users on one hand and
production, marketing, finance and the manufacturing group in DGOF on the
òther so that the pace of product design and development an regular in can be ex-
ited and technology transfer facilitated.
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(xvii) To strengthen the financial management (the DGOF improve management
information and control system, reorient/streamline audit procedure and
strengthen, project appraisal systems.
(xviii)To improve production, planning, control system, production technologies,

safety standards, working conditions and provide effective staff support to the
production unit in areas such as standardisation of raw materials and components,
manufacturing technology, duality control, industrial engineering and material
management.
(xix) To cleats an environment within the Ordnance Factories which; promotes

harmonious relationship throughout the organisation, encourages creativity
initiative and the desire to accept responsibility and, aims generally the highest
level of job satisfaction for all employees. .
(xx) To develop where possible ancillaries and off load as much as possible, the
simpler operations, to outside suppliers and develop alternative sources of
supplier.
(xxi) Maximise pace of indignation specially where there is a single foreign

supplier.
(xxii) To minimise delay and cost over runs in the implementation of projects.
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_____________________________________________________________________________________________
CHAPTER-III
NUMERICAL CODES AND THEIR IMPORTANCE/$YLLABUS OF

WORK ORDERS
Para
Numerical Codes 38
Allotment of Code Numbers 39
Element-of Costs 41
Main Primary documents 42
Kind of Documents (KOD) 43
Extract 45
Work Orders 46
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CHAPTER-III
NUMERICAL CODES AND THEIR IMPORTANCE/SYLLABUS OF

WORK ORDERS
38. Numerical and Alpha Numerical codes are used for purposes of production
and cost control. Tile codes are necessary to avoid the writing down of the details
in wards and for purpose of processing the various' documents through Electronic
Data Processing Machines. When these numbers are prefixed / suffixed by one, or
more alphabets, the system is called Alpha Numerical System. It is essential to use
pre-printed forms with- descriptive headings on all mechanised tabulations, so that
the contents can be easily deciphered.
39. Code Numbers are allotted to the different sections of the factory, office of
the Chief Controller of Accounts (Fys), Ordnance Factories, Accounts Offices,
OFB Headquarters etc. The object is to facilitate compilation of the expenditure to
the various factories/formations. The section compiling the expenditure will be
known from the code numbers allocated for Account offices/ sections of the Main
Office. The compilation is done on a document called "Punching Medium" i.e. the
medium through which information con' tamed are punched on cards for
further processing on EDP Machines. The document contains the following
particulars: -
Month - Identified by two Code viz. 12 for December.
CDA - Code Number of the Controller viz. 07 for Chief

Controller of Accounts (Fys), Calcutta
Section - Code Number of the Section/Accounts office compiling

the amount.
Class of Voucher - There are four classes.
Class 1 - Payment
Class 2 - Transfers
Class 3 - Items adjustable by Defence
Class 4 - Items adjustable by civil
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The main part consists of
On the left hand side
Description Receipt Minus

Code No. Receipt
Right hand side
Code Charge Minus

No. Charge
The system of codification adopted for Ordnance Factories Organization is a

detailed one. The provides for 6 figures on the top and seven figures at the bottom
as indicated below: -
C R MR
001101 (cheque drawn)
01/804/01
The first three digits indicate the unit of Control Code i.e. 001 stands for
"Pay and Allowances of Gazetted Officers".
Next three digits indicate Factory Code. No. i.e. 101 stands for, Ammunition
Factory Kirkee:
At the bottom 01/804/01 -- Pay & Allowances Head,
When cheque for Rs. 2000/- is issued for pay and allowances of officers at
Ammunition Factory Kirkee, the entry will be:
Receipt Charge
Rs. Rs.
C. B. 2000 001101 2000
01/804/01
40. Great care has to, be taken in making out the Punching Medium, as these
form the basis for financial compilation as well as adjustments for cheque drawn
on various treasuries, receipts deposited on Military Receivable Orders etc. Details
of financial expenditure are furnished in the monthly statement of Cash
expenditure ``Statement C" issued by the EDP Section of the Office of the Chief
Controller of Accounts (Fys) Calcutta. This is supported by a detailed statement
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RTC KOLKATA 29
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CCO-2, containing voucher wise particulars via. Month, Voucher Number, Section
Compiling, Factory to which expenditure pertains, Code Nos Amount etc, The
amount booked on account of "Pay & Allowances", "Contingent Charges",
"Maintenance of Buildings" are allocated in Cost Accounts through allocation
sheets. While the initial booking in Cost Accounts is done with reference to Pay
bills, contingent bills etc. final check about inclusion of all bills is done with
reference to the cash compilation statements. Upto data list of Financial Code
Numbers are circulated by the Accounts Section of the Chief Controller of
Accounts (Fys) periodically to all Factories/formations/Accounts Officers/OFB
Head Quarters. Reference to these instructions and the publication of
"Classification Hand Roof; for Defence Service," will facilitate proper compilation
and understanding 'of the figures in Statement "C', CCO-2 etc.
41. Cost of a product consists of Direct Labour, Direct Materials, Variable

Overhead, Fixed Overhead and other charges. These are called element of cost and
identified as under:
11 ... Labour
20, 21, 22, 28 ... Material
36 .... Variable Overhead
39 ... Fixed Overhead
While the tabulations on Labour, Material, 'Overhead Cost indicate the code
numbers for different elements of cost, the class of cost numbers are shown in
Sectional Variable and Fixed Charges Statement's and Master Cost Card
tabulations. These are 1 for Labour, 2 for Material and 4 for other charges.
42. The main primary documents are Day Work Cards, Piece Work Cards,
Demand Notes, Return Notes, Receipt Vouchers, Issue Vouchers and Transfer
Vouchers. While pricing store documents, it is likely that these might have been
overpriced or under priced. Provision has therefore to be made for documents
which provide for minus adjustments viz. Minus Demand Note, Minus Receipt
Voucher, etc.
43. The kind of document (K.O.D) for store documents is as under
Plus Minus
Receipt Voucher K.O.D. 21 K.O.D 29
Issue Voucher K.O.D. 26 K.O.D 24
Demand Notes K.O.D. 27 K.O.D 42
Return Notes K.O.D. 22 K.O.U 47
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RTC KOLKATA 30
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This indication must be given on all documents. Thus a Receipt Voucher
containing one item is initially priced for Rs. 1000 and the correct value is Rs.950
the adjustment will be made out as under:-
Adjustment Receipt Dated

Voucher Number
K.O.D. 29
Folio Description Value Correct Difference

Charged Value
_____________________________________________________________
- - Rs.1000 Rs.950 Rs.50
K.O.D. 29 at top indicates that the difference is minus. This minus figure will be
posted in the Ledger Folio and alto Priced Store Accounts.
44. The receipt and issues of stores are classified according to the sources of
receipts and parties to whom issues have been made. Code Numbers are allotted
for each head of receipt and issues. Thus Code 05 in the Priced Store Account is
for "Local Purchase". Separate Code Numbers are allotted for receipts of stores
from production and stock of different consignor Ordnance Factories. Same
procedures are followed for issue, in addition surpluses, profit on sale of stores,
losses etc. are also shown.
45. Authority for undertaking work in the factory is the Extract issued by the
D.G.O.F. These are divided into five classes viz.:
(a)Class I . .. For issue to Army
Class II ... Payment Service
Class III ... Inter Factory Requirements (demand)
Class IV ... Manufacture for stock .
Class V .. Capital Works
Numbers are allotted in serial order.
In addition to the above the following may also constitute authority for the
work.
(b) A requisition from an Ordnance Depot for minor repairs costing below
Rs. 1,500.
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(c) A.G.M.'s order called a "Supplementary Work Order Draft" for petty
casual work or minor internal factory services or repairs and, maintenance or for
departmental store orders.
Note 1- All S.W.O. Drafts will be post-audited by the A.O. If the work is
executed in piece work system, details of operations, estimated time
required for each of them, class or grade of labour to be employed and the
average rate therefore for each of the operations, the actual amount of
money in rupee for each of these operations, etc. always be shown in the
drafts or be made available to the Accounts Office.
Note 2- While post auditing the S.W.O.Ds issued for maintenance and repair
work to particular item, of plant and machinery, the A.Os should consult the
Machine History Cards maintained by the Factory to examine that the
expenditure on repairs is not unjustifiably heave when compared to the book
value/purchase cost of the asset. It should also be ensured that sanction of
the D.G.O.F, is available to incur repair .expenditure costing Rs. 500 and
more on any asset, which is held at nil value vide Government of India,
Ministry of Defence letter no. 574/IS/ II/D (Fy) dated 6th July, 1959.
Note 3- Spot estimates instead of detailed ,a estimates will fee prepared by the
Management in respect of small orders, which expression would cover an
order, individual or bulked, in which the estimated value of aggregate direct
labour ;charges, (indirect labour charges in respect of the jobs done- on
indirect work orders) does not exceed Rs. 100. In the case of a service order
of urgent (Priority) category, the limit of "Small Orders" may be raised so as
to include orders covering direct labour value (indirect labour value in
respect of the jobs done on in (direct work orders) upto Rs. 250.
(d) A GM's order for replacement of rejection in the' course of manufacture.
46. Manufacture and Material Warrants are slued used on "Standard

Estimates". The "Standard Estimates" are allotted numbers as per local
requirement. Regarding work orders, these consist of 9 digit code numbers. The
first two digits indicate the Main Work Order. The next five digits indicate the
particulars of work and the last two digits indicate control codes. For indirect
Work order 0 in the third digit of the Main Order indicates debit 1 in the third digit
of the Main Work Orders indicates credit i.e. minus figures. The last two figures of
the work order indicate the section for 'which expenditure is incurred.
47. Details of work orders common to all factories, codes as well as Process
Work Orders are contained in the Syllabus of Work Order Part I issued by the
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Chief Controller of Accounts (Fys). For items production peculiar to a factory,
details are contained in Syllabus of Work Order Part II. The allotment of numbers
is controlled by the General Manager. For proper allocation and ascertainment of
the overhead expenses, it is essential that a thorough ,study' of the different work
orders under 01-Fixed charges and 02-Variable charges as detailed in the syllabus
of Work Order Part I is made by all concerned with production and cost
management.
Excepting the "indirect expenditure" under W.O. serials "01 and 02" in the
first part of the syllabus, the expenditure on all work orders is treated as "direct
expenditure".
48. Warrants are allotted five digit numbers. The last digit is utilised for
indicating type of expenditure viz. tool expenditure, replacements etc. System of
numbering is left to the requirement of each individual factory.
49. Raw Materials are allotted ten digit cod numbers. The first two digits
indicate the section in the vocabulary of Army Ordnance Stores. These Code
Numbers facilitate proper identification an accounting of stores. The Material
Inward Slip, are allotted, continuous serial number through the year. Alpha
numerical system is used for numbering stock and production receipt and issue
you chers by prefixing or suffixing the letter "S" for; transactions relating to stock
and "P" for production issues. The allotment of serial numbers is necessary, for
tracing a transaction at a later date and for ensuring that all documents processed
during a period are received and accounted for. Last batch certificate are issued
indicating the last number allotted am blank numbers for, each kind of document
for each month to the Accounts Office. Materials are requires to be accounted for
in terms of numbers, weighs length, area, volume etc, The unit to be accounts for
vary from item to item. These units are allotted two digit numbers thus "40" stands
for numbers. The, correct unit of quantity should b quoted on all documents. If the
unit of quantity is Kilogram and if the unit for Ton is quoted, the, pricing at the
rate per Kilogram will lead to heavy under pricing.
50. The industrial Employees are identified by Token Numbers. These

numbers change when they are transferred from one section to another. These
token numbers are quoted on all labour documents viz. Presentee memo Muster
Rolls, Accounts. Records for wag calculation, Day Work 'and Piece Work cards,
Fun applications overtime memo etc. The Provider Fund Account allotted by the
Office of the Chic Controller of Accounts (Fys) remains the same for any
individual during his entire career in the factor organisation. One of the main
requirements in processing claims is the quoting of correct Fun Account Number.
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51. Buildings, Plant and Machinery and other assets including inventory items
are identified by Alpha numerical or Numerical codes called Register, Numbers
allotted to them. Physical stock verification is done with reference to the numbers.
To ensure that all instructions issued on administration/ audit matters are received
by all concerned, the Office of the Chief Controller of Accounts (Fys) issues "AN"
and "AT" series orders serially numbered during a calendar year. It is the responsi-
bility of the recipients to call for missing numbers. Thos, the dual object of
dispensing with acknowledgement in cacti individual case and ensuring receipts of
all orders is achieved.
52. The entire system of financial and cost accounting is dependent on the
timely receipt and; proper accounting of all documents. Any dilution in" watching
these basic aspect results in serious distortion of cost and financial accounts. Thus,
if 500 Receipt vouchers are made out during a month and only 400 are received in
the Accounts Office, then the non-accounting of these balance 100 Receipt
Vouchers results in understanding of stock holding. Working out of Monthly
Average Rates in respect of 'the items unaccounted for will not be correct. The
payment made/debits received will remain unlinked. Prompt action for ensuring
the despatch of all documents is the responsibility of the factory authorities.
Careful watch for ensuring the receipt and accounting of all documents in the same
month and accounting in time devolves on the Accounts Office. The system
basically is to note in the register the date of receipt against cacti serial number of
the particular document and call for mi s sing numbers. Vouchers intimated as
blank will be excluded.
53. The correct compilation and allocation of expenditure is of paramount

importance. The watching of expenditure against projects is possible only if
correct Head of Account is quoted on all documents. if an advance of traveling
allowance is paid in connection with a journey for a particular project to, an
Officer of the DGOF, the amount will be booked to the Expenditure Head of
DGOF instead of the Project, if indication to the effect that the journey is in
connection with the Project, is not given on the bill. Similarly erroneous quoting
of work orders lead to incorrect cost compilation statements. Proper supervision of
the Work of staff engaged in the preparation and accounting of Primary documents
is necessary for ensuring that (i) the entries are clear (ii) the Code. Numbers
quoted are correct. If entries of any work order or financial code is not clear; the
keypunch operations will indicate the work order as "00000" and leave the
question of rectifying the mistakes to the Accounts Offices concerned. The tracing
of the documents and rectifying the defects consumes the times of both Accounts
and Factory, personnel. Quoting of wrong or fictitious work orders and warrants
leads to incorrect presentation of Data and waste of time and energy in rectifying
the mistake. Serious view is taken of 'mistakes 'in the "Punching Medium"' if
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erroneous code numbers are indicated. The EDP section and DP section of
DGOF's office are service sections. The correctness of the output depends on the
"Input Material'". The aim should be to make out the primary documents properly
and price them correctly.
54. BLANK
55. BLANK.
56. BLANK.
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CHAPTER-IV
SYSTEM OF COST ACCOUNTING IN ORDNANCE FACTORIES
Para
Basic Concepts 57
Job Costing 58
Marginal Costing 60
Standard Costing 61
Objectives 62 Foundry
Costing 63
Timber Costing at G.C. Factory Jabalpur 65
Leather Costing at O.E. Factory Kanpur 71
Process Costs 92
Civil Trade Orders 99
Comparison Cost. Between Factories Manufacturing the same Items 109
Items Kept out, of Production Accounts 111
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CHAPTER- IV
SYSTEM OF COST ACCOUNTING IN ORDNANCE FACTORIES
Basic Concepts
57. Most of the items manufactured in Ordnance/ Ordnance Equipment

Factories are man produced. In the case of commercial firms, the practice is to cost
the product each month on the basis of the actual output and actual expenditure
and also compare with the rough cost fixed for the product at the beginning of the
year. This would mean here is no lot identity but this, in turn, entails very, good
planning and progressing to ensure adequate supply of materials and also control
over rejections. In the case of Ordnance Factories, the production authority in the
form of a warrant is for lot quantity. The system is basically sound one, and it is an
advantage, that the system covers all the factories. As the Ordnance Factories have
any lines of production in the same factory and Sometimes in the same shop, the
system of costing by warrants (Job Costing) has the following distinct
advantages:-
(i) Orders are placed on the shops in the shape of manufacture and material
warrant for convenient batch or quantity which can be completed in three
month,
(ii) Warrant along with the standard estimate forms the main instrument for
control over utilization of labour and material on an individual job or batch.
This also forms the basis for compilation of cost
(iii) Warrant is the authority for utilization of labour and drawl

of materials.
(iv) Expenditure incurred under the elements òf cost viz. Labour, Materials,
Variable Overheads and- Fixed Overheads are collected warrant-wise.
(v) After the closure of warrant the actual cost is compared with the
estimated cost under different, elements of cost.
(vi) Comparison between the costs of production on warrants for the same
items, during different periods, enables location of variances and the causes.
Remedial measures as necessary can be taken. Speedy cost ascertainments
depends on the timely closure-of warrants, timely rendition of all primary
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documents, the timely receipt of cost tabulations from EDP Section and,
prompt action by Costing Section.
The factors that stand' in the timely closure of warrants are:-
(a) Non-availability of or interruption in supply of components/materials.

(b) Frequent change of priorities in production.
(c) Tying up of component manufacture with the corresponding main warrants.
(d) Awaiting sentence from inspection authorities.
(e) Non-availability of packages/containers in time.
(f) Interruption in production due to break down of Plant and Machinery.
(g) Non-preparation of the accounting documents by production shops.
Review of these factors is made with a view to ensuring the closure of

warrants within the time limit prescribed.
58. Under this system of Job-costing, the ascertainment of cost is possible only
after the closure of warrants. In the case of items which are in the process of
manufacture as on 31st March of any year, evaluation of the work in progress is
made and the cost of production is worked out as:-
(a) Expenditure during the year minus value of closing semi cost of
production.
(b) Cost of Production, divided by the number of unit manufactured gives
the rate per unit. This rate is worked out correct to two decimal places. Apart from
the system of job costing, Process costing method is used for Chemical
Factories.
59. Costing Methods are different for conversion of timber, foundry etc.
60. The technique of "Marginal Costing" is employed while quoting for the civil
trade. The object is to utilise idle labour and facilities available to the extent
possible. Details of the system are at Para 99.
61. Standard Costing stem envisages the determination of standard

compilation of actual and working out of variances in respect of Direct Labour,
Direct Material and Overhead for each component, sub-assembly or assembly
manufactured against a warrant in a section of the factory.
By applying the variances to the standard cost, actual cost is ascertained.

Cost Cards for individual of 'manufacture arc not necessary. Due to constrain like
proper floor-time keeping, fluctuating, production programme, necessitating in
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RTC KOLKATA 38
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extending , the periodicity of warrants for considerable length of time and belated
documentation, standard sting could not be introduced so far.
Objectives
62. The object of maintaining cost card is for purpose "Cost Ascertainment" and
"Cost Control' analysing figures of, variations into facts in its time perspective,
so that the management may be aware of the cost results for any timely action,
when deemed necessary. Closing of Cost Card, compilation, of process costs,
Foundry Costs etc. are very important items of work requiring keen insight, extra
inquisitiveness, intelligent scrutiny, sound judgment and above all promptitude in
action.
Foundry Costing
63. Blooms, billets, rods arc produced by open hearth, electric steel furnaces.
Foundry work orders 03/ 00001/ 00-Iron Foundry, 03/00002/00- Steel Foundry
and 03/00003/00-Brass Foundry are operated. The procedure consists in arriving at
a unit rate per kilogram of castings produced. Foundry Cost Statement Form I is
made out by Labour section posted from Foundry Form III (metal statement and
process statement) which gives details and value of material consumed and Form
II (Foundry work record) which gives labour charges. Variable and Fixed Charges
are calculated on the basis of labour charges. The total expenditure divided by net
total weight of castings produced gives the rate r unit weight. The moulding rates
of the casting very according to the type of casting produced. The labour charges
are allocated direct from Form I to, the relevant castings after adding variable and
fixed overhead expenses. A watch is kept on the percentage of loss to the total
quantity manufactured. An abstract is prepared by "Costing Section" debiting the
out-turn order by credit to the elevant Foundry work Order.
Important Items
64. (i) Costing Section will check the quantities for which payments have been
claimed in Form II (Foundry Work record) with the total weights of castings issued
as per Form II for which the metals had been expanded. Any discrepancy in regard
to under/ over payment of labour or excess drawl of materials in relation to the
quantities shown in the statement is settled with the management.
(ii) In order to arrive at the total cost of a particular job, undergoing

different operations, the expenditure incurred in previous months is linked up with
that incurred for the remaining operations for the same job in subsequent months.
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RTC KOLKATA 39
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(iii) Steel Ingots arc classified into four types, according to their
composition viz. plain carbon steel, nickel steel, temper steel and alloy steel.
Mould charges are ascertained on uniform basis. As different materials are
expended for different ingots, the material value is ascertained separately for each
type of ingot.
(iv) Electric Furnace: Procedure followed is the same except that electricity
charges are accounted in Form I.
Timber costing at Gun Carriage Factory, Jabalpur
65. Logs of various kinds of timber are accounted for in the Bin Cards/Store
Ledgers. These are drawn for conversion into planks. A monthly statement is made
out by the Saw mill Section for conversion of Log/sleeper to planks.
The columns are: -
_____________________________________________________________
Element of Quail- Rate Value Recoveries of
Cost tity per cft
in cft of log
_____________________________________________________________
1 2 3 4 5
_____________________________________________________________
Materials Fire Wood (Ord)
Opening Fire Wood Balance
Selected Saw Dust
Drawals Off cuts Gr. I
During the Off cuts Gr. II month
D. No. and Return to the
Date stored Balance in
Hand on Planks
Direct Labour Groups IRO 1
Variable IRO 2
Charges % IRO 3
Fixed Charges IRO 4
IRO 5
IRO 6
IRO 7
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RTC KOLKATA 40
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IRO 8
IRO 9
IRO10
Total Plank Produced
to Difference due to less or
excess Timber.
_____________________________________________________________________________________
Quantity Return Rate per Value

in Cft/Cwt Note No.
& Date
--------------------------------------------------------------------------------------------
6 7 8 9
------------------------------------------------------------------------------------------
Distribution of Cost
--------------------------------------------------------------------------------------------
Wt. WO. I Note In Cft Size Value
No. No. No. &
Date
--------------------------------------------------------------------------------------------
10 11 12 13 14 15
--------------------------------------------------------------------------------------------
66. The Debit side consists of Opening Balance of Logs and drawals during the
month. To the value of these, labour expended on conversion of logs and
overheads charges on the above are, added, from this, the values of Timber Fire
Wood and 'Saw, Dust recovered,' Logs returned to Stores and tog in hand is
deducted, to arrive at the cost of a lank produced. The Planks are graded in 10
groups according to quantity and size of Planks. Quantities of various groups of
Planks are posted against each group. There is a mid-weight fixed by the factory
for Planks of each group. Total of mid-weight for all Planks is worked out and
thereafter the rate per mid-weight is determined. By applying the rate, the total
value of Planks of various groups is calculated. Loss in conversion of Logs to
Planks is reviewed with reference to the scales fixed and regularisation action
taken where necessary.
67. The Planks are required to be seasoned. Kulu seasoning of the Plank is done
and the expenditure on Kulu-seasoning is distributed monthly to the Planks
through Kiln Cost Distribution Sheet. Along with the "Kiln Cost Distribution
Sheet" an Allocation Sheet giving the Ticket Numbers, Rate of Pay and
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Designation of each IE employed against WO Number 03/00303/00 Kiln
seasoning of Timber is furnished. Kiln seasoning consists of: -
(i) Labour charges including overheads.

(ii) Steam Cost as (per Allocation from Steam /Cost Statement and
(iii) Material if any from Material Abstract.
This Seasoning Capacity Time X Rate

Cost
Rate Seasoning Cost

Capacity X Time
68. Based on the rate, the distribution is made to different planks as indicated
below: -
Kiln Cost Distribution Statement
Seasoning Rate/Day 100%Capacity
Seasoning Cost Total P.C. Capacity X Time X

Rate X Day
--------------------------------------------------------------------------------------------
Size Stock-in-Hand Receipts
Qty. Value Qty. Value
1 2 3 4 5
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Total Stock Closing Balance
Qty Value Rate Qty. Value
6 7 8 9 10
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Planks Seasoned Seasoning Charges
Qty. Value PC Time
Capacity
--------------------------------------------------------------------------------------------
11 12 13 14
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RTC KOLKATA 42
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--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Seasonal Cost Total cost Rate per Qty,
Col. 12+Col.15
--------------------------------------------------------------------------------------------
15 16 17
--------------------------------------------------------------------------------------------
Distribution
Qty Value.
W.O. Wt. Rt Vr
No. No. No.
--------------------------------------------------------------------------------------------
18 19 20 21 22
--------------------------------------------------------------------------------------------
69. The quantity shown against "08" series of work order under column 13 of
the Timber Balance Sheet i.e. Saw Mill Section Statement should agree with the
quantities of planks seasoned as per Kiln Cost Distribution Sheet.
70. The special features are thus the distribution of "Kiln Cost" and the
allocation of expenditure on suitable basis to various types and sizes of planks
produced.
Processing of Leather at Ordnance Equipment Factory, Kanpur
71. Processes involved are:
1. Liming, fleshing and de-haring

2. De-liming
3. Colouring
4. Handlers
5. Layer (Buffalo and Hides)
6. Drumming (Bellies only)
7. Removing at replacing and circulating (Bellies only)
8. Final washing (Buffaloes and Cow Hides)
9. Oiling, shedding and final weighment (Bellies only)
10, Oiling, drying and final weighment (Bellies only)
72. There are separate work orders under 41: series for (1) to (10) above.
Buffalo hides, Buffalo bellies and cow hides receive different treatment.
Hence piece works rates for one and the same operation vary. Separate process
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statements are prepared at the end of each quarter. Buffalo hides are divided into
grades.
(1) A.B.C.
(2) D.E.F.
Separate cost statements are prepared for grades 1 & 2.
Liming, Fleshing and Unhairing
73. Dry raw hides on receipt in the Factory are put in lime pits for about 12
days. Raw material for this process is lime only. After this the hides are taken out
and unhide. The accepted hides are weighted in their limed state. The accepted
hides are paid for at the contract rate and brought to account as such. The rejected
hides are returned to the contractor and recoveries for liming charges on these
hides made at a fixed rate and credited to the process. Recoveries on account of
sale of fleshing etc. are credited to the Buffalo and cow hides in proportion to the
weight of the accepted hides and taken as a credit to hide cost.
74. Cost of process material like lime etc. is distributed in proportion to the
limed weight of the hides accepted during the quarter.
75. Water charges is allocated with reference to water Cost Statement to the
Tannery and Curriery Section. Water charges for Tannery Section is distributed to
Buffalo and Cow hides work orders in proportion to the weight of the accepted
hides. This is again distributed to the operation as under: -
Liming, fleshing and unhairing - 50%

Deliming -- 20 %
Leach House - 30
76. Bellies are cut off from accepted buffalo hides after liming and they are
transferred to the appropriate work order at the fixed rate for being treated
separately from the operation of deliming.
Deliming
77. Process materials are acid boric and cost of water. The accepted Bellies and
shoulders are priced at 20% and 50% respectively of the cost of the whale; hide.
Balance represents the butt' portion of the hide.
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Acid Boric drawn on buffalo hides work order is distributed to the Buffalo
hides, Buffalo, bellies and Cow hides at fixed percentages.
Colouring
78. The hides are rotated in a lattice drum containing weak tan-liquor to give
them a uniform colour. No material is debited to this process as the value of weak
tan-liquor is reckoned as "NIL".
Grinding of Bark Baboul and Myrabolam
79. Ungrounded Bark Baboul and Myrabolams are drawn against the relevant
41 series work order. The ground stuff is returned to stock on C.S. Voucher. The
ground stuff is priced at the purchase cost plus grinding charges. The difference
between the weight drawn and weight returned represent loss and is charged to the
process. This loss is carefully scrutinised. Rates for ground stuff are standardised
and no adjustments between the actual cost and the cost already charged are made.
Leach blouse Expenditure
80. The ground bark and myrabolam are redrawn on 41 series work order
provided for leach house where they are made into liquor ready for supply to tan
and layer yards. Strength of liquor is determined by Bark Meter Reading. Unit of
liquor is represented by 5 degrees Bark Meter Reading. To charge the cost of the
liquor to various processes, the following documents are furnished by the factory:
(i) The leach-house liquor transfer register.

(ii) The tannery liquor transfer register.
(iii) Leach House Production Statement No. 1.
(iv) Leach House Production Statement No. 2.
(v) Leach House Production Statement No. 3.
Items III to V above represent cost data in respect of liquor which is allocated to
the various processes with reference to item (i). Transaction at (ii) above is
incorporated in those at item (i).
Handlers
81. The hides are put in pits containing liquor and are gradually moved into
stronger and stronger liquor. In addition to the value of liquor charged from Leach
House, the value of other materials consumed in this operation as obtainable from
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RTC KOLKATA 45
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the Register of Bark and Myrabolam are added to àrrive at the completed cost of
process materials. The hides found in the pit as on 31st March are priced at the last
operative rates plus the amount of labour, material arid overhead charges incurred
in respect of their part finished stage.
Layers
82. After the above process, the hides are put, in pit duly arranged in layers.
Buffalo hides take two layers while cow's one or two. The duration of each layer is
one month. The layer pits are filled with fresh strong liquor. Details of materials
used' "other thin liquor is obtained from the register referred to above and value of
such materials is debited to the work order. Hides lying in pit are valued on the
same basis as in the process for Handler's.
Drumming, and removing and replacing in circulation
83. The operations are similar to "Handlers" and "Layers" Buffalo bellies
undergo these operations. Liquor from Leach House and other materials consumed
are debited to this work order. Bellies found in drum or circulated as on 31st
March are priced in the same way as hides in pit.
Final washing
84. Very weak liquor is used after washing, the hides are sent to Curriery
section for oiling and shedding. This operation forms a part of Tanning. The hides
are rubbed with coal oil and when dried they are washed and transferred to stock
as Tanned Hides through stock vouchers.
The weight of limed hides minus the weight of tanned hides represents loss
which is charged to the process.
Oiling Drying and final weighment
85. The buffalo bellies after drumming on circulation, are oiled with Kromoline
in Tannery Section and when dried they are forwarded to stores and brought on
charge as Tanned Bellies. Difference in weight between limed and tanned weight
is treated as in the case of Buffalo & Cow hides.
Curriery process cost statement
86. In the Curriery Section, tanned hides are dressed with cord oil, tallow etc.
Share of Water charges from the water cost statement is debited to the process
work orders. The curried and converted leather is brought into account under 15
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RTC KOLKATA 46
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heads as detailed under 41 series of work order. Process material and tanned hides
are drawn on 41 series of work order. All curried and converted leather is
transferred to stock.
87. Factory furnishes every month, statement showing the number of hides and
their weight in respect of all.
(i) Curried and converted leather.
(ii) Opening and Closing Balance of currying and conversion materials as
well as those of unfinished hides.
(iii) Allocation of Currying - and conversion materials.
Various items of cost (viz. Labour, Material and Overhead) are collected in
the proforma and cost of finished leather is worked out therein, variations are
analysed. Standard rates are adopted for pricing tanned leather. Copies of
statements are forwarded to the C.C. of A (Fys) and the G.M.
Cutters Shop
88. All sorts of leather are drawn on work order 03/00006/99. Leather is cut and
charged to various out turn orders. A daily record (H&S Form 39) for all leather
transactions is maintained by the shop. The information regarding the quantity of
leather used in manufacture is collected monthly from the piece work cards which
are sent by shops. All recoveries such as cutting, pieces and splits etc. are returned
on Return Notes to the credit of the above work order. An annual balance sheet is
drawn up showing the above transactions'.
89. Difference between the total quantity of leather drawn for cutting and
that charged to out turn is determined and a percentage to total quantity drawn is
worked out and compared with previous year's figures. The difference is generally
due to in alteration which occurs in the Curriery Section receiving the leather from
the Cutters Shop for conversion or, alteration. Monetary difference between the
original values of the cuttings splits etc. and the sale proceeds is eventually
distributed over the production. The percentage is standardised, for adoption, in
the next year's account.
90. Accounts Office prepares a monthly abstract showing the quantity utilized
on, different work orders as per Piece Work Cards. The quantity is then priced at
the standard rate. To the value thus arrived at, standard percentage of loss is
added Monthly Punching media showing the value is sent to EDP Section for
inclusion in the transfer voucher abstract.
Modern Method
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RTC KOLKATA 47
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91. The method is in vogue from 1978 in Tannery Section in addition to drum
tanning method of processing, leather following are the process which are
common ;-
1. Liming Fleshing and Unhairing.

2. Bathing.
After "Bathing" in the new method, buffalo hides, including bellies are
divided into two parts. Process is (1) Pertaining (2) Scudding (3) Rocking (4)
Drumming (5) Layers (6) Washing (7) Punching and cutting and carrying to
Curriery, Section.
In the old method, Buffalo bellies and buffaloes tanned butts are processed
separately. In the modern method, both leather buff and tanned bellies are
processed together. In Curriery Section, sole side leather is produced and the
process is considered as complete.
Process Costs
92. Certain items of production pass through various stages or processes before
the final product is obtained. For each such process, separate accounts are
maintained known as process accounts. To compile process accounts, it is
necessary to have a flow chart of production. The various process work orders are
listed in the Syllabus of Work Order Part 1 (1979) Edition under "03" series.
93. Basic principles in the compilation of process costs are:-
Labour:-Direct Labour booked by the Section for each process is obtained

from Labour Abstract.
Materials:-Material Abstract will contain value of materials drawn; every

Process Section furnishes the quantity of material demanded and material
expended. The value of material expended is arrived at. Further, materials
common to two or more work orders are the first instance demanded by the
Section under one Work Order and. then transferred to other Work Orders by a
Transfer Voucher. Such figures are compiled from Transfer Vouchers.
Variable Overheads: These are divided into
(i) Allocated Overheads

(ii) Unallocated Overheads
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RTC KOLKATA 48
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_____________________________________________________________________________________________
Repair and other charges such as electricity, steam, compressed air and
refrigerated water etc. that can be directly allocated to a process are called
"Allocated Overheads". Other indirect charges incurred by the Section itself or by
other Section and the Overheads thereon cannot be directly allocated to a
particular process are compiled separately and are then distributed to the process
concerned on direct labour charge basis.
Fixed Overheads leviable are being absorbed on the current level of production.
94. In addition, departmental materials are also used in the manufacture of

certain process material. They are also valued at the previous month's rate and are
compiled under charges incurred in manufacture. Acid Sulphuric is priced at pre-
determined standard rate which is to be reviewed from time to time, as necessary.
95. Waste acids are recovered from certain processes and they are again utilised
in production after necessary purification. The waste acids are priced at pre-
determined rates which are arrived at the beginning of each financial year, with
reference to the purification/concentration, cost, incurred during the previous
financial year in, the following manner: -
Cost of pure acid recovered minus cost of con cent ration/purification

charges in the shape o labour, overheads, raw materials etc. will be the
concentration/purification charges in the shapes of labour overheads, and raw
materials etc. will be the cost for the input i.e. quantity of waste acids purified/
'Concentrated. Thus a rate per unit is arrived at which forms the pre-determined
rate of the waste.
96. The total expenditure incurred in a process fist of (i) Direct Labour Charges
(ii) Raw materials (iii) Overhead Charges-Allocated variable overheads, Fixed
Overheads Charges and Departmental Material. The total of the charges form the
cost of production for a particular month.
97. Every month the management furnishes the Accounts Office with a
statement showing on the receipt side the quantity of the process materials educed
and of the opening balance from the previous months and on the issues side
quantities Sued and the closing balance. The value of the opening balance is
obtained from the previous month account and is added to the value of production
wring the month and an average rate for the month; worked out. The issues are
priced at this rate. Transfer vouchers are made out debiting the work order and
crediting the process material and forwarded to E.D.P. Section for incorporation in
the Master Card Tabulation.
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RTC KOLKATA 49
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Note: - The process cost will be worked once every quarter. In order,
however, to avoid delay in the closing of cost cards relating to out-
turn warrants the following procedure will be followed.
98. The production and issue statements, showing issues from process will
continue to be received monthly as at, present. The issues to the out-turn work
order during the first two months of the quarter will be priced at the latest
available average rates. Necessary transfer vouchers will also be prepared monthly
as at present by operating classes of cost 22 and 23. As soon as the process
accounts for the quarter are finalised consequential adjustments to the cost of
issues made in the first two months of 'the; quarter will be carried out and included
in the transfer vouchers for the third month of the quarter.
Civil Trade Orders
99. The policy of the Government is to utilise the spares capacity available,
after meeting service demands for the manufacture of stores etc. for sale to Civil
Trade, other non-military departments (including Central and State Governments,
Public Bodies, Municipalities, Local Board and Other Semi-Government
institution and Foreign Governments). Manufacture is undertaken against 80, 82,
83, 84 and 88 series of work orders. The OFB/GMs are authorized to fix the
quotation price without prior concurrence of A..O. /C.C. of A (Fys). The Accounts
Office prices and checks the arithmetical accuracy of the estimates. He ensures
that orders issued by Governments are not overlooked. Pricing of all materials
other than non-ferrous scrap is done with reference to market or controlled rice.
Minor difference between ledger a market/controlled price may be ignored and
ledger rates may be adopted where market rates are not available. Price of non-
ferrous scrap is fixed on the basis of the Value of Grade I Scrap as given in "The
Eastern Metal Review". The prices of other scraps are calculated on the basis of
the percentage given in the relevant orders.
100. The minimum price will include Direct Labour+Direct Material and full
variable overhead charges plus the cost of such staff as ma have to specially be
retained or entertained for the work.
101. For Civil Trade Quotations (other than Export and Non-Military
Departments including Central, State Govt. etc.), the minimum price will be direct
labour plus Direct Material plus as much of variable charges as the market can
bear. The amount of variable Charges to be levied is left to the discretion of the
OFB.
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102. The maximum price is the minimum price as referred to above plus fixed
charges plus appropriate share of preliminary expenses where applicable. The
profit or loss is calculated with reference to the total volume of civil 'Trade done
by a factory in a year. Export prices are fixed by Director (Export) Ministry of
Defence in consultation with IFA (DP). Payments for Civil Trade Orders
103. All civil indentors are required to pay according to one of the following
methods
(A) CASH WITH ORDER
1. While issuing quotation, the factory will write to the party to send a crossed
Demand Draft in favour of the General Manager of the factory for the value of
stores. The demand drafts will invariably be on the State Bank of India of the place
where the factory is situated.
2. On receipt of the demand draft, the General Manager will make

endorsement on the back of it in the manner as ascertained from the State Bank.
3. The Demand Draft will then be deposited by the factory into the State Bank
of India on a Military Receivable Order in favour of the Chief Controller of
Accounts (Fys), Calcutta.
4. On receipt of the receipted copy of the M.R.O. the State Bank of India, the
factory will under, manufacture/issue of the Civil Trade items.
In general, pre-payment need not be insisted upon from the Government
Departments (including State Government) and recognized firms of known
financial stability, provided the General Manager/Officer-in Charge is personally
satisfied that this will not result in loss to Government.
(B) SECURITY DEPOSITS
The Security Deposits should be for such amount as to cover the entire cost
of material to be provided for the order (or likely to be delivered in a period of
three months at the maximum rate of out-turn possible) and other contingent
expenses the full cost of preparatory tools and equipment) labour and overheads
for the first month's Production at the maximum cost. Subsequent monthly
payments shall be made to the extent of the-value of order likely to be completed
and the work-in-progress, in each month.
Note: - This is only for major orders of considerable `value covering several
months' work for which no credit is to be extended to the firm.
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RTC KOLKATA 51
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(C) CASH MONTHLY
Payment for stores issued shall be made monthly. -Full settlement of the
monthly bill must be made within 15 days of the close of the month to which they
pertain.
(D) CASH ON DELIVERY
Full payment must be made by a banker's draft within one week of receipt
of the stores, within one week of dispatch of stores (at owner's risk) by Railway or
one week of the receipt of the Railway Receipt from the factory whichever is
earlier. The mode of payment as enumerated at para 5(c) and 5(d) above should be
allowed with utmost caution and only in respect of commercial houses of
exceptional good financial standing, provided the G.M. is personally satisfied that
this will not result in loss to Government. In cases of doubt, regarding the financial
standing of the party, the question should 'e decided by the O.F.B.
(E) IRREVOCABLE LETTER OF CREDIT
An irrevocable letter of credit established with the State Bank of India or

any Nationalised Bank in favour of the Chief Controller of Accounts (Fys) for the
total value of the order may be accepted as an approved method of advance
payment for stores indented for. In the case of Non-Nationalised Bank, the letter of
credit would require the countersignature of the State Bank of India. An
irrevocable Revolving Letter of Credit authenticated as above may also be
accepted if it is so established and fully cover the total value of the order and full
payment is effected before further issue of stores to the party. In the case of
Irrevocable Letter of Credit, supplies should be so regulated as to ensure that
payment of consignment is received before supply of another consignment
commences and validity is also adequate to cover subsequent supplies. In such
cases, it will not be necessary to ask for a Security' Deposit in addition, as the total
value of the order will be covered by Irrevocable Letter of Credit.
104. If the General Manager of the Supplying Factory is satisfied that the
Replacement/Rectification is due to any defect in materials, workmanship which
were not noticed at the time of despatch of stores, he may authorise the
rectification/replacement being done free of charge at the premises of the
consignee provided the cost of rectification/replacement and freight including
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TA/DA both way and other charges incidental thereto do not exceed Rs. 500 per
order.
105. All cases involving expenditure exceeding the above limit of Rs. 500 will be
decided by the OFB on their merits in consultation with Associated Finance. In the
case of orders received through the agency of DGS&D rectification/replacement
will be made in accordance with the orders issued in their behalf by the DGS&D.
Issues to Foreign Government
106. Director (Export) (Ministry of Defence) fixes the export price in

consultation with the Ministry of Finance based on cost data received from OFB
duly vetted by the local Accounts Officer taking into accounts other factors like
transportation charges, agency commission, escalation for labourour, material
charges etc.
107. Five copies of the Packing Account will at by the factory to the Embarkation
Headquarters' to enable him to obtain the necessary shipping document. The
Embarkation Headquarters the stores have been loaded will send a full set, of the
Bill of Lading along with three copies of the Packing Account to Director (Export)
within ten days. The Bill of Lading including one stamped Negotiable copy will be
sent by the Director (Export) to the nominated Representative/Bank as the may be.
108. Factories/Depots will send four copies of connected Issue Vouchers to

Director (Export) pile sending the Stores and Packing Account the Embarkation
Headquarters.
The Director (Export) on receipt of document will prepare a bill to be sent

to the Foreign Government, or to the Banker for negotiating against the letter of
Credit as the case may lie. He will also match the speedy recovery of the bills and
crediting the same to the account of the C.C. of A. (Fys.).
Copy of the bill prepared by Director (Export) with two copies of the Issue
Voucher prepared by the factory will be sent to the C.C. of A (Fys) who will check
the correctness thereof and enter it in the Demand Register for watching recovery.
C.C. of A (Fys) will bring to the notice of the Director (Export) if there is any
discrepancy in the realisation of the amounts. One copy of the Issue Voucher will
be kept by CC of A (Fys) for check of the bill and the other copy to the Accounts
Officer for linking the charge off from stores and reflection of credit in the cash
compilation and acknowledgement obtained. Accounts Officers are to watch the,
receipt of statement of case/Issue Vrs. from C.C. of .A(Fys) with reference to the
Issue Vouchers available with them and report case of non receipt within ',two
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months of the transaction to CC /of A (Fys) for further action. This is to ensure
that the recovery of the amount due from Foreign Government is not lost sight of.
Comparison of Cost
109. In the case of factories manufacturing common items of production,

comparison of cost is made under the different elements of cost with a view to
effecting economy and cost reduction. Variations may be both in quantum and type
of materials as well as direct labour charges while certain variation due 'to
differences in the Plant and Machinery utilised by different factories is under-
standable, the reasons in the quantum i.e. quantities of materials authorised for
production by different factories require analysis. Detailed comparison of the
Standard Estimates is made by the GM/AO with a view to evolving a common
standard which should be adopted by all factories wherever practicable. It any
downward revisions are carried out, this should be brought to the notice of other
factories so that similar revision call is made by them. Upward revision of
estimates is not to be normally undertaken without consulting other Ordnance
Factories and with the approval of the OFB.
110. The Accounts Office is to record separately the items for comparison of cost
under the following three heads: ----
(a) For common, items of production between two or morel factories.
(b) For components/stores simultaneously received from out of the

manufacture of more than one factory and being assembled in the factory.
(c) Components manufactured in factories own production, a~ well as those

obtained from different factories.
Upto date element-wise costs are obtained; wide variations are investigated
in consultation with other AOs/GMs for corrective action. The details are obtained
in intervals of six months.
Items kept out of Production Accounts
111. There are certain items of expenses like abnormal profit or loss on sale of
stores, arrear depreciation, care and custody of stores surplus to requirement which
do not relate to the normal production activities. Inclusion of the items in the
overheads will vitiate cost comparison. Hence these are not treated as leviable
overhead and the expenditure is shown as deduction from the total expenses.
While there are instructions for keeping items out of production, other expenses
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like heavy arrear payments, abnormal losses etc. may have to be excluded from
overhead. Such cases can be kept out of production only after approval by OFB
and Chief Controller of Accounts (Fys).
112. BLANK.
113. BLANK.
114. BLANK
115. BLANK
116. BLANK
117. BLANK
118. BLANK
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CHAPTER-V
LABOUR-METHODS OF PAYMENT AND ALLOCATION
Para
Classification of workers 119
Procedure for mustering 121
Submission of Muster Rolls to Accounts Office 130
Submission of documents pertaining to wages 143
Calculation of wages under different elements 146
Piece work earnings 148
Guarantee pay 154
Incentive bonus 155
Idle time 160
Leave and leave salary 169
Overtime 187
Night duty allowance 201
Paid holidays 202
Dearness allowance 203
Compensatory (City) allowance and House Rent Allowance 206
Educational assistance 211
Completion of Muster Rolls for payment 213
Agreement form of labour 214
Disbursement certificate 216
Absentee Payment Register 219
Payment of arrear wages 220
Belated and advance payment 221
Financial Accounting of labour charges 222
Cost Accounting aspects-Day work Cards and Piece work cards 223
Labour punching medium 228
Preparation of Labour Abstract 229
Allocation of D.A., C.C.A., etc 230
Piece work rates 231
Increment 241
Payments under workmen's compensation act 242
Payment of travelling allowance claims 248
Casual industrial employees 249
Medical attendance 250
Fine 252
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Scale audit 256
Pensionary rules 258
Gratuity 267
Discharge 269
Last Pay Certificate 273
General Provident Fund/Contributory Provident Fund 274
Audit of manufacture warrant 277
Provisional payment 280
Training of Boy Artisans 282
Subsistence allowance 285
Trade test 286
Promotion 289
Fixation of pay 290
Attendance for IEs working outside the Factory 292
Transfer of IEs. 294
Forest operation 296
Labour Welfare Fund 297
Strength of Labour vis-a-vis load position 298
Pay audit work 307
Claims of NIEs/NGOs 309
Industrial Establishment Group and Night Duty Allowance 311
Overtime allowance for N1Es/NGQs 312
Overtime pay of re-employed pensioners' 318
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CHAPTERV
LABOUR-METHODS OF PAYMENT AND ALLOCATION
Classification workers' record maintained by Labour Bureau/Accounts and

information contained therein.
119. The industrial workers in Ordnance/ Equipment Factories are classified as:-
Unskilled
Semiskilled
Skilled
HS-II
HS-I
The jobs have been grouped trade-wise as Black smith, carpenters,

Electrician etc. and the type of worker under each group viz. unskilled, semi-
skilled are notified in Govt. Orders. The number posts of Master Craftsman in
each trade shall be upto 10 per cent of the total number of sanctioned posts in
highly skilled Grade-1 in each Organization. There will be no trade test for promo-
tion to a higher in the same trade or transfer to a different grade as also
appointment as Tradesman, rising the. Prescribed trade test is necessary. A trade
test board will conduct the tests as per details of a specification approved by the
DGOF for each trade and grade.
120. The workers are on monthly rates of pay. Those who are paid on the basis of
attendance are called Day Workers. Workers on piece work, rates of wages,
working individually or in gangs are called individual/gang piece Workers.
In addition there are casual industrial employees for specific jobs/periods to

act as substitutes to meet increased work-load and, trainees under various training
scheme.
Under the Factories Act 1948, no adult worker is required to work in a

Factory for more than 48 hours in any Week. The total normal working hours in a
week in the Ordnance and Clothing Factories have, however, been fixed at 44
hours excluding intervals for recess. The difference of 3 hours i.e. complement
of 48 hours has been viewed as Saturday bonus, as dealt in para 125. The GMs
have full discretion in respect of fixing the working hours for week days and
Saturdays and in prescribing the opening and closing, hours and time for recess.
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Normally, the factories will be open at least during normal working hours on
all days except Sundays and days which are declared to be paid holidays for
workmen. If, however, the majority of workmen desire a holiday for a particular
day or part of a. day and the exigencies of production permit it, the factory may be
closed for that day/part of a clay, the workmen not receiving pay for 'that time, but,
whether a factory remain open tar is closed under such circumstances rests entirely
at the discretion of the GM. When for unavoidable or strong reasons, a factory has
to be closed by the G.M. on a clay which is a normal working clay rot workmen,
the G.M. will be responsible to arrange as early as convenient thereafter, working
time it compensation for the time lost in order that work men shall not lose pay.
Production for Mustering
121. The gate of the factory is opened about half an hour before the time fixed
for commencement of work in the factory and is punctually closed at the fixed
time. During this interval that workmen get in, remove their tickets (metal dices)
from the ticket boards, placed near the gate under the supervision of labour bureau
or gate office and deposit them on the boards or in the boxes placed for the
purpose in the respective shops. Soon after the factory gate is closed, the gate
office of labour bureau prepares separately for each shop a list, if necessary, (for
purpose of mustering) showing the ticket numbers that have not been removed
from the ticket boards. At the same time, after shops have commenced work, the
shops examine the tickets deposited by the workmen in the section boards or boxes
and also take attendance by personal counting. ensuring that the persons not
present, absent as shown in the report are actually absent Thereafter the shops-
prepared a `Casualty Memo' or 'Presentee Memo' whichever is convenient. The
report is signed by the Foreman or by the Head of Shop and sent direct to the
Accounts Office. The late comers are allowed inside the factory after , , and
l hour from opening time. No one is normally allowed inside the factory after one
hour. The late comers are required to deposit their tickets in the respective boxes at
the gate specially. Provided for the purpose to record the particular hour at which a
late comer is admitted or their numbers are noted on this account by a represent-
tative of the gate office (or the labour bureau) who is deputed at the gate specially
for this purpose. The Labour Bureau or the gate office prepares the memo for these
men and one copy of the memo is supplied to the Accounts Office.
122. The main attendance record of the worker is maintained by the factory (gate
office or the labour bureau) in IAFO 1367 outer/1367 A Inner and is known as
'Muster Roll'.
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123. The Muster Roll is maintained in a separate monthly volume (conveniently
divided into parts where necessary) for each shop in the factory. The Column' for
the day against men who are absent according to the tickets not removed or list
prepared there from as referral to in para 121 are marked 'A' or 'LP' accordingly as
the workers are absent or on 'Leave with pay. The hour is divided into equal parts.
Hence eight hours work in a day represent 4X8 =32 quarters. For every quarter
hour the numerator is one. Thus the attendance of the late comers will be marked
short to the extent they are late i.e. 31/32, 30/32, 29/32, 28/32 accordingly as they
are late by , , and 1hour respectively, others being marked '1'.
124. Men who take short leave are granted 'Leave passes'. Leave passes granted
to men on the previous day, overtime memos, and copies of order granting leave
with or without pay are collected and the previous day's attendance marked up in
accordance with them. Part leave is generally granted in terms of quarter of' an
hour, absence for which is normally booked as absence for 1/32 of a day.
125. Deduction for absence during part of a day including Saturdays shall in the
case of industrial employees, to whom the payment of Wages Act 1936 is
applicable, be calculated at the rate of 1/32 of a normal days pay, for each quarter
hours absence for the normal period of that day. Deductions for absence for a
whole day other than a Saturday shall continue to be a whole day's pay for these
individuals, but deductions for absence for a whole Saturday shall be calculated as
prescribed above for a part Or a day except that if a man is absent for not less than
six consecutive working clays, including a Saturday, the deduction for absence on
that Saturday shall be a whole day's pay. The following formula should be adopted
in marking part attendance on Saturdays: -
---------------------------------------------------------------------------------------------------
Present on Saturday for hours Booking of attendance
---------------------------------------------------------------------------------------------------
0 13/32
1 17/32
2 21/32
3 25/32
4 29/32
5 1-1 /32
6 1-5/32
---------------------------------------------------------------------------------------------------
The extra hours i.e. 13/32 hours is called 'Saturday/ Bonus'.
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The effect of the grant of, Saturday bonus is to increase the period of normal
attendance by 31/4 hours per week. As piece-workers are laid on the basis of work
done, the grant of bonus in their case involves no payment at all, the only effect is
a prorate increase in their normal time wages on the basis of which gang profit or
loss is distributed. In the case of (lay workers, the grant of the bonus, however,
involves, extra-payment for hours not worked. It will no (be admitted as a
separate element of wages, but included in the time-wages and booked to the work
orders upon which the clay workers concerned are engaged during the week.
Saturday bonus to the extent it cannot be booked accordingly will be charged to
(lie relevant indirect work order.
126. In the case of shift workers having 7 hours effective working on week
days and 7 hours on Saturday marking should be made as follows:
--------------------------------------------------------------------------------------------
Present for Booking on Booking on
week days Saturdays
--------------------------------------------------------------------------------------------
0 2/32 3/32
4/32 5/32
1 8/32 9/32
2 12/32 13/32
3 16/32 17/32
4 20/32 21/32
5 24/32 25/32
6 28/32 29/32
7 1 1-1/32
--------------------------------------------------------------------------------------------
This bonus of 2/32 and 3/32 hours marked on week days and Saturdays should be
with held from payment if the individual concerned absented for dot less than 6
days including Saturday.
127. The late attendance of workers, due to late running cancellation of local /
shuttle trains may be condoned up to a maximum limit of three hour by the GM of
the factory If he is satisfied that the late attendance is solely due to late running of
trains. When the late attendance is condonded, the workers, will not be penalized
in the matter of wages, for un worked time. Marking of the attendance in muster
rolls will, however, be done with reference to the actual time of attendance of the
Workers. The condonation of late attendance will be notified through Factory
Orders. If any over time is worked by the affected personnel on the date of late
attendance, the overtime wages will be reduce by the proportionate wages
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calculated on single time rate in respect of late attendance condoned, if any, on
that, particular date. For this purpose a certificate on the following terms, will be
furnished by the GM in all claims of over time
"Certified that no individual attended late on the date for which overtime
allowance lids been claimed and in cases where late attendance due to late running
of trains has been condoned, the claim ,has been reduced by proportionate wages
calculated on the single time rate in respect of late attendance on , the particular
date".
128. Suitable symbols will be used for noting different kinds pf leave, idle time
clue to various 'causes and periods of absence in the muster. The symbols will be
adopted by the factory in consultation with the Accounts Office.
129. Overtime attendance is marked on the basis of 1/32 of a clay for each
quarter hour of' over time in respective of whether it is on week day, Saturday or
Holiday. Overtime memos are prepared in the rise of casual overtime when the
shop or section is not working systematic overtime as a whole.
Submission of Muster Rolls to Account Office
130. After completing the muster rolls for the various shops in the manner
detailed above, the gate office (or the labour bureau) sends them every day to
Accounts Office with the leave passes, over time passes etc. This is to down as
done as early as possible daily, but not later than 1 P.M. for day shift and the time
arranged with Accounts Office for night shifts.
131. The gate office (or labour bureau) also shows at the end of the muster roll
the total number present (i) at the morning attendance as marked by them on the
basis of tickets not removed or the list prepared there from and the late memos
prepared by them, and (ii) the evening attendance for the previous day as modified
by the postings of part time leave passes overtime memos etc. A similar procedure
is followed for night shift attendance. The total attendance for the day will be
initialled by the Clerk of Gate Office (or Labour Bureau).
132. After the close of each week, the progressive total of each man's attendance
to' the month is also shown by the Gate Office (or Labour Bureau) in the muster
roll. .
133. On the day following the close of the month, the muster roll will be sent to
the Accounts Office by the Gate Office (or the labour bureau) after entering therein
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the total monthly attendance in respect of each worker for the completion of the
same as regards wages payable to each workman.
134. The Gate Office (or labour bureau) will furnish the Accounts Office with
daily Statement showing:-
(i) Entertainment and discharge of workers.

(ii) Alteration of rates of pay and any other facts connected with worker
which may affect their earnings.
135. A formal change statement confirming the daily reports from the Gate
Office (Labour Bureau) should reach the Accounts Office not later than the first
working day of the month following that to which it relates.
The Gate Office (or the Labour Bureau.) maintains service records for
workman.
Check of attendance and maintenance of records therefore
136. The Accounts Office maintains attendance in the form IAF (Fac) 74, 74 A
and 74 B or IAF (Fac) -73 Old and IAF (Fac) 74 old where found suitable. The
records may be opened for complete financial year, six months, three months, for
each month showing, names, ticket numbers, trades, grades and rates of pay of
industrial employees. Separate records should be prepared for the various shops or
sections showing ticket numbers serially like muster rolls (in which case
distribution gang profit or loss is to be carried out through zing. distribution book)
or for day workers, individual piece workers and various piece worker gangs
separately. On receipt of the muster rolls from the gate office (or the labour
bureau). The entries or the day will be checked with reference to presentee
statement or casualty memos received from the gate office. The previous day's
attendance will be checked with reference to leave passes, overtime memos etc.
Received from. Any discrepancy noticed will be reported to the gate office (or
labour bureau) through discrepancy reports and alterations in the muster rolls will
be made and attested that authority. It will also be verified by the accounts Office
that the total attendance shown the muster rolls by the gate office (or by the labour
bureau) for the days and the previous day are correct.
137. The daily totals by Sections in the Muster Rolls will be recorded in the
Accounts Office records eider the Labour Section Auditor's initials. The latter
should also initial these total in the Muster Rolls in token of having checked them
with leave reports etc. A similar procedure will be followed for, attendance in night
shifts.
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138. The Accounts Office will also verify the Correctness of the progressive
total of the weekly attendance of each worker as shown by Gate Office of labour
bureau) in Muster Roll. These totals of weekly attendance of each worker will
thereafter be copied by Accounts Office in the records maintained by them. The
hours of overtime worked under Departmental Rules and Factories Act will also be
noted. NDA & NSS hours are also to be noted.
139. On receipt of the muster roll on the day following the close of the month in
the Accounts Office, the total number of clays' attendance by each worker will be
checked. The total number of days worked by workmen for the whole section will
be agreed with the total for the month of the daily attendance as noted in the
records maintained by the Accounts Office.
140. Whenever a change or correction is made in the muster roll on account of

recruitment, promotion, discharge or transfer, the Account Office must watch that
the relevant documents arc received from the factory without delay and that the
action taken in the muster rolls with reference to these documents is in order. A
register showing the particulars of individual employees section-wise maintained
for the purpose will, if necessary, also be, consulted.
Surprise check of industrial employees
141. The General Manager will carry out occasional surprise' checks on the
attendance of workmen in various sections. These surprise (checks will, as far as
practicable be carried out once a month. The result of the surprise checks shall be
communicated to the Accounts Office for any action that may be necessary.
Date of payments to Industrial, Employees
142. Under file payment of wages Act 1936, the wages for any wage period (the
calendar month in the case of Ordnance and Ordnance Equipment Factories) are
payable before the expire of the 10th day following the last day of the wage period
if the factory employs 1000 or more workmen before the expiry of the 7th day
following in the case of factories employing less 1000 workmen. It is therefore,
necessary that the factory should receive the muster roll showing gross wages in
sufficient time to enable factory authorities to effect various authorized recoveries
of dues from the workmen. The exact date on which the rolls should be sent to the
factory should be settled between the Accounts Officer and the General Manager.
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Submission of documents pertaining to wages
143. The Factory will issue dark .and piece work cards in the prescribed forms-
to workman showing-Me-work to be done either by an individual or gang. Day
work and piece work cards may, if necessary, be returned to the Section office
where they may be held for safe custody and ready reference but must at all limes
be readily accessible to the workman concerned. These cards will be checked by
the shop with the manufacture warrants.
Note- In the case pf clay workers who are continuously employed on same class of
work no work cards are necessary but a list of work orders on which they
are employed is furnished by the Sections concerned to the Accounts Office.
144. In the case of piece workers the number of articles or operations passed for
payment will be entered in the card duly initialed in the employees specially
authorized to inspect and pass the work. Shops should enter stepwise rejections in
the relevant manufacture warrants indicating briefly the cause for rejection as
well as reference of the relevant Inspection Notes wherein the exact causes for
rejection are to be indicated. If only a portion of the work on a card has been
payment at the end of a month, the balance will be brought forward on to a new
card, necessary amended being made on the record of cards mainted on the
manufacture warrant.
Note- In those factories in which, although inspection for final operation is

invariably carried out by the Inspectorate staff, piece work cards for
intermediate operations may be passed finally by factory foreman or by the
Assistant foreman for, payment purposes. In such cases, also the Inspector
reserves the right to carry out any stage inspection lie considers desirable.
In Filling Factories, like Ammunition Factory, Kirkee/Ordnance Factory,

Khamaria, the payment admitted on the basis of initial acceptance of ammunition
articles by the staff specially authorized to inspect and pass the work in
anticipation of proof results for the articles completed in a month shall treated as
final.
Rapid costing depends absolutely upon the data on the day and. piece work
cards, being available to the Accounts Office at the shortest possible intervals. It is,
therefore, important that the amount Work given on a card should be restricted.
145. The day and piece work cards for, completed work should receive in the
Accounts Office at frequent intervals in a regular flow without delay. Endeavourer,
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should be made to work on a weekly to avoid rush of work at the end, of month
which delays the preparation of wage bills and compilation of cost. The date of
receipt of the batch of piece work and day work cards should so fixed by the
Accounts Officer in consultation with .the General Manager of the factory, which
normally should not be beyond Ist working day ,of the following month. After
necessary action being taken on them, wages sheets and labour abstract may be
prepared in time either on Electronic Data Processing Machine or manually as the
case may be. A Register of the piece work cards wills, case may in the Accounts
Office to watch the receipt and disposal.
Calculation of wages
146. Wages payable to alt industrial employee for any wage period will include
(i) Duty pay at basic monthly rate day workers and piece work- for piece
workers.
(ii) Other elements of pay e.g. idle time, overtime, leave, holiday, injury,
segration etc. pay.
(iii) Overtime and night shift bonus. Night duty allowance. Incentive Bonus
for day workers (maintenance workers) and any other remuneration payable
under existing rules, and
(iv) Certain allowance e.g. dearness, city compensatory etc. but not House
Rent Allowance vide Section 2 (vi) (a) of the payment of Wages Act
1936.House Rent Allowance due for each wage period should, However,
normally be included in wages for the purpose of payment. In making any
deduction from wages, the provision of the payment of wage; Act 1936, will
be strictly followed. Entitlement of each clement of wages will be decided
first and then calculated separately with reference to the orders on the
subject and also the instructions and procedure detailed in subsequent
paragraphs.
Note- The documents relating to casualties affecting pay of industrial employees

as notified in factory orders, increment sheets, leave memos etc. will be
subject to a cent per cent check by the Auditors and test check by (lie
Section Officer. The result of the test check will be reflected in a Register to
be maintained for this purpose. Duty Pay at basic monthly rate
147. This is also called the time wages or the nominal time wanes in the case of
piece workers. Time wages in respect of any industrial worker will be calculated
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by multiplying the number of days worked by him by his daily rate of pay as for-
mulated below. As day workers are required to be pail on time basis without regard
to output, they will receive this element of wages.
(a) In the case of those governed by the payment of wages Act 1936 the pay
for a day should be assumed at 1/N- (S+H) X Basic monthly pay (where `N'
represents the number of days in a month and 'H' represent number of closed
paid holidays in that month). No separate payment for any closed holiday is
made. For the purpose of calculating duty pay due for broken period for a
month, this formula should be multiplied by the number of days actually
worked i.e. excluding Sundays and paid, holiday: In the case of those not
governed by the payment of Wages Act ;1936 the daily pay should be
assumed I/N as ,in the case of regular establishment.
(b) They formula as given in (a)above will not apply to pieceworkers in

Ordnance and Ordnance Equipment Factories in calculating the pay for a
day. They are eligible for payment of paid holidays separately in addition to
piece work earnings. The formula is I /N--S X Basic monthly pay
(c) the formula at (a) will not also apply to a workman who works partly as
a piece worker and partly as a dory worker during a wage period. He will be
paid piece work earnings for the period he is put on piece work and' time
wages calculated at the rate of 1/N--S for the period he works as a day
worker. In addition, payment for closed paid holiday, if any falling with in
the wage period will be made to him separately as in the case of a piece
worker.
Note: - The period of strike/token strike resorted to by industrial employees is to

be regarded as 'Dies-non'. It is neither count as service nor as break in service.
Unless otherwise stated o pay and allowance will, be admissible to workers for the
period are on strike/token strike etc. Deduction of wages on account of periods of
strike for a part of a day will be trade on the basis of formula given at (a) or (b)
above as the case may be multiplied by (M x A)/ W where ,À' represents the
number of hours. 'W' the number of normal working hours per day, the working
hours for Saturday being the same as for other week day and `M' for monthly rate
of pay and dearness and other allowances.
Piece work earnings
148. Piece work cards are sent to the Accounts Office by factory shops (in
duplicate, if wage sheets and labour abstracts are required. to be prepared on
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E.D.P. Machine) in batches as and when work is, completed. They relate to the
work turned out by the individual and gang piece workers. As Cards for individual
and gang piece workers are prepared on kind of documents 18 and 19 respectively,
they can easily be segregated. The cards show the ticket number of the individual
or gang number, the shop to which he or the gang belongs, the details' of the work
completed such-as-work order, warrant etc. number completed, the operations and
the rates payable correct to four decimals. The last batch of cards should be sent by
the 1st of the following month. The piece work cards will be posted in the
manufacturing warrants but before doing so it will be seen that the numbers
presented for payment plus those paid for in the past as well as the rates for
operation are covered by the manufacture warrant. Any operation in excess of the
number authorised on a warrant will not be paid for, but will be referred back to
the foreman.
Note- In certain exceptional cases a larger number of operations than those

covered by tile, manufacture warrant may have to be performed to obtain
the number of passed articles ordered to be manufactured on "the-warrant.
In such cases the Accounts Office may accept. Provisional payment for the
excess operations and lie will watch that necessary amendments are made to
the warrant by competent authorities. The cards are then valued and wages
sheet prepared manually or on, EDP machine as the case may be. In order to
ensnare receipt of the wages sliest from the EDP Section in time, one copy
of each of the card will be sent to that section in convenient batches of
which the last must reach on the prescribed date.
149. The wages sheets contain the total earnings of each gang or individual
pieceworker correct to two decimal places. Piece workers are required to be paid
on the basis of work performed and gang and individual piece worker will get the
piece work earnings recorded in the wage sheets. In accordance with the revised
procedure of correlation of piece work rate and distribution of earnings, piece
work rate will be correlated to the minimum of the pay' scales of the relevant
grade(s) of worker(s) as incorporated in the estimates/rate forms.
In the case of gang piece workers, the total piece work earnings will be
distributed anion; tile workers with reference to Notional Time Wages of each
worker calculated on the basis of the minimum of his pay scale. [That difference
between the actual basic pay of a worker and the minimum of his pay scale will be
paid to him as separate elements].
Accordingly, the piece work earnings of a gang will be distributed among it

members in proportion to their Notional Time Wages calculated @ (I/N-S) X No.
of days present, where "l" stands Or minimum of pay scale of each worker. If the
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total earnings of the gang are more than the total the notional time wages
calculated for each bet of the gang the result is it profit but if less a loss. To
determine the share of each man in profit or loss, a percentage should be worked
out as below: -
Amount of profit or loss x 100

Total Notional Time Wages of all the members the gang.
Each man will thus get as his share of earnings his Notional Time Wages increased
or decreased by his share of profit or loss. In actual if practice, however, to arrive
at the share of earnings, the procedure of adding the profit or subtracting the loss
from National Time Waves can be dispensed with by adopting the following
formula:
Earnings of any His Notional Total earning of

member of the time wages X the gang
gang = -------------------------------------------------
Total Notional time wages of all the members of the gang.
As regards individual piece workers the amounts intimated by EDP Section

will be entered against their names in the Accounts Office records. For the purpose
of calculation of Notional Time Wages in respect of individual piece worker, the
minimum of his pay scale will be taken and the difference weep the actual basic
pay and the minimum of his pay scale will be paid to him as a separate element
like the Gang Workers. In case of four factories belonging to OEP Group viz.,
OPF, CFS, CF Avadi OE Fy., Hazaratpur the distribution of piece work earnings to
the different workers in the gang ,be made pro-rata to their attendance during the
go period instead of distribution pro-rata to time wages as in the case of other
Ordnance Factories adopting the following formula:
Total Piece works earning of the Gang X Attendance of each member

Total attendance of the Gang
(Authority: M of D letter No.1/P(C)/CFS/9745/D Giv-1) dated 29-11-60 as

amended vide M of D otter No. 1/P (C)/CFS/1193/IS/D (Civ-I1) dt. 3-7-61 OFB
Calcutta No. 834/A/A dt. 12-4-91).
Note-An illustrative example on the calculation of Piece work earnings in respect

of Gang Piece Workers and distribution thereof among the members is given at
Annexure-'C' to this chapter.
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150. In Ordnance Parachute Factor, Kanpur the workmen employed on the
manufacture/repair of man dropping parachutes on day work basis are entitled to a
bonus at the rate of 25 per cent of their pay with effect from 1-4-1965 for the
actual number of hours engaged on the manufacture/repair of parachutes.
151. The bonus will be booked to the same outturn work order to which the pay
is booked and will also be included as an element of direct labour cost in the
relevant estimate.
152. In Ordnance Parachute Factory and other Clothing Factories, there is a "Pool
Bench" attached to each section and each shift from which men are posted to
regular gangs-benches of the section to meet absenteeism there without formal
transfer memos. Daily record of gang distribution is maintained by the Pool Bench
in a labour report and by the regular benches in the form of gang list. At the end of
the month, copies of the gang list and labour report are received in the Accounts
Office. The total attendance of each pool bench man in each gang is worked out
with reference to the gang list and acquaintance roll of the pool bench and is noted
in the Accounts records pertaining to the regular gang benches.
Their pro-rata earnings in those gangs are calculated and then transferred
against their names in the pool bench where total wares and allowances are
assembled. Remaining men in the pool benches work as I.P.W. in the pool bench.
In the Clothing Factories, piece workers are paid at the rate fixed for each
garment made by them. But the gang/benches are not complete units in that. Tailor
'C' have different rates and earnings have to be distributed separately amongst
Tailor 'C'. Rate forms showing detailed operations for each kind of garment will be
priced. A summary in the following proforma is made for ensuring that the total
number of garments shown as completed on the piece work/day work cards have
actually been passed in inspection or not.
Work Order Warrant Making Total No of

No. No Sections garments for each work
order
This is compared with the monthly summary of inspection notes received

from the factory. The practice of preparing preliminary abstract has been dispensed
with.
In cases where certain materials like buttons are not available, 90 per cent
payments are authorised. Suitable Registers should be maintained for proper
linking of balance 10 per cent payment. It should be ensured that for the same
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garment 90 percent and 100 percent payments are not paid and balance 10 per cent
payment are claimed expeditiously duly supported by inspection notes.
153. In Gun Carriage Factory, Jabalpur, where gang workers are frequently
transferred from one gang to another, the attendance in each gang is recorded daily
in a gang distribution book and the carries therein are transferred at the end of the
month to I.A.F., (Fac) 73 in I.A.F (Fac) 74 in which the earnings of the men in the
general gangs are assembled.
Note: - The percentage of profitor loss as worked out with reference the formula
given above will recorded in a register to be maintained for purpose. The ceiling
on profit which was 50 Per cent is now fixed at 75 per cent for a period from 19-
07-83. Ordnance factory Board is to make institutional arrangements for
monitoring the increase in volume production very half year and intimate the
results to the department of Defence Production with the help of the Register,
abnormal profit or loss and data regarding the profit earned or loss sustained by a
gang or an individual piece worker will be brought to the notice of the factory
management.
Guarantee Pay
154. Guarantee pay is admissible to industrial employees of unskilled, semi-

skilled and skilled grade when their piece work earning during the period of their
duty falls below the actual basis time wages applicable for that period. By way of
illustration, if a semi skilled worker in the pay scale Rs.800-1150 per month is
entitled to a basic pay of Rs. 845 as his basic pay having earned three increments,
his basic pay guaranteed to him would be Rs. 845 for the period his piece work
earnings falls below this rate of pay. Similarly in the case skilled worker in pay
scale of Rs. 950-1500 per mouth who has earned three increments and has milled
the stage of Rs. 1010, his basic guarantee wages would be Rs1010, if however it is
found that a pieceworker consistently stands in need of the above guarantee
minimum, the reasons for the shall be investigated and if the need arose due to his
inefficiency, the question of taking necessary action on this ground would be
considered by the competent authority.
This has effect from 6-4-1984.
Note: - (a) O.T. Bonus paid to a piece worker under departmental rules or statutory
regulation should be taken into account for determining whether or not
stands in need of any guarantee element.
[Authy: - C.G.D.A.'s No.11057/AT-S dated 21/23-08-63]
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(b) As per new system of P.W.E. calculation the minimum of the revised
pay suites of the piece workers are taken as basis and the difference between
the actual basic pay of a worker and the minimum of his revised pay scale is
paid as a separate element. Since the increment difference so paid forms part
of a worker's actual basic pay, this element should also be taken into account
to compute the guarantee pay element. Hence the following method of
calculation should be adopted.
(Time wages+Increment difference+Overtime pay) - (Earning+ Overtime

Bonus) = Guarantee Pay.
[Authority: CC of A (Fys) Calcutta case File No. Pay/TechII /01050 (PWR)]
Incentive Bonus
155. Incentive Bonus to the maintenance worker of the Ordnance and Ordnance
Equipment Factories will be paid at the rates and subject to the conditions
enumerated below: -
(i) Incentive bonus will be paid to all maintenance workers outer than
unskilled workers employed on maintenance work within the factory
premises.
(ii) Workers attached to production sections will be paid bonus at 50,

percent of piece work profit earned by the piece workers of the relevant
production section. Workers not attached to production sections will be paid
incentive bonus at 50 percent of the average piece work profit earned by the
piece workers in the whole factory.
(iii) Maintenance workers in Production Section where p.w. does not exist
are also eligible for incentive bonus @ 50% of average p.w. profits of the
Factory as a whole.
156. The following categories of workers other than unskilled workers who are
partly employed on maintenance work will also be entitled to payment of incentive
bonus at 50% of the average piece work profit earned by the piece workers in the
whole factory.
(a) Workers employed in gas plants, steam generating plants, compressed air
supply plants and plants supplying industrial water.
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(b) Workers employed in maintenance of electrical power supply including
power line maintenance.
(c) If any or the above plants catering to industrial requirements are installed
outside the factory premises for any technical reasons the workmen
employed therein will be deemed to be employed within the factory
premises for the purpose of payment of incentive bonus.
(d) Battery/leister truck drivers and mobile crane drives, Tractor drivers,
loco drivers and drivers' crane (electric overhead) who are employed on
internal transport system of factories.
(e) Workers employed in Sewage Treatment Plant.
(f) Points man attached to Mechanical Transport handing, equipment

sections on Internal Transport System of the Factories.
[Authy: - M of D No. 754/A/A/531/75/II/D (Fy-l), dated: 19-2-73 and No. 50(13) /

87/III / D (Fy-II): dated 7-6-88]
157. Maintenance workers other than unskilled workers working in maintenance

sections who are withdrawn from their parent section for erection and installation
of new plant and machinery as, well as rehabilitation and re-erection of old
machinery will continue to be entitled to incentive bonus during the period for
which they are temporarily diverted for erection /rehabilitation/re-erection at an
average of such bonus for the last three months which they having in their parent
sections.
158. The term 50 per cant of piece work profit and 50 per cent of average piece
work profit used above Should be taken to mean 50 per cent of the percentage
of profit earned in month by all the piece workers, both and individual and gang
of the production section or whole factory as the case may he percentage so
calculated will be applied to the time wages of the maintenance workers to arrive
at the amount of incentive bonus admissible. For this purpose the percentage of
profit earned by the piece workers will be calculated taking into account the
difference between their total earnings and total Notional time Wages in a Section
or entire factory as the case may as envisaged in Para 149.
159. The General Manager will select a team of workers to be employed on

maintenance work attached to the production sections or non-productive /service
sections. The names of such maintenance workers other than unskilled workers
indicting the section in which they are to be employed/ actually employed and the
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periods for which they are actually employed on maintenance work will be
notified in factory order every month.
Piece work rates have been made applicable to Chemical Factories also.
60. Idle time
1. High atmospheric Idle time payment may

humidity hindering be made under certain
certain operations specified conditions to
in explosive factories the workmen temporarily
or unfavourable rendered surplus for.
Weather conditions reasons of such nature as
hindering specialised specified in the margin
optical work depen- and who. cannot be pro-
ding on sun light. vided with a suitable alter,
native employment in the,
2. Plants, furnace normal manner. Such .
and transport break idle time may be ordered ,
downs, inspection & by the General Manager repairs.
of the Factory for the first six
working days in res-
3. Temporary shor- pect of any workman.
tae of material. After that time, the arrangement
will, if neces-
4. Failure of powers ary; be continued under
supply. the authority of the
5. Temporary shor- Ordnance Factory Board.
tage of work in highly specialised
sections such as
instrument repair
and optical sections.
Idle time payment for causes other, than those enumerated above should be
covered by separate Govt. sanction. The idle time payment will not be admissible
on the occasion when it is due to wrongful action or misconduct of the employees
making it impracticable to employ certain classes of workmen.
161. When the conditions noted in the margin rise, the General Manager after
making any transfer, of workmen and rearrangements of work that maybe possible,
will employ as many of the temporary surplus workmen at the Factory, as may be
practicable on work such as special cleaning up or other suitable work which
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would not otherwise have been perforce at that time and, if necessary, will so
employ, temporarily surplus men in rotation. While so employed they (together
with the remaining workman, if any) will be charged to appropriate idle time work
orders. The remaining workmen mentioned above wilt not are required to spend
the whole of their time in the factory to qualify for idle time pay.
162. These arrangement will be mad by GM for the first six work-men. After
that period, the arrangement will, if necessary, be continued under the authority of
the Director General, Ordnance Factories, who in deciding how long they should
continue will take all factors into consideration, such as (in the case of anticipated
long duration of the abnormal conditions), the difficulties of recruiting suitable
man if experienced hands are retrenched, relative cost of continuing to pay idle
time and the probable cost of training eventual replacements of, some of the
workmen who will be discharged etc.
163. The General Manager has discretion subject to any directions which the
DGOF may give to decide the occasions when such 'workmen will' report at the
factory but such occasion shall not be less frequent than once in three working
days. A working man failing to report at the time directed will be liable to be
deprived of his idle time pay from the time of last reporting to the time of next
reporting unless his failure-to report at the due time is excused by the General
Manager. In excusing such cases the GM will follow the same principles while
granting leaves retrospectively when it is not applied for before commencement;
No workman will be forced against his will to take idle time payment and
remain on the strength of factory. If he requires it, he will be allowed to take
discharge under the normal arrangement for discharge.
164. As soon as it is found that a workman is surplus permanently and not merely
temporarily, action will be taken to discharge him under the procedure for
discharge on retrenchment or reduction establishment as may be in force from time
to time.
165. In the case of men who normally work on piece work and who may be
temporarily surplus to a market extent the, G.M. may make an estimate of the
number which, if performing the available work at standard speed, would earn
piece work profile of the standard amount and treat the remaining workmen as
temporarily surplus. In such case the G.M. will arrange for a satisfactory rotation
of workmen within each month so that as far as practicable have equal share in the
available work. If it is found necessary, such arrangements may be continued
under the orders of the DGOF, after the six working days from the commencement
of special arrangement.
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166. Payment for idle time is intended to cover instance where work is
interrupted for an appreciable period. It is not intended to cover shorts periods of
one hour or less of stoppage of work which may be considered incidental to the
manufacturing process.
167. The actual expenditure on account of idle time should be worked out by the
Accounts officer based on the data furnished by the management. When sanction
of the DGOF or Govt. of India is necessary application for the covering sanction
should be sent by the General Manager to the DGOF through the usual accounts
channel as soon as possible after the close of, the month in which it is incurred but
not later than the end of the next month.
168. Whenever there is any idle time beyond the first six working days; in
respect of any workmen the accounts office should look for the approval of DGOF
or such continuation of idle time payment. Regarding the attendance of those
workmen who, will be permitted to stay, out for any day/days, the General
Manager should furnish a list of such personnel giving inter-alia the date/dates
fixed for their, report, at factory to the Accounts Office. In the acquaintance roll
they should be marked as I.T. since they are neither present nor absent. The
date/dates of reporting should be carefully watched by the Accounts Office with
reference to the list received from the management.
Leave and leave salary
169. Industrial employees governed : by the Factories Act 1948 are entitled to
leave on full pay under Civilian in Defence Services (industrial Employee) Leave
Rules 1954 Or Under Section 79 of the Factories Act, whichever is favorable at
different stages of their service.
All other kinds of leave admissible under the CDS (IE) leave rules 1954 will
also be admissible to these employees in addition.
In accordance with the provision of Rule 6 of CDS, (IE) Leave Rules 1954,
the entitlement, of leave on full pay of a I.E. will be based on the length, of
service, whereas the quantum of leave that can be, availed of by him is determined
with reference to the calendar year i.e. to say the leave account of an I.E. can be
credited in advance with the full years entitlement, at the beginning, of the
calendar year without performance of duty in that calendar, year.
Further an industrial employee transferred/ promoted/appointed to a non-

industrial post in a particular year, (without break to service) is entitled to E.L.
under the Revised Leave Rules for civilians of Defence service in that year even
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though he has already got the benefit of full Years leave entitlement under C.D.S.
(I.E.) leave rules 1954 for the same year enabling him to obtain the double benefit
(which is inherent in-the Rules) of leave for the same spell of duty.
Note:- The G.M. will publish Factory Orders notying all kinds of leave
granted to IES every month and furnish a copy of each Factory Order to the
Accounts Office. The Factory Order should specially whether the leave is
granted under factories act or under Departmental Rules.
170. The G.M. should ensure that the leave applied for and received by the
Management by the 24th of a month is sanctioned according to rules and factory
Orders issued so that payment for leave period is made along with the wages for
that month.
171. Leave on full pay is admissible under Leave 1954 as follows:-
---------------------------------------------------------------------------------------------------
Length of total service Amount of leave in a
Calendar year
---------------------------------------------------------------------------------------------------
(a) Less than one year service No leave
(b) 1 to 10 years continuous service 17 days
(c ) Above 10 to 20 years continuous

service, 22 days
(d) More than 20 years continuous

service 27 days
--------------------------------------------------------------------------------------------------
Note: -Industrial employees shall also be entitled to encashment of leave and shall
now get maximum accumulation of full pay leave /annual leave
As per Section 79 of Factories Act 1948, earned leave to an industrial

employee is calculated at the rate one day for every 20 days worked in the
preceding year. For computation of 240 days, all kinds leave with full pay and (a)
days of lay-off, (b) Maternity leave in the case of female workers (c) C, availed in
the previous year are to be treated period of duty.
Inoculation leave
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172. Leave on full pay for inoculation owing to prevalence of plague may be
granted upto 2 days many one occasion. When they are inoculated under orders of
competent authority.
Terminal Leave
173. Full pay leave admissible under Rule 6 of CDS (IEs) Leave Rules 1954 may
be granted at the discretion of the sanctioning authority on the termination of
service on account of retrenchment or abolition of the posts or in case, of
resignation due to ill-health or other compelling circumstances beyond an
individual's control subject to the condition that the leave does not extend beyond
the date of super annuation. In all cases, however, where any notice of termination
of service is necessary, the leave should be so granted as to cover the notice period
as far as possible. It is necessary to extend the temporary post to cover the period
of leave granted to I Govt. servant at the end of the temporary employment.
174. The above provision is not applicable to apprentices and persons in non-
continuous employment. Terminal leave will not be admissible in tike following
instances:
(i) Where the employee concerned has been dismissed or removed from
service (This rule will not apply to persons whose services may have to be
dispensed with as a matter of administrative convenience, an alternative to
the initiation of disciplinary proceedings against them)
Or
(ii) Where the employee concerned resigns his post of his own- volition.
In case of resignation which is not due to reason of ill health or other

reasons beyond the individual's control, sanctioning authority may at his discretion
allow half the amount of full pay leave which the individual can avail of at a time
175. Blank.
Casual Leave
176. Casual leave on full pay may begranted upto 12 days in a calendar year and
the unutilised leave will lapse at the end of the , calendar year. Sundays and
holidays falling in between the periods of leave will not be taken into account for
calculating the period of casual leave availed Casual leave cannot be combined
with any other leave.
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Note 1:-An IE Joining service in the middle or a year may be granted the
full period of 12 days' casual leave or any portion thereof by the authority,
competent to sanction such leave at his discretion taking into account the
circumstances of the case.
Note 2:-While for the purpose of leave under factories Act, the provision of
grant of leave for not more than 3 spells will apply for leave under the
Departmental Rules contained in CDS (IE) Leave Rules 1954, there will be
no such limit regarding number of spells.
Note 3:-No leave shall be earned for the period of idle time, under Sec. 79
of the Factories Act, but idle time for portion of a day will be treated as
work for the purpose of earning leaves, under the Act.
Note 4:- Industrial employees who are governed by Factories Act will be
allowed the option to choose leave under departmental rules or Factories
Act whichever is more favorable. [Govt. of India, Min. of Defence No.
20(2)/82/D (Civ-II), dated-.3-6-83 circulated under 00 no. AT/74: dated 8-
11-83]
Note 5:- Leave entitlement of an industrial Employee superannuate or dies

or discharged on medical, grounds during the course of a calendar year will
be calculated proportionately for to period of service rendered during the
year subject to the overall limit of 60 days. The employee or his heirs will
be entitled to the wages lieu of this leave.
Note 6:- Industrial employees governed under departmental Rules are

entitled for encashment of leave under the same circumstances as for
industrial employees under Factories Act 1948.
Note 7:-All, kinds of leave granted to IEs should be notified in Factory

Orders Leave accounts should be maintained in the form prescribed.
Note 8:-The total service referred to in Rule 4(A) of the CDS (IE) Leave
Rules 1954 refers only to industrial service and, will not include, service in
non-industrial posts.
Note 9:-The under mentioned periods will count as-duty for earning leave
under section 79 of the Factories Act.
(i) Period spent for reservists training with Armed Forces:
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(ii) Period -spent-on- training in UK. at Govt. expense.
(iii) Periods spent on duty with Territorial Army/Home Guard.
Note 10-An absence without leave of an industrial employee cannot be left,

unregularised, if he is permitted to resume after his absence. If the person
concerned was permitted to resume duty but the G.M, of the factory
concerned is not satisfied with the explanation for absence, he may take
suitable disciplinary action against him but the period of absence if not
exceeding three months, will have to be covered by grant of E.L. without
pay.
Note 11--Audit of service books and the leave entitlements of 'IEs will be
done to the same extent as in the case of NIEs. This equally applies to
Hospital Leave. Other kinds of leave not provided for in CDS (IE) Leave
Rules 1954, which may be granted to an IE are given below: -
(i) Hospital Leave/Injury Pay
177. Hospital leave may be granted to industrial employees whose duties

involve the handling of dangerous machinery, explosives materials, poisonous
drug and the like, or life performance of hazardous tasks while under medical
treatment in a hospital or otherwise for illness injury, if such illness or injury
indirectly due, to risks incurred in the course of duties.
Hospital leave shall be granted on the production of medical certificate from

an authorised medical attendant.
Hospital leave may be granted for such period as the authority, granting it,
may consider necessary and Leave Salary for Hospital leave shall be calculated as:
(i) Equal to leave salary while on earned leave; for the first 120 days-on any
period of such leave and
(ii) Equal to leave salary half pay leave for, the remaining period, any such
leave
Hospital leave shall not be 'debited against the (caw account and may be
Combined with any other kind of leave admissible except, casual leave, Provided
the total period after such combination does not exceed 28 months. The period of
leave will be such as may be certified by the authorised medical attendant to be
necessary. The certificate of a superior a1licer not below the rank of a gazettcd
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officer that the in was directly due to risks incurred in the course of duties may be
accepted for the purpose. But the amount of leave will be restricted to that
recommended by the authorised medical attendant. The Hospital leave will
commence from the date of the accident. Duty pay allowed for the number of
hours actually worked on the day of the accident will be deducted from the leave
salary for the day of the accident. Payment to an industrial employee on account of
personal injury caused by accident arising out and in the course of his employment
will be made in accordance with the provisions in the Workmen's Compensation
on Act 1923. The injury leave allowance payable should not be deducted from the
compensation payable under Workmen's Compensation Act 1923. However, it is
permissible to deduct from the leave allowance under the said article the amount
of any compensation only under Sec 4(i)(d) of the Act and not any lump sum
compensation payable under clause (a) to (c) t on 4(i) of the said Act.
Payment of Hospital leave will be made for the number of working days
including paid holidays but excluding Sundays in the case of piece workers and
working days excluding paid holidays and Sundays-in the case of day workers.
A Register for payment of injury pay will be shied in Accounts office to

record all pay- made to industrial employees.
Court Attendance Rules
178. Industrial employees who are granted leave attending court as witness on
behalf of Govt. or as juries and where under local rule remuneration from the State
authorities concerned cannot are entitled to normal wages which they would get
had they not been precluded by order of the court from attending their normal
duties. In admitting leave (which with allowance due will be equal normal wages
excursive of profits) the certificate from the court regarding attendance individual
concerned will be, looked for in audit.
179. The G.M. is allowed discretionary powers short leave without pay on two
occasions for, not more than 2 hours in a month, in, recognized genuine cases. In
very exceptional and emergent cases only short/petty leave without pay for more
than two Occasions or for more than 2 hours on any one occasion may, be granted
at the discretion of the G.M.
Special Casual Leave

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180. Special Casual Leave on, full pay up to maximum of 14 days may be
granted to industrial employees for attending the course of instruction training; etc.
in the Territorial Army.
Special casual leave on full pay on other occasions mentioned below may be
granted to the extent and subject to the conditions mentioned in the Govt. Orders
issued from time to time.
(a) Participation in the sporting events and tournaments of National or

International importance.
(b) Participation in the Inter-Ministerial or Interdepartmental tournaments.
(c) Participation in cultural activities.

(d) Representatives of Unions/Federations/Associations; to attend
meetings/conference.
(e) Undergoing I.U.C.D. insertions.
(f) Undergoing non-puerperal Tubectomy operation
(g) Under going Sterilisation operation.
(h) For the period spent by ex-servicemen boarded out of service and re-
employed as civilians for appearing before medical survey Board.
Special Leave with wages for obtaining medical treatment during working
hours
181. The time spent by workers for receiving medical treatment during working
hours will be treated as under:
(i) In case of injuries/'sickness arising out of work.
(a) The time spent in dispensary/Ambulance room within the factory

premises will be treated as duty %
(b) The time spent in dispensary/hospital. Out side the factory premises will
be treated as special leave with wages.
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(ii) In case of injuries/sickness not arising out of work. The time spent upto
limit of 2 hours at a time will be treated as special leave with wages. The
concession will be limited to two occasions in a month:
The period of .absence will be from the time the workers leave work spot till
he returns to duty at work spot. Workers who do not join duty prior to their
proceeding to receive medical attendance and workers who are not in a
position to, return to duty within the stipulated time limit of 2 hours as well
as those who do not return duty before the closing of working hours will not be
entitled to receive the benefit of the concession given above.
The question whether the injury/sickness arose out of work or otherwise will
be decided oar the bass of the report of the Medical Officers on duty at the
dispensary etc. where the worker receives the treatment.
Calculation of leave pay
182. Calculation of leave pay will be made in the same Way as is done in respect
of duty pay viz. under the formula [(1/N-(S+H)] in the case of day worker and 1/
(N-S) in the case of piece worker when the leave is granted under Departmental
Rules. Sundays and holidays falling within the spell of leave will form part of the
leave but for purpose of payment of leave allowance Sundays and holidays will be
excluded in the case of day workers and Sundays only in respect of piece workers.
Pay, for, the purpose of leave allowance under the Departmental Rules both in
respect of day workers and piece workers should be taken as pay on the date
preceding that on which leave Commences.
Calculation of leave under Factories Act should with reference to Section 80

of the Factories Act. According to this, a, worker granted ,under Section 79 of the
Factories Act shall be paid at a rate equal to the daily average of his total full time
earnings of immediate preceding month ,for the day in which he worked.
183. Blank.
Leave on half pay
184. Half pay leave will be granted as follows:
(a) At the rate of 20 days per year on completion of each years service.
(b) Half pay leave can be accumulated at the rate of days per year without
limit.
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(c) Half pay leave may be commuted without any ceiling subject to
production of medical certificate. In that case twice the amount of such
leave shall, be delaited against the half pay leave due.
(d) Half pay leave may be availed without restriction.
During the leave on half pay, an employee will be paid leave salary at half
the rate of pay drawn immediately before proceeding on leave.
Advance Credit of HPL is admissible in two instatements and10 days each

on the' first day of and July of every calendar year.
[Auty: M of D Corr. No.11 (2)/86/D (Civ-II) Dt. 10-6-88].
Maternity Leave
185. Absence from duty may be granted on full pay for a period of 90 days
from the date of its commencement in all cases i.e. it shall lot ; be restricted to six
weeks from the date of confinement. The female Govt.servant, if temporary, has
been in continuous service for not less than one year before the commencement' of
the leave.
Maternity leave may be granted in case of miscarriage including abortion

(abortion induced under the Medical Termination of Pregnancy Act, 1971 should
also be considered as a case of abortion). Leave should not exceed six, weeks and
should be supported by a medical certificate' from an authorised Medical attendant
or a Registered medical practitioner.
Extra-ordinary Leave
186. Except in case of an employee in permanent employment the duration of

EOL on any one, occasion shall not exceed the following limit,
(a) Three months.
(b) Six months in cases where a Govt. servant has completed one year
continuous service on the expiry of the leave of the kind due end admissible,
and the request for the leave is supported by a Medical Certificate.
(c) Twenty four months where the, leave is required for the purpose of
prosecuting studies certified to be in public interest, provided-the Govt.
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servant has completed three years continuous service on the date of expiry
of leave of the kind - due and admissible under rule.
(d) (i) No IE, other than permanent shall be granted leave of any kind for a
continuous period exceeding five years
(ii) The authority empowered to grant, leave may commute retrospectively:
(a) Periods of absence without leave into extraordinary leave.

(b) Extra-ordinary leave, granted into leave of a different kind, if the
latter type of leave was admissible at the time extra-ordinary leave
was granted.
All leave except extra-ordinary leave taken otherwise than on medical

certificate shall count for increments in the post in which he was working at the
time of proceeding on such leave provided it is certified that he would have
continued to hold the post but for going on leave.
Overtime
187. Any work done under proper orders outside the norms working hours or on
a Sunday or a paid holiday will be treated as overtime. Orders for working
overtime are required to be issued. strictly conformity with the provisions under
Sections 51 to 56 of the Factories Act as modified by exempting if any, framed by
the State Govt. under powers conferred by Section 64 and exemption in force vide
section 65 ibid.
188. Sunday for which a compensatory off is arranged within three days
immediately before or after a Sunday will be treated as work do one on a normal
working day and not as a overtime work. If the Compensatory off is granted within
three days immediately before the Sunday, it will for the purpose of calculating
weekly hours of work be included in the preceding week. In cases where work
done on Sunday is not treated as work done on a normal day, work done on
Sunday should be treated as overtime and taken into account in computing the
total hours for overtime irrespective of whether compensatory off is given or not.
189. Overtime may be systematic or casual. Any overtime worked by a shop or a

Section as a whole irrespective of the period involved or over-time worked by any
individual exceeding 14 calendar days (including Sundays and gazetted holidays)
is classified as systematic overtime worked by individual members of a shop or on
for a period not exceeding 14 consecutive calendar days will be classified as
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casual overtime it is sanctioned by the DGOF in which case it is to be treated as
systematic overtime.
190. The General Manager is competent to ion both casual and systematic over
time in of instructions issued by thy OFB from time to time.
191. Payment of overtime under Departmental will arise when a workman works
beyond the working hours of Ordnance/Ordnance Equipment Factories which has
been fixed at 44 hours per week i.e. 8 hours on all week days and 4 hours on
Saturdays.
192. Payment under Section 59 of the Factories Act, 1948 arises for work done
beyond 9 hours day or 48 hours in a week. The total of the overtime hours worked
in a week should be divided into overtime hours under factories Act and
departmental overtime.
193. In all cases where overtime is admissible to a worker both under the
provisions of the Factories Act and under Departmental rules, the overtime will be
calculated as under:-
(i) For work in excess of normal working hours and upto 9 hours on any
working day or 48 hours in a week, overtime will be paid at the rates pres-
cribed in the Departmental Rules. For calculating overtime pay under this
item, basic pay, dearness allowance, special pay, personal pay, pension (to
the extent taken into account for, the fixation of pay in the case of re-
employed pensioners) and city compensatory allowance will be taken into
account. House Rent allowance, conveyance allowance, traveling and daily
allowance, permanent travelling allowance, clothing allowance, uniform
allowance, washing allowance and children education allowance will not be
taken into account.
(ii) For work in excess of 9 hours on any day or 48 hours in a week,

overtime will be paid at the rates prescribed in the Factories Act. For
calculating overtime under this item, the expression basic wages entitled to
be used in Section 59(3) of the Factories Act includes basic wages, dearness
allowance, city compensatory allowance and house rent allowance. The
terns 'ordinary rate of wages' as per Section 59 of Factories Act 1948
includes basic pay plus such allowances as the worker is for the time being
entitled to.
Note- CEA and conveyance allowance, Bonus, wages for O.T. work etc. are not to
be included.
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194. Both for computing actual work performed and the normal working hours for
purpose of Departmental rules, lunch break and periods of rest will be excluded.
Similarly, for purpose of calculation under 'Factories Act' periods of lunch break
and rest will be excluded for computing actual work performed. The number of
hours for which Saturday bonus is paid without actual work being performed will
not reckon for the purpose of computing normal working hours.
195. The split up between hours of overtime under departmental overtime and
Factories Act may be done by ascertaining the `hours of overtime under Factories
Act' in the first instance. The difference between the total hours of overtime and
overtime under Factories Act will be overtime under Departmental Rules. Thus if a
worker works for 54 hours in a week.
Overtime under Factories Act is 54 48 = 6 hours

Total overtime hours is 54--- 44 = 9
Overtime under Departmental Rules is 9 - 6 hours = 3 i.e. the

difference between 48 and 44 hours. Calculation of OT hours will be done,
weekly basis or daily basis whichever is beneficial to the workers. Therefore, if a
worker is absent on Saturday and the number of hours is 10 hours per, day on
week days then the hours worked is 50 in a week. Calculation of overtime hours
has to be done on daily basis being more beneficial i.e. from 8 hours and 9
hours, I hours under Departmental Rules and from 9 hours to 10 hours under
Factories Act.
Departmental overtime @1 hour per = 5 hours day for 5 days
Overtime hours under Factories Act

@ 1 hour per day for 5 days = 5 hours
Total OT hour @ 2 hours per Days or 5 days =10 hours
Night Shift bonus
196. A night shift represents the hours worked between the termination of the day
shift and the normal opening hours of the next day. The piece workers who
Perform overtime work under Departmental rules in the night shift will be paid
an extra half hour pay termed as 'Night shift bonus' calculated at the hourly rate of
1/200 of the monthly basic pay plus dearness allowance, special pay, personal pay,
pension (to the extent taken into account for fixation of pay in the case of re-
employed pensioners) and city compensatory allowance for every hour of
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systematic overtime under Departmental Rules worked on the Night shift in
addition to their piece yearnings. This element is not admissible to day workers.
Calculation of overtime
197. Calculation of overtime pay may be made in accordance with the following
formula where:
'P' stands for monthly basic pay
D.A.-Dearness allowance
C.C.A.-City Compensatory Allowance
"D"- All allowances including D.A., C.C.A. and House Rent Allowance.
Day workers under Departmental Rules
Beyond normal working hours upto 9 hours on any day/48 hours in a week.
(i) (P + DA + CCA)/200 for every hour of overtime work overtime

upto 9 hours on any day/ 48 hours in a week.
(ii) [2 (P+D)/200] for each hour of overtime work beyond 9 hours

a day or 48 hours a week.
The portion P/200 is debited to the job concerned.
The following extra payments viz.
(i) (DA +CCA)/200 and

(ii) (P+2d)/200
are booked to work order 02/00008/00 (overtime. bonus) to avoid inflation of cost
of articles manufactured in overtime hours.
Note- Piece workers who are put on day work for part of a wage period are to be
paid O.T.A. under Departmental Rules also, as admissible to the day
workers, for the period he is on day work.
(Authy: C.G.D.A. No. AT/II/2010/XLVI dated 17-9-92).
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Piece workers departmental overtime
198. No overtime will be admissible to piece workers for working overtime in

the ay shift but for the purpose of distribution of Piece work profits the time wages
element in respect of overtime upto 9 hours a day or 48 hours a week will be
determined at the rate of P/200 per hour, where 'P' represents minimum of his
scale. The O.T. element on the difference between the actual basic pay and the
minimum of pay scale will be paid separately as shown in Annexure 'C' to para
149.
For systematic overtime worked in the Night Shift under Departmental

Rules, an extra half hour pay calculated at the hourly rate of the monthly basic pay
plus dearness allowance, special pay, personal pay, pension (to the extent taken
into account for the purpose of fixation of pay) in the case of re-employed
pensioners and C.C.A. is paid in addition to piece work earnings.
Factories Act
199. For each hour of overtime in excess of 9 hours on any day or 48 hours in a
week an amount equal to P/200 for every hour O.T. worked will be added to the
nominal time wages of a pieceworker: In addition, he will get P/200 of the
monthly basic pay plus 25% of the basic pay plus twice all allowances. in other
words, if `P' represents the monthly basic pay and 'D' stands for all allowance such
as dearness Allowance, House Rent Allowance, City Compensatory, Allowance,
etc. overtime for each hour will be P/200 +l/4/P/200+2d/200
The extra payment involved on account of night shift Bonus under

Departmental Rules viz. [1/2 (Pay +DA+CCA)]/200 X No. of hours (upto 9 hours
a day/48 hours a week) as indicated at sub para 198 and also the payment on ac-
count of overtime Bonus (OTB) under Factories Act 1948 will be booked to work
order No. 02/ 00008/00
Note 1:- Periods .of idle time caused by stoppage of power, Break-down of
machinery or other causes, beyond control should be reckoned for purpose
of computing working hours for overtime under Factories Act. Such periods
however, not reckonable for computing working hours for the payment of
overtime allowance under Departmental Rules
Note 2:- Work done by industrial employees out-side the factory/workshop

premises will also taken into account for computing overtime hours
provided the nature of duties performed by the individuals outside the
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factory/, workshop premises is similar to that done by them inside. For this
purpose, a certificate to, the effect, that the nature of the work done outside
the premises similar to the, nature of work done inside the factory/workshop
premises will be furnished by the Head of the Factory/Workshop.
Note 3:-The overtime allowance in respect of industrial employees who are

employed whole 'time outside the factory will, however, be regulated
according to as they are treated as workers or non-workers. For this purpose
they will be treated as workers either when they report for duty at the
factory and t lien go out for work or mark their attendance in the Section
located outside the factory premises which has been registered as a Factory
in addition to the main Factory. In other cases they should be treated as non-
workers and not governed by the Factories Act.
Note 4:-IEs paid from the Defence Services Estimates will also be eligible for
overtime allowance for performing overtime work while on tour/temporary
transfer.
For working out overtime allowance, the working hours of the establishment
to be visited while on tour will be taken into account. Time spent for journey shall
be excluded for computing over, time hours.
Cost Accounting
200. For Cost Accounting purposes, overtime allowance is spilt up into overtime
pay and overtime bonus, though so far as the question of actual payment to the
workers in concerned no such differentiation is necessary and these terms, need
not be used at all. P/200 of each hour of overtime has been construed as overtime
pay for purpose of merger with the time wages as part of labour charges and the
excess over P/200 for each hour of overtime treated as overtime bonus for purpose
of accounting it as an item of overhead expenditure. For this purpose, the
procedure detailed below may be followed in actual practice as it, will involve
calculation of overtime pay virtually at the full admissible rate as also segregation
initially of the bonus element of the overtime allowance.
(i) Total overtime hours worked during the wage period will be recorded
first below the total normal attendance for calculation at P/200 rate for
merger with the time wages of day workers or Notional time wages of piece
workers as the, , case may be.
(ii) The total overtime hours worked. Beyond the normal working hours
upto 9 hours on a day/ 48 hours in a week will be recorded in the adjacent
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column for calculating (DA+CCA)/200 for each hour of overtime per day
workers which represent the bonus portion of overtime allowance under the
Departmental Rules. Hours of systematic over time in the night shift under
Departmental Rules will be noted separately for piece workers for cal-
culating 1/2 (P +DA+CCA)/200 under the night shift bonus.
(iii) The overtime bonus beyond nine hours day /48 hours in a week will be
indicated in the next Column for purpose of calculating the bonus element
under the Factories Act viz. (P + 2d)/200 for each hour in the case of day
workers and (P +1/4P+2d)/200 for each hour of overtime in the case of
piece workers.
Night Duty Allowance
201. Industrial employees working on night shifts are eligible for Night Duty
allowance on the basis of weightage of 10 minutes for every hour of night duty
performed between 22.00 hours and 6.00 hours at the rates specified in the
Government orders Issued from time to time. For calculation of weightage, duty
for less than half an hour shall be ignored and, duty for half an hour and more but
less than one hour shall be reckoned as one full hour. The rounding off of fractions
of an hour shall be made with reference to the, actual hours of night, duty
performed in a month (i.e. wage period) and not on daily basis. Night duty allo-
wance not be admissible during overtime hours if any falling within the night duty
hours. The allowance will not be treated as `Pay' for purpose of piece work
earnings or for other allowances admissible to the employees. The night duty
allowance payable to the industrial employees shall be booked to work order
number 02/00003/00 and the work order is exempt from DA levy.
Note: - In the muster rolls, the period of night shift indicating the time of
commencement and closing of such a shift in respect of workers on ' ht duty
should be specifically indicated by the factory.
The net hours of work between 22.00, hrs. and 6.00 hrs. performed by the
workers daily during the normal hours of night shift duty (i.e. after excluding the
period of recess, shift leave, overtime etc. during that period) ',which hours
qualify for night duty allowance should be shown separately in muster roll and
progressive weekly and monthly Carried over as done in the case of normal
booking, of attendance.
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Paid Holidays
202: The industrial employees are entitled to 16 paid holidays. Out of these
holidays, three holidays namely, Republic Day, Independence Day and Mahatma
Gandhi's Birth Day being National Holidays, are compulsory. The remaining 13
holidays, will be determined every year by the establishments/organisations
themselves on the basis of the guidelines issued by the Govt. from time to time.
Holiday pay is not admissible separately to day workers as the element of

pay stands included in their daily wages.
Holiday pay for piece workers is to be calculated based on tire formula

(1/N-S) X basic monthly rate of pay where 'N' represents the number of days in a
month and `S' represents the number of Sundays in the month. Holiday pay is paid
separately.
Holiday pay is not, however, admissible to them when the paid holidays fall
within the period of leave without pay. It is not also admissible separately as an
element of wages to the piece workers when the paid holidays fall within a spell of
leave with pay/half pay in which case the entire period will be treated as leave
with pay/half pay as the case may be and paid accordingly. Holiday pay is
however, admissible for any paid holiday which may be affixed or prefixed to,
leave.
In the case of day workers, when paid holidays fall within a spell of leave
with pay/Half pay, while the entire period will be treated as leave, no payment of
leave salary will be made for the paid holidays within the period of such leave.
Labour Methods of payment and allocation.
Dearness Allowance
203. The rates and conditions etc. for the grant of dearness allowance are
contained in Govt. orders issued from time to time.
The rates of clearness allowance will be determined with reference to the

pay of the individual concerned. `Pay' means the basic monthly rate of pay and not
the actual piece work or day work earnings.
Dearness allowance during leave will be based on the rate of pay on which
leave salary has actually been drawn. Therefore, when leave on medical certificate
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on half pay is drawn a for determining the rate of dearness allowance will mean
half of the basic monthly rate of pay drawn for the leave period.
204. Dearness allowance is admissible for the number of days an industrial

employee is on duty or on leave with pay or paid holiday in the case of piece
workers. Leave with pay includes injury etc. for which pay is drawn. Dearness
allowance will be admitted for complete days irrespective of attendance for part of
a day. No dearness allowance is admissible for leave without hay and unpaid
holidays. It is not also admissible when paid holidays fall within a period of leave
without pay.
205. Calculation of dearness allowance for broken periods of a month will be

made exactly in the same manner as calculation of pay for a broken period of a
month i.e. 1/(N--S) x rate of dearness allowance for each day where `N' stands for
the number of days in a month and `S' for Sundays. A worker is, therefore, eligible
for full dearness allowance if lie remains present during all the working days in a
month. But if he is employed for any days more in addition to the normal working
days f the month, lie will not be eligible for any extra clearness allowance for
these days.
Compensatory (City) Allowance and House Rent Allowance
206. The rates and conditions etc. for the grant compensatory (city) allowance
and House Rent allowance are contained in the Govt. orders issued from time to
time.
Payment of Compensatory (City) allowance and douse Rent Allowance
involves.
(a) Determination of the eligibility to draw these allowances.
(b) Determination of the rate of allowance.
(c) Determination of the number of clays for which the allowances are
payable and lastly.
(d) Calculation of the amount of allowance due,
207. The rates of Compensatory (City) allowance and House Rent Allowance
will be determined with reference to pay and dearness pay where applicable. For
this purpose `Pay.' means the basic monthly rate of pay and not the actual piece
work or day work earnings or leave salary drawn. Those in occupation of Govt.
quarters as well as those barred for drawing the allowance arc not eligible or the
House Rent Allowance. List of industrial employees eligible for the allowance is
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indicated monthly in the muster roll along with other certi5cates under the
signature of the officer competent to sign such certificates.
208. Compensatory (City) allowance and House rent Allowance is admissible for
the number of days an industrial employee is on duty or on leave or paid holidays.
These allowances during leave period including leave without pay may be granted
for a period of 40 days at the same rate at which the individuals were in receipt of
before proceeding on leave. The limit of 40 days shall be extended to 180 days in
the case of employees suffering from TB/Cancer/other ailments during leave taken
on medical certificates. Sanction of the Ministry of Defence is necessary for
payment of these allowances beyond the period of 180 days.
209. Calculation of compensatory (City) allowance and House Rent allowance for
broken periods of a month will be made exactly in the same manner as calculation
of pay or dearness allowance for broken periods of a month.
210. Blank
Educational Assistance
211. IEs are entitled to educational' assistance in the form of children education
allowance, reimbursement of tuition fee, subsidy for purchase of books and hostel
subsidy in terms of Central Civil. Services (Educational Assistance) Orders 1988
vide Annexure to Min. of Personnel, P.G. and Pensions, Deptt. of Personnel of
Training O.M. No. 21011/21/ 88-Est (Allowance) dated 17-10-88 as amended,
from time to time.
Insurance Scheme
212. IEs are also eligible for the scheme as contained in Annexure to Ministry of
Finance OM. No. F. 15(3)/78-WIP dated 31-10-1980 as amended from time to
time.
Completion of Muster Rolls for payment
213. Wages payable to an industrial employee for any period will include:
(i) Duty pay at basic monthly rate for day workers and piece work earnings
for piece workers.
(ii) Other elements of pay i.e. idle time, overtime, night shift bonus, holiday,
injury pay etc.
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(iii) Overtime Bonus, Night Duty allowance and other extra remuneration
like incentive bonus payable under the existing rules.
(iv) Certain allowances like Dearness allowance, City Compensatory

allowance, House Rent Allowance.
Each element of wages (including House Rent Allowance) should be

calculated separately in the appropriate column of the attendance record as stated
in earlier paras. All the elements of wages thus calculated will be totalled and
recorded in the column for total. As each page of the record will contain names of
8 to 10 industrial employees, .he accuracy of the gross wages (inclusive of House
Rent Allowance) appearing against their names will be ensured by reconciling the
grand total of the page by cross totalling the columns or totals. The next page will
be completed in the same way and the columns, and page totals of all pages will be
copied down on a separate sheet at the end of the, volume and preparing a
summary of the record of totals, the total gross wages for the whole section will be
arrived at. The gross wages of each industrial employee of the Section will then be
transcribed in the appropriate place of the muster roll. The total of gross wages
thus recorded will be worked out and reconciled with the total of the records. The
total sum reconciled will be passed for payment by an endorsement on the muster
roll under the Account officer. The muster roll will thereafter be sent to the factory
for disbursement of wages or effecting recovery of all authorised deductions like
license fee for quarters, hospital stoppage, fund recoveries, festival advance etc.
Dates will be fixed by the General Manager in consultation with the

Accounts Officer by which the acquaintance rolls-for-various shops of Sections
are to be sent to the cash section .The Accounts officer will take all possible steps
to forward the rolls by due dates.
Note 1:-The Acquaintance Roll will be passed for payment by an Accounts

Officer. When the Accounts Officer is granted casual leave or other leave
and if no officiating arrangement is made in his place, the senior
AAO/Section Officer is allowed to pass 'provisionally' pay orders of Muster
rolls subject to counter signature by the General Manager of the Factory
before payments are made., The muster rolls Which are so passed
provisionally should be post-audited by the Accounts Officer on his return
from leave. Under this arrangement no responsibility, devolves on the
General Manager as the correctness of the muster rolls, countersigned by
him.
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Note 2:-The Section Officer I/c of the Factory will pass the 'muster rolls' and the
payment order will be countersigned by the officer I/c of the Factory before
payment is made.
Note 3:-A review of primary documents e.g. a attendance record, leave memos,
gate pass, overtime rolls, day work and piece work cards etc. will be carried
out by a Section Officer to the extent considered necessary by the Accounts
Officer. A register of Review of Primary Documents in the proforma given
in Annexure "A" is kept for the purpose of recording the results of such
review. The review should be completed before the master rolls are passed
for payment.
Note 4:-The Calculation of various elements of wages should be subject to a test

check by Section Officer to the extent of 3 per cent before the Muster Rolls
are passed for payment Selection of the items will be made personally by
the Accounts Officer-in-Charge. Labour Section and the selection of the
items should on no account be done in routine fashion. For this purpose it
should be ensured that 3% items are selected in such a way that they
include doubtful or complicated cases. A general scrutiny of pay records of
Industrial Employees by the Section Officer should also be carried out. The
result of the 3% check by the Section Officer will be recorded in register as
per proforma given in Annexure À'.
Note 5:- 20% check will be carried out by Internal Audit cell functioning
under Chief Internal Auditor for the factories other than Ordnance
Equipment and ordnance Clothing Factories. In respect of ordnance
Equipment and Ordnance Clothing Factories 20% check shall continue to be
carried out by the respective Factory Accounts Office. The results of
checking and the settlement of discrepancies etc. shall be recorded in the
register to be maintained as per proforma given in Annexure "A".
Note 6:-The pay entitlements of the Industrial Employees shall also be checked to,
the extent off/6th of the total number of employees as to cover all the cases
within a period of six months. This check will be carried out with reference
to pay fixation proforma in the case of promotion/reversion, factory order
and last pay certificates in respect of individuals who have come on transfer
and the entertainment metros in the case of newly appointed workmen.' A
reference should be made to the latest audited document. (Including
periodical increment certificate) for the purpose of this half, yearly veri-
fication.
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Note 7:- At the time of this periodical visits, the inspecting officer of the C of A
(Fys) of the Group will exercise a test check and general review over these
payments, and for this purpose one month's wage sheet in a half year should be
checked in detail by inspecting officer. The other months' wage sheet should be
generally reviewed, subject to the provision that if the inspecting officer has
reasons to suspect the accuracy or authenticity of the sheets, he should increase the
scope of the check.
Agreement Form of Labour
214. The Accounts Office will make out an agreement form of labour (IAF 13) in
duplicate in which the total amount passed for payment will be entered section-
wise. its will be forwarded to the General Manager of the Factory, who will return
one copy duly completed to show the amount actually paid, undisbursed wages,
fines, licence fee etc. recovered, income tax, provident fund recoveries and other
deductions. All supporting schedules and documents will also be forwarded along
with the agreement form of labour so as to reach the Accounts Office by 10th of
the second month following that: to which the transaction pertains.
Payment to Industrial Employees
215. Advances are paid by Accounts Officers attached to factories to heads of

formations on requisitions based on an estimate of probable amount required
during the month for payment to industrial staff. For this purpose, cheques in
payment of requisition for advance will be normally issued by the Accounts
Officer one or two days be fire the actual date of disbursement. The
reasonableness of the advance claimed should be checked with reference to
anticipated payments based on past actual a present trends. These advances will be
recorded in a demand register (IAFA 590) and adjusted on receipt of disbursement
certificate from the officer concerned after due checks thereon as check down in
Disbursement Certificate.
Disbursement Certificate
216. A monthly Disbursement Certificate (IAF0 1929) is prepared by the Factory

for industrial employees who, are paid out of advances Obtained monthly from the
local Accounts Officer. The payment side of the certificate shows (i) the total
amount passed for payment in the muster rolls (ii) deductions made there from (iii)
the pet amount payable and the actual amount disbursed. Arrear wages paid and
also the payments made through supplementary bills on, account of discharged
also pled therein. The receipt side of the certificate shows (i) advances received
from the Accounts officer and sums, if any, drawn on Emergency Cash requisition
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and also (ii) any receipt for undisbursed wages remitted by Money Order. The
difference between the receipts and payment represents undisbursed amount which
is required to be recorded the payment side of the disbursement certificate and
both the sides balanced. The Treasury receipt for the undisbursed amount along
with the disbursement certificate duly supported by requisite schedules should be
sent to the Accounts Office on or before the 10th of the second month following.
217. Necessary punching media will be prepared in adjustment of the Treasury

Receipt and recoveries noted in the disbursement certificates viz. licence, hospital
stoppages, fund recoveries etc. The original copy of the punching media will be
sent to the E.D.P. section of the (Main Office of C.C. Of A (Fys), Calcutta). The
relevant demands outstanding in the Demand Register should be closely watched
and necessary action taken for prompt settlement where necessary.
218. The amount of deduction wilt be, checked with relevant scheduled, licence
fees recoveries shown in Disbursement certificate should be checked with the rent
rolls at the time they are audited. The total amount of deduction as noted in the
Disbursement Certificate will agree with the total amount of deduction shown in
the Agreement Form of Labour. The net amount payable as shown in the
Disbursement Certificate is checked with the total amount shown as payable in the
Agreement Form of Labour to see that they agree. The arrear wages paid as shown
in the Disbursement Certificate will be verified with the list as well as with the
entries in the Absentee Payment Register. The amount of the undisbursed wages
which can be worked out from the details of the disbursement certificate will be
checked with the grand total of the Absentee Payment Register to see that they
agree.
Absentee Payment Register
219. Absentee Payment Registers are maintained separately for each section for
each month in the loose leaf form in the factory in which all amounts remaining
undisbursed on the regular pay day are noted and so also the payments made there
from. When all payments have been completed. from a sheet in the Absentee
Payment Register and necessary audit check has been carried out, the sheet will be
removed from the register and attached with the last page, of the relevant
acquaintance (Muster Roll).
A part from the check mentioned in the previous para, the following points
tire to be verified: -
(i) The entries in the Register have been correctly made from the
Acquittance Rolls.
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(ii) The total of column of àmount due' on each sheet is written both in
words and, figures.
(iii) The register should be initialed by the Auditor against each payment
which has been attested by the factory office.
(iv) The grand total agrees with the amount shown as 'un-disbursed
wages' in the Agreement Form of Labour.
Payment of arrear Wages
220. The claim for arrear wages becomes time barred after 12 months from
the date the wages became originally due for payment. The authorities competent
to sanction arrear wages are given below: -
Periods of arrear of Authority
Wages
Full powers up to Dy. GM/ Financial concurrence

one year Managers is required where audit
authorities are
Full powers beyond General not in a position to
three years but not Manager investigate the claim more
than six years due to limited period of
Preservation of records.
Beyond six years OF B
Doubtful cases will however be referred to the .Government of India for

orders and the C C of A (Fys) will invariably be consulted when claims of the
above nature are dealt with.
Belated and Advanced Payments
221. Belated payments for work done in previous months are ordinarily
inadmissible. If at the .of payment a workman discovers that he has been paid for
certain work he has done during the month he will at once report the matter and
after investigation any amounts due will either be paid to him on supplementary
pay roll or included the wages for the following month. Beyond; no belated claims
will be admitted unless supported written order of the Genera1 Manager recording
the reasons allowing the belated claims.
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There will be no difficulty to book the expenditure involved to the out-turn
order as usual if the payment is made in the year in which the Warrant closed or
running. But if the, warrant was closed the previous year, the out-turn, charge
(through piece work cards while making payment' in the payment year) should be
relieved through a transfer voucher by crediting then out turn work order and
Debating the work order under 02 series. Further, if the accounts of the previous
year remain open at the time of payment, the actual cost can also be eked out by
adjustment through a transfer voucher by debiting the out-turn order and crediting
work order under 02 series. In no case, however, work order should be operated
without instruction from the Chief Controller of Accounts (Factories), Calcutta.
Financial Accounting of Labour Charges
222. The Pay head of Industrial Employees is 54/805/03. To have detailed idea of
expenditure, unit controls have been allotted for overtime pay, Educational
assistance etc. This pay head will be charged with the entire amount while paying
any advance or adjusting any debit/credit accounted for in the disbursement
certificate. Similarly, the pay heads will be credited (as minus charge) with the
entire amount while adjusting any treasury receipts for amounts deposited against
the advance drawn. It is evident, therefore, (with reference to the entries in the
disbursement certificate as explained in Para 216 to 218) that the amount of F
unclaimed wages is not charged to the pay head in the financial accounts although
the same is fully charged in the Cost Accounts. The difference between the cost
and financial accounts thus represented by the unclaimed wages is treated as
'Outstanding Liability'.
Cost Accounting Aspects: Day Work Cards/Piece Work Cards
223. The different productive/service section will issue day/piece work card in
the prescribed forms to workmen showing the work to be done by any individual
or a gang. In order to make payment to industrial staff in a particular month
necessary advance calculated Eased on the requisite estimated amount in a
particular month is paid by the concerned Accounts Officers to the Head of the
Factories. For this purpose a cheque for payment of the advance is issued by the
Accounts Officer, one or two days earlier to the actual date of disbursement. The
justification for the advance claimed will be checked on the basis of the past actual
and the current trend. These advances will be noted in the demand register
(IAFA-" 590) and after getting the same checked by the concerned Officer the
same will be adjusted on the receipt of the Disbursement Certificate as has been
prescribed in the Disbursement Certificate. The cards will be prepared with
reference to the Manufacture Warrant incorporating all identification particulars.
The cards so distributed may, be returned to Section for safe custody and ready
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reference. They should, however, at all times be readily accessible to the workmen
concerned for reference.
224. In the case of day workers who are continuously employed on the same type
of indirect work, no day work card are necessary but details of men so employed
and the work order concerned on which they are employed are to be furnished by
the by the Sections concerned to the Accounts Office. It should, however, be
ensured that the financial limit laid-down for incurring expenditure by the G.M.
against these work orders is not exceeded without the sanction of the DGOF.
Day work cards (in duplicate in the case of factories to which E.D.P. Section
are not attached) will be prepared periodically for each day worker and submitted
to Accounts Office. These cards will show the ticket number, the name of the
worker, the rate f ay, the work order number and the warrant on which he was
employed on each job during the period.
225. Having furnished the muster rolls, duly completed, to the factory
management, the Accounts Office will complete the day work cards as regards the
amount debitable to each work order and warrant. For this purpose, the cards
should first be posted on the relevant manufacture warrants, supplementary work
orders/drafts etc. concerned to see whether the work shown on the day work card
has been authorised. The total time for which each workman was present on duty
during the period according to the muster roll should be agreed with the total time
booked to jobs through the day cards for each workman. Any discrepancy should
be brought to the notice of the management and necessary reconciliation made.
After the timings have been agreed, the debit to each job will be calculated on the
basis of tune spent on each by the workmen and his rate of pay based on the
formula 1/[N-(S+H)] x rate of pay for each day. The total of debits to jobs thus
allocated in respect of each man should agree with the total day earnings passed
for payment to him in the muster roll. The completed day work cards should be
passed thereafter to the E.D.P. Section for use by that Suction in the compilation of
labour abstracts etc.
226. The day work card which is prepared in the kind of documents 17 does not
furnish the particulars such as operations performed or the quantity passed in
inspection. This can be checked while posting day work cards in the manufacture
warrant. It should, however be seen in audit that no job whose piece work rates
have already been fixed is carried out on daily work basis.If any job whose piece
work rate is carried under exceptional circumstances on daily work basis, there
will naturally be a variation between the estimated and actual cost. Under normal
circumstances, the actual cost should be generally less than the estimated cost,
which includes a percentage of piece work profit. As such, if the actual labour is
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greater than the estimated cost, the fact should be brought to the notice of the
management for explaining the reasons for Variation.
227. Separate statements for each section in respect of day workers employed
continuously on one work order showing ticket numbers, names etc. and the work
orders involved will be received from the factory monthly or periodically as
agreed between the Accounts Office and Factory Management. These work orders
will be copied in the counts Office Attendance Records for reference while
preparing allocation sheets of labour mentioned in para 214.
Labour Punching Medium
228. For booking payments pertaining to leave pay, holiday pay, overtime bonus,
dearness allowances, (debit and credit) the Accounts Office prepare labour
punching media showing the Section code number, the work order number and the
total amount. All these punching media relate to indirect orders only.
Preparation of Labour Abstract
229. All piece work cards; day work cards, allocation sheets and the labour
punching media pertaining to a month are sent to the E.D.P. Section for the
preparation of labour abstract on E.D.P. Machine. While forwarding these
documents, the A.O. also ultimate control totals of each kind of document
pertaining to each Action. The Labour Abstract is prepared section-wise showing
each work order and warrant and the amount of labour booked. Charges shown in
the labour abstract are inclusive of allowances which are levied at the constant
D.A. percentages as explained in next para.
A top sheet is ago prepared by E.D.P. Section, showing for each section, the
total charges booked against each work order series (01, 02, 70, 90 etc. series) and
also the grand total for the section.
Allocation of DA, CCA etc
230. At the beginning of every financial year a percentage will be worked out for
each section of the Factor based on the actual amount paid as basic wages and
dearness allowance, House Rent Allowance and City Compensatory Allowance.
The figures for the previous year should be suitably modified taking into account
the load position, overtime working composition of the trade and Grade of men
employed in that section as also revision in the rates of D.A., H.R.A. And C.C.A
for this purpose management's advice should be sought.
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An example is given below:
Suppose the basic wages and D.A. etc. paid for a section in 1983-84 are Rs.
60,000 and D.A., CCA & HRA is Rs. 90,000 respectively then the percentage to
be adopted for that section valid for the year 1983-84 will be
[(Amount of DA, CCA & HRA)/Basic Wages] x 100 =90000/60000 x 1000=150
While working out the constant percentage, the amounts relating to training
work order viz. O1/ 00010/00 etc., 02/00003/00-Night Duty Allowances,
02/00007/00--Payment of incentive bonus to I.Es. 02/00008/00-Overtime bonus to
I.Es and such otherwork orders as exempted from levy of DA should not be taken
into account.
The percentage thus worked out will be intimated to EDP Section to in the
month of May every year along with the Punching Media for April. EDP Section
will adopt this percentage throughout the year for levy and inclusion of DA, CCA
and HRA in the monthly labour abstract in respect of all work orders and. warrants
excepting those which are exempted from levy of D.A.
The amount of DA, CCA and HRA actually paid every coon=h will be
compiled in Cost Accounts as follows: -
DA/HRA/CCA paid to I.E. W.O. 02/00002/00 of Factories.
The amount compliable to work order 02/00006/ 00-Relief to be taken of

DA, HRA and CCA allocated at constant percentage to both direct and indirect
work orders as part of labour charge will be worked out by AOs with reference to
the basic wages on which DA, CCA and HRA are leviable at the constant, DA
percentage of the section concerned. This amount will be included in the monthly
punching media to be sent to E.D.P. Section.
In exceptional cases where the estimates of Basic Wages, DA, CCA and
HRA have to be changed due to variation in load, grant of enhanced DA etc.
revision of the percentage during the year may be made.
The difference between the actual allowances paid for a month in each
section and the amount allocated to various- jobs at the pre-determined rate will
represent under/over allocated DA which will automatically get included in the
variable overhead expenses of that section to recovered in production.
Piece Work Rate

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231. Fixation of piece wok rates for a piece of work/operation is only feasible if
the work is Measurable i.e. if a reasonable approximation of the volume and nature
of work involved can be made. Accordingly, no piece work rates can normally be
fixed for indirect services, repair job etc. All sundry jobs where the exact quantum
and nature of work is not susceptible of exact determination should be carried out
on day work.
232. In the case of non-recurring jobs, that is, job for which the quantities are
small and further orders are not anticipated, no standard rate form is obviously
required and as such piece work rate will be fixed on the basis of estimates.
233. For fixation of piece Work rate, the work will be split up into different
operations and the trade and grade of labour required, determined. Two essential
factors involving a rate is the hourly rate of the operator and the time in hours
required to do the job. The time required can be estimated on an ad hoc basis or
may be fairly calculated to clinically with reference to time taken actually in
respect of similar jobs, if any. Recurring items of work should initially be
undertaken normally on, Work Basis. Piece work rates can be fixed only after
proper time and motion study and watching performance for some period. The
provisional piece work rate will show (i) the work. split up into operations
together with the estimated time required for each operation (ii) the c1ass or grade
of labour anticipated to be employed (iii) the minimum rare of the grade of the
employee for each of these operations and (iv) the actual amount of money in
rupees for each of these operations.
234. By proper time and motion study the average time taken to do the
job/operation should be determined on a data sheet by taking 8 to 10 rear dings
through stop watch arrangements by engaging different operations of the same
trade and grade on the average time, an allowance up to 12 per cent may be
added for machine break down tool, sharpening, fatigue etc. on the total time
inclusive of the allowance, another 25% allowance will be provided for incentive
to the worker. The time so arrived at will be taken as the standard tile. The hourly
rate of operator will be minimum of the pay scale divided by 195 corrected upto
four decimal places. The piece work rate will be the product of standard time and
the hourly rate correct upto four decimal places.
235. Piece work rates of operation or Estimates/ rate Forms should be worked out
to four places of decimal but while making payment of the monthly wages,
rounding off will be done to multiples of nearest 5 paise in accordance with Rule
789. Central Treasury Rule Part I.
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236. It must be made clear to the operators that the rates are provisional and that
they will be finalised within 3 months of the commencement of work at
provisional rate. The rates will be finalised as a result of time study of various
operations concerned.
Piece work rates, once fixed should not be altered unless there is a change in
method of manufacture or change due to introduction of improved types of
machineries or any other very special circumstances. As such, it should be
ascertained before finalising provisional rates that they are neither tight nor slack
i.e. they are really fair to; the Government and the workmen.
237. Whenever a new piece work rate is fixed or an existing rate is revised by
Management, Accounts Office will see in post audit whether the new or revised
rate is financially equitable with reference to data such as the rates of pay of the
workman skill required, operation time test/intervals and other allowances etc.
which will be furnished by the Management.The Accounts Officer will not merely
check the arithmetical calculation but also scrutinize the rate and scrutinise the
rate and will have the right to challenge the same form a financial point of view.
238. Any abnormal profit or loss should be subject to scrutiny for ascertaining
the real cause and it is due to wrong fixation, revision will be advised and looked
for in audit. A register of profit and loss of individual Piece or and gang work rates
will be maintained by the accounts Officer for the purpose of watching the normal
percentage of profit or loss. No payment is made when the profit exceeds 75%.
The excess profit is booked to indirect work order No 02/ 00127/00.
239. As rates for all operations and the quantum different materials required for a
job are after actual establishment of the manufacture, on to labour rate and/or
material will not be vary under normal circumstances. In exceptional
circumstances only addition may be necessary for covering some job of a non-
recurring nature such as bringing materials to the correct size or shape or to rectify
defective forgings or castings or for similar jobs of a non-recurring nature. The use
off such non-recurring rate form should be restricted to the absolute minimum and
can be resorted for special reasons to be recorded in for the scrutiny of the
Accounts Officer in audit:
240. Piece work incentive scheme has also been introduced in Chemical
Factories.
Increment
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241. Increment Certificates are submitted to the Accounts Officer by the

Management duly completed signed in the revised form, IAFA (456) as and when
they are due. Periods of all kinds of leave except extra ordinary leave taken other-
wise than on medical certificates will count for increment. Absence from duty
lasting for less than a day during periods of strike/token strike, treated as, dies-non
will not affect the qualifying service for purpose of grant of increment. In other
words, increment will not be deferred by any period of dies non lasting for less
than a day. Where, how-ever .the period of strike last for one full day or re, the
increment will be deferred by the number of full days of absence. For the purpose
of arriving at the date of next increment in the time scale in which the individual is
serving, total of all such period, as do not count for increment in that time scale
shall be added to the normal date of increment.
It should be seen in audit that the increment certificates have been signed by
the competent authority and that increments of progressive salaries have been
earned to qualifying service as detailed by the administrative authorities in the in-
crement certificates. It should also be ensured that the lien certificates issued by
the leave sanctioning authorities are rendered along with the periodical increment
certificates of those who proceed on leave while on officiating appointment. The
particulars shown in the increment certificates are not normally required to be
verified with reference to the service documents/audited wage records etc. unless
special circumstance necessitate such a course. A record of the date of last
increment and the quantum of non-qualifying service should, however, be kept in
the Accounts Office to verify the correctness of the details of service given in the
increment sheet.
Payment under workmen's compensation Act, 1923
242. If a personal injury is caused to a workman by accident arising out of and in

course of his employment, his employer shall be liable to pay compensation in
accordance with the, provisions of the workmen's compensation Act, 1923, subject
to the fulfillment of the conditions laid down in the same Act.
The General Manager is competent to sanction competent to sensation under

workmen's compensation act, 1923 upto the ceiling prescribed in the act for all
employees defined as `worker' of the Factory with the prior concurrence of the
Accounts Office. OFB has powers to sanction upto the ceiling prescribed in the
Act. OFB is not required to obtain prior financial concurrence before according
sanction but only a prior verification by the A.O., which would ensure the rates of
pay and allowances on which payment is based are correct is, required. In cases
where A.O. while verifying a case raises question bout the applicability of the
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workmen's compensation Act, it is for DGOF to take a final decision an in case lie
decides to sanction payment under Workmen's Compensation Act, such payments
will be made by A.O. .In such a case when A.O. feels that the payment was not
regular, he will place such payment under objection and if the objection is finally
upheld, the payments will have to be regularised under the orders of Competent
Financial Authority.
243. The convening of Court of Inquiry for enquiring into the accidents is an
administrative matter and unless there is `prima facie' a case of doubt no objection
of reference seeking for clarification arising out of the proceedings of the Board of
Inquiry need be made.
Every endeavor should, be made for the expeditions disposal of payment of

compensation under the provisions of Workmen's Compensation Act, 1923.
244. Payment on account of claims for compensation will be made on a

Supplementary Roll to be preferred by management, duly supported by a copy of
the relevant factory order. The payment of compensation being a statutory
obligation and not a matter of discretion it is imperative that immediate action
should be taken by the G.M. to initiate the claim and ensure prompt payment of
compensation /half-monthly payment within one month in the date it falls due for
payment.
[Section 4A (1) of the Workmen's Compensation Act 1923 refers].
Note: - For purpose of calculation of wages under Section B (a) of the W.C.
Act, 1923, only wages in respect of the last twelve calendar months which have
fallen due for payment should be taken into consideration. For example, if a
workman is paid on the 7th of each month and if he is injured on 5th January, the
wages for preceding December will not enter into calculation but wages of
December of the preceding year are to-be included.
245. The accounts office will verify from medical report that the extent of injury
is such as to bring the claims under the provisions of the Act. Payment will be
passed at the scheduled rates laid down therein. In the case of injuries not covered
under schedule I of the Workmen's Compensation Act, 1923 the loss of earning
capacity will have to be assessed by the administrative authority that had the
opportunity of seeing the workmen's work before and after the accident. For this
purpose, 'the medical opinion regarding assessment of loss Of earning capacity
should indicate the particular items of the Schedule I of the Workmen's
Compensation Act, 1923 to which the non-scheduled injury bears the closest
resemblance. The General Manager while ratifying the medical assessment of
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amending the same with reference to other factors should specifically record in
writing the merits of the case justifying the assessment.
246. The compensation under Workmen's Compensation Act, 1923 in the case
of accidents while proceeding to the place of employment or coming back there
from, may be paid provided the workman came by a permitted route over his
employers premises or over other premises which he would have no right to
traverse but for his employment. In dealing with cases of accidents taking pace
outside the premises of the employer, payment of compensation will depend on
whether (a) the workman was in any way subject to the contact of employer or (b)
he was doing any thing involved or connected with his duty to his employer.
247. Compensation under Workmen's Compensation Act, 1923 is payable also in

respect of an accident occurred in course of a job entrusted to the worker by his
superior officer. This need not necessarily be a job which under normal, terms of
his employment the workman has to do.
All payments under the Workmen's Compensation Act, 1923 will be

recorded-in the register' of payment for injury pay.
Note: - The cost of law suits in connection with the payment under the
Workmen's Compensation Act, 1923 will be paid from the contingent
grant and adjusted in the financial accounts under the appropriate
detailed head, which are clearly admissible under rules, may be paid by
Branch Accounts Offices.
Payment and adjustment of TA/LTC Claims
248. Payments made to Gazetted Officers/NGOs/ NIEs and DAD personnel on

account of TA/LTC advances will be communicated to the C C of A (Fys)
Transportation Section/AN Section, as the case may be, forthwith and
acknowledgement watched in each case for clearance of the demand from the
Demand Register.
In the case of Industrial Employees .transferred to other factories or to

formation in another audit area, the demand will be intimated direct to Accounts
Office attached to such factories or to the concerned Audit Officer, as the case may
be, and his acknowledgement obtained for clearance of the demand from the
Demand Register.
In the case of payments made to the personnel of the Defence Accounts

Department by the Branch ' Accounts Offices, the Original copies of Disbursement
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vouchers on which the advance of traveling allowance are paid will be forwarded'
direct to the C.D.A. (P), Allahabad by the 15th of the month following that in
which the advances are paid.:
Demand Register will be reviewed by the Branch Accounts Officer monthly

and a review report in respect of demands against Industrial Employees lying
outstanding for more than one year/six months/ three months (separate statement
-for each category) and action taken to clear such outstanding-demands will be
sent to the C C of A (Fys), Transportation Section.
Claims on account of traveling allowance,' Daily Allowance and Leave

Travel Concessions in respect of industrial employees of the factories and allied
formation for journey undertaken on and from 1-1-71 will be audited by Branch,
Accounts Office
Casual Industrial Employees
249. Staff paid from the Incidental and miscellaneous grant as are not brought on
the regular, establishment are classified as `Casual Employees'. Besides the casual
employees paid from contingencies, casual personnel recruited on monthly scales
of pay from regular pay or works head of accounts for specific lobs e.g. as
substitutes or temporarily increased work load will be designated as `Casual
Industrial Employees'. Employment of such personnel may be resorted to where,
necessary subject to the following conditions:-
(i) Men will be recruited in this category, only when it is clearly anticipated
that they are not likely to be 'required from more than six months.
(ii) It should be clearly stipulated in their terms of appointment that their

services will be liable to termination at any time without notice during the
first six months.
(iii) During the period of employment not exceeding six months these men
will be governed by ,.the following conditions:-
(a) They will be paid the same monthly rates of pay as are prescribed for
the corresponding category of regular industrial employees; and their pay
will be met from regular pay or works head of accounts.
(b) Leave and holiday will be admissible as for other regular industrial
employees.
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(iv) It for any reason the appointment is to continue beyond six months the
individual will not be discharged and re-employed from the same
date Instead, he will be allowed to continue in service without any break and
will be treated as a regular industrial employee from the date of his original
appointment as casual industrial employee. This change of category from
casual to regular will be declared even before the expiry of six months as
soon as it is definitely known that the individual will continue in service
beyond six months.
Note 1:- Industrial Employees who are appointed in casual capacity for a
period not exceeding one month should be paid daily rates of pay as
determined by local administrative authorities irrespective of the fact that
their pay is met from regular pay or works heads of accounts.
Note 2:- Casual employees are to be treated as fresh entrant every time they
are employed after a break in their service.
Medical Attendance
250. All civilian employees both gazetted and non-gazetted including industrial
categories serving in the Ordnance and Ordnance Equipment factories and
associated Inspectorates and their families are entitled to the concessions of
medical attendance as laid down in Fy. Regulations. However, the employees who
are living beyond a distance of 8 Kms radius from the factory premises (to be
determined with reference to the main gate of the respective factories) may opt to
be governed by Central Service (Medical Attendance) Rules, 1944 and such
employees will is case of emergencies, during the performance of their, duties,
continue to receive the treatment in the factory dispensary/hospital only to the
extent statutorily admissible under the provisions of Factories Act, 1948.
Hospital stoppages
251. In cases where hospital stoppages are recoverable, hospital stoppage rolls
will be prepared in I.A.F.A. 55 and sent by the Medical Authorities to the Audit
Officer (Disbursing Officer in the case of Industrial Employees) for effecting re-
covery from the pay bill of the individuals 'Concerned. The recovery in respect of
industrial employees will be affected through their acquaintance rolls and the
credit therefore accounted for in the relevant disbursement certificate. While
verifying the details of the disbursement certificates, the recovery for hospital
stoppages should be checked by the Accounts Office with the relevant hospital
stoppage rolls. The credit for hospital stoppages should be accounted for as
miscellaneous receipts in the financial accounts.
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In cases where no pecuniary benefit accrued to an IE being on leave without

pay, no recovery for hospital stoppage is to be made.
Fines
252. All persons employed on the industrial Establishments, whether Day

Workers, or. Piece Workers, with the exception of children below 15 years of age,
are liable to fines under Section 8 of'- the Payment of Wages Act, 1936. Rules in
regards to infliction of fines are:-
(i) The incumbents of the following, appointments are empowered to

impose fines on- persons employed under them: -
(a) General Manager
(b) Dy. General Manager, Manager/Dy. Manager or Asstt. Manager.
(c) Principal Foreman/Foreman or Assistant Foreman in charge of a

section of a factory.
(ii) Fines may be inflicted for the following acts and omissions on the part
of a person, with the previous approval of the State Government or the
prescribed authority, after giving him an opportunity for explanation :-
(a) Breach of Factory Rules.
(b) Drunkenness, sleeping on duty, idling or loitering about.
(c ) Negligence, disobedience of expressed order ' relating to

discharge of legitimate duties malingering and deliberately delaying
production.
(d) Riotous conduct or any act likely to cause disturbance of peace.
(e) Loosing identification tickets or not producing it when demanded.
(f) Smoking in unauthorised places, interference with any safety

devises or failure to observed safety instructions.
.
(g) Willful damage of work in process or to property belonging to
Government.
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(h) Distribution of or exhibiting inside Factory area of hand bills,

pamphlets, posters etc without previous permission.
(i) Any conduct prejudicial to the health, hygiene morals and safety of
other employees in the factory.
Note 1:- The above list lays down the basic principles of general applicability.
Items may be added to as necessary by tile executive heads of the
establishment concerned with the prior approval of the State Government or
of the prescribed authority under Payment of Wages Act.
Note 2:- A notice specifying the acts and omissions should be displayed in
English and in the language of majority of persons employed at the main
entrance and other prominent places of the factory.
Note 3:- Fine shall not exceed in total half an anna in the rupees of wages
earned in the wage period vide Sections 8(4) of Wages Act, 1936.
Note 4:- Deductions, other than fines made in accordance with the Payment of
Wages Act should not be entered in tile `Register of Fines'.
Note 5:- Fines may be remitted or increased upto the limitation of the Rule 3
above at tile discretion of the General Manager.
Note 6:- The Fine Register is to be laid before the General Manager at the end
of each month for his approval.
Note 7:- Objects on which the proceeds of fine may be utilised will be laid
down by the General Manager with the approval of prescribed authority. The
proceeds will be applied only to such object and purposes.
253. The fine fund account maintained under section 8 of the Payment of Wages
Act, 1936 is a public Fund and the procedure for maintaining the accounts of the
Funds is to record all these in the Register referred to in the previous para.
A fine fund Account; will be opened by the General Manager with the local
branch of the State Bank of India or with a recognised bank and-where, banking
facilities do not exist in a civil treasury.
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254. Recoveries under Section 7(2) (c) of the Payment of Wages Act, 1936 from
the workman on account of the value of tools etc. lost by them will" be paid into
the treasury in the usual manner and credited to Central Government Revenue.
255. The fine register will be audited monthly and fine fund accounts will be
audited quarterly by the Accounts Office. In auditing the accounts it should be
seen, that:-
(1) All transactions are in order and in accordance with the fine fund rules as
laid down in the rules.
(2) The receipts agree with the amount of fines recovered as shown in the
acquittance rolls and the disbursement certificates. `
(3) The transactions have been accounted for separately from tile factory
cash.
(4) The balance at the end of each financial year has been transferred to the
Labour Welfare Fund.
(5) If expenditure is incurred from the fine fund and the labour welfare fund
simultaneously for the same purpose it has been sanctioned by the
competent, financial authority and has been applied only to such
purposes beneficial to the persons employed in the factory or establishment
as are approved by the prescribed authority mentioned in the preceding para.
Soon after the audit is completed a report with any observation raised will
be submitted to the Accounts Officer. A report will be sent to the CC of A
(Fys) annually by the 1st of May regarding audit of the fine fund accounts
for the whole year,
Scale Audit
256. The overall strength of industrial employees in each factor for each grade of
labour for each trade will be fixed by the OFB and intimated to the Branch
Account Office accordingly. Any increase, decrease in strength as approved by
him from time to time will also be intimated to them. The Accounts Officer will
check the actual strength with the sanctioned on receipt of Factory Orders inti-
mating promotions, reversions, transfers to different trade/grades etc. and bring to
the notice of the management any variation noticed by them for regularization. A
register will be maintained in the proforma given to Annexure À' for this purpose.
The object is to ensure that authorised strength for each trade/grade is not
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exceeded as a result of promotion/ transfers from other factories and
establishments.
257. The register in Ordnance factories is subject to audit by Internal Audit Cell
functioning under Chief Internal Auditor, Calcutta.
Pensionary Rules
258. An industrial employee shall be retained in service till the day he attain the
age of 60/58 years as the case may be in respect of Group `S' and `C' employees,
respectively whether his retention in service beyond the age of 55 years is in
public interest will however be reviewed and decided six months before he attains
the age of 55 years.In case it is found, his retention will not be in public interest,
he will be given 3 months notice and retired from service. Similarly, an industrial
employee may also retire from service by giving 3 mouths' notice after he has
attained the age of 55 years.
Class IV industrial employees who entered service prior to 23-7-66 will

however, be exempt form the above rule and will continue in service upto the age
of 60 years.
259. Not withstanding the above provision, the services of an industrial employee
-may be terminated, if it is in public interest, after he has attained SS Years by
giving 3 months notice.
260. An industrial employee under Government orders may be granted extension

of service or reemployed under very special circumstances, after he has attained
the age of 55 years by giving him month's notice.
Note- Permanent Industrial employees officiating in non-industrial grade may be

permitted to revert to their permanent .àppointment in the Industrial Grade before
attaining the age of 58 Years so as to enable then, to serve upto the age of 60 years.
Such reversion should however take place before an individual attain the age of 58
years.
261. Industrial employees on being, made permanent will be brought under the
pensionary scheme
262. Temporary industrial employees who enter service on or after 14-2-62 will
be admitted to the contributory Provident Fund benefits in accordance with the
relevant rules applicable to them. They will, however, be brought over to
pensionary scheme on their confirmation.
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263. Temporary industrial employees in service on 21-5-1971 as well as those

who are appointed thereafter will be given an option to join the pension able
establishment or retain contributory provident fund benefits. The option will be
exercised in writing within a period of 6 months from the date of appointment.
264. The whole temporary service followed by confirmation, whether in the same
post or another post, which may either be as industrial or non industrial one, will
be counted as service qualifying for pension, to the extent it would have counted
had the service been rendered ab-initio in a pension able establishment.
Note 1- The procedure laid down in Civil Service Regulation read with
relevant orders issued by Government would regulate the matter regarding
application for the grant of pension to the Industrial Employees.
Note 2- The orders and procedure as are obtaining for the non-industrial
employee will be followed for verification of service for purpose of pension.
265. Superannuation statement in respect, of Industrial Employees is to be
prepared by the Factory Management in the prescribed form and furnished to the
Accounts Office concerned. Checks prescribed in Office Manual Part-II (Vol.-I)
are to be carried out. Each Accounts Office will maintain a list (in the proforma
given below) allotting a page for each establishment for watching the - receipt and
disposal of superannuation statements. Action taken to call for the superannuation
statement from the defaulting establishment will also be indicated in the list in the
remarks column:-
---------------------------------------------------------------------------------------------------
Section/ Name of the Year No. Remarks
Group of Establishment and date
the Accounts under which
Office the superannuation
list was received
---------------------------------------------------------------------------------------------------
The above list will be submitted to the Accounts Officer concerned every
quarter for his inspection.
266. The date of birth shown in the super annuation statement should be
compared with the date of the birth shown in the March Check Roll and it, the
previous year's statement. In the case of new names it should be compared with
LPC/ Rolls etc. where pay was drawn. Audit should proceed from. March Check
Rolls/ LPC etc. to the superannuation statement and vice versa
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Discrepancies noticed should be promptly got fled in consultation with the

administrative authorities and orders of the competent authority send for in case of
an individual is retained beyond age of superannuation or previous extension of
service.
Gratuity
267. (i) If an industrial employee has rendered continuous service' of five years
or more prior to 1-8-49, he shall on discharge for causes beyond his control,
i.e. on account of reduction in establishment or on reaching the age of
superannuation or on medical grounds, get in respect of that service a fatuity
equal to half a month's pay for each completed year of service, subject to a'
maximum of nine month's pay. This gratuity will also be payable to the
dependants in the event of the employee's oath, while in service. War bonus
paid to such industrial employees under the provisions of late Finance
Department O.M.No.7(29)-W/42 dated 23rd February 1942, should not be
deducted from he gratuity payable to temporary industrial employees.
Deduction on account of war bonus should however be made from the
gratuity admissible to the permanent industrial employees.
(ii) Industrial employees admitted to the contributory fund scheme will not
be entitled to the benefit gratuity from the date of their joining that scheme.
(iii) For the purpose of 'calculating gratuity o pay referred to in clause (i)
above means pay drawn on 31-7-49. In the case of personnel who were
eligible to join the I.O.F.W.P. Fund, pay for "; the purpose of calculating
gratuity for the 'service ' Tendered prior to joining the fund will mean pay
drawn immediately prier to the date of introduction of the fund, or the date
the individual joins the fund, whichever is later. Pay will also include any
personal pay drawn on the aforesaid date.
(iv) Gratuity is also admissible to the industrial employees on retirement, for

the period of service rendered from 1-8-49 onwards till the date of their
actually joining the fund, or the date of their retrenchment, if they are
retrenched, before actually joining the fund, at the rate of half of a month's
pay for every completed year of service after 1-8-49, subject to a minimum
of one month's pay, provided, however, that no contribution shall have been
made by the Government in respect of the employee concerned to any
provident fund scheme and provided also that he is not entitled to any
gratuity under any other scheme sectioned by Government for the same
period of service. .
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(v) Spell of service rendered before and, after 1-8-49 should be reckoned
separately for the purpose of admitting gratuity.
(vi) A person who has not rendered 5 years service prior to 1-8-1949 will,
for the Purpose of admitting gratuity, be allowed the benefit of counting
service rendered from '1-8-49.
(vii) Only persons discharged on 'or after 1-8-52 are eligible for gratuity 'for
service rendered after 1-8-49.
268. All gratuity claims will be audited in Accounts Office with reference to the
instructions contained above and any further orders that may be issued from tame,
to time oil the-subject and recorded , in. a Register to be maintained for the
purpose. IEs are also entitled to benefits under C.C.S. (T.S.) Rules, 1965.
Discharge
269. Industrial employees, whose services are no longer required, may be

discharged on the expiry of the period of notice to be served on them in writing.
The fact of discharge will be notified by the Management in a discharge memo and
sent to the Accounts Officer who will post it in .the appropriate column of the
Register of I.Es. The period of notice will be as indicated below -
Period of notice
(a) For persons having continuous
service for not less than 10 years. 3 months
(b) For persons having continuous 1 month

service less than10 years.
Note- It will be at the discretion of the appointing authority to give 1

month's or 3 month's pay ' in lieu of 1 month or 3 months' notice of
discharge as the case may be. Pay in lieu of notice means pay plus
allowances which are otherwise admissible. Payment of notice pay should
be booked to Work Order 02/00010/00 and kept out of production.
270. No notice is required in the case of those who are employed for specific
jobs/periods or by way of substitution or for short periods of casual nature as for
example for a period not exceeding 6 months. In the case of workmen absenting
themselves without notice and as a result struck off the factories as a penal action,
the question of notice or cash payment in lieu thereof will not arise.
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271. An industrial employee who wishes to leave the Service is also required to
give notice in writing or to pay cash in lieu for 1 month or 3 months, accordingly
as his continuous service is less or not than 10 years. In exceptional case, however,
competent authority may, by mutual consent, waive requirement of notice being
given by the employee, shorten the period of notice. If an employee governed the
payment of Wages Act, 1936 fails to give requisite notice or compensate
Government by an amount equal to his pay for the notice period, he has not
worked, he will be called upon by the management to pay the same within a
reasonable period, say, within a fortnight from the date of receiving the factory's
letter. A specific date for the payment may, with advantage, be also fixed the man
warned that if he fails to comply with demand, he will be liable for disciplinary
action and be debarred from further employment under government. In the event
of his failure to pay the amount within the prescribed date or within any other date
in case where an extension may be granted on the special merits of the case
disciplinary proceedings should be started against him. Not withstanding his
liability to compensate Government no deduction on account of notice pay can be
de from wages as such deductions have not been specified in Section of the
Payment of Wages act, 1936. Undisbursed pay, if any, should 'not therefore, be
withheld from payment.
272. When an industrial employee is discharged, ages earned by him shall be

paid before the expiry of the second working day from the day on which his
employment is terminated as per Section (2) of the Payment of Wages Act, 1936.
The payment of day workers and individual piece workers (with reference to the
individual piece work cards required to be called for from the sections concerned)
should be made in full within the aforesaid time. The gang worker should,
however, be paid in the first instance at their assigned monthly rate like day
workers within the prescribed time limit and the profit earned, if any, may be paid
later but not later than the date of regular payment for the month in which the
discharge takes place. When, however, the gang works at a loss, the loss incurred
in each case to Government on account of payment at the assigned monthly rate
should be submitted to the C C of A (Fys) for sanction only when it exceeds the
financial powers of the A.O./ACA/DCA etc. Otherwise it should be sanctioned by
him and the overpayment adjusted to the proper head of account.
Last Pay Certificates
273. In the event of transfer of industrial employees from one factory to another or
to some other establishment, no formal last pay certificates arc required to be
issued. A statement s owing the rate of pay, the date upto which the individual is
paid, outstanding, demands if any, and monthly piece work /daily work earnings
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for the three compete calendar months preceding the month of transfer should be
prepared by the management and submitted to the local Accounts Officer for
verification and countersignature. One copy thereof, after counter-signature,
should be forwarded by the, management to the General Manager of the factory to
which the individual is -transferred, and similarly one countersigned copy should
be forwarded by the Accounts officer of the transferring formation to the other
Accounts Officer.
General Provident Fund/Contributory Provident Fund
274 (i) The application and Nominal Roll for admission to. G.P.F./C.P. Fund, in
duplicate along with Nomination Form (all in prescribed proforma) will be
submitted to the Accounts Office by the Factory management. The Accounts
Office after verification will keep the same in their custody and allot G.P.
Fund/C.P. Fund Account Number. One copy of the application and
Nomination Form will also be forwarded to the Factory Management by the
Accounts Office duly accepted. The block of account numbers for G.P. Fund
, and C.P. Fund for each Branch Accounts Office are allocated by the C.C.
of A (Fys) Calcutta. A register in this regard is maintained by the Branch
Accounts Offices.
(ii) Rate oh subscription in respect of G.P. Fund and C.P. Fund is 6% and
1/12th of emoluments respectively under the existing Rules and orders. The
emoluments mean the basic pay of Industrial Employees.
(iii) Recovery of subscription is rounded off to the nearest Rupee i.e.

fraction less than 50 has to be ignored and those of 50 paise and more have
to be rounded off to the nearest rupee.
In the case of Day Workers recovery of subscription will be effected on the

basis of monthly time Wages whereas in the case of Piece Workers, the
recovery will be effected on the basis of monthly time Wages plus 25 per
cent thereof.
(iv) C.P. Fund Assets of I.Es will be transferred to G .P. Fund on their
electing pensionary benefit on their being brought over to pensionary
benefits compulsorily on confirmation in service as per existing orders.
(v) I.Es who opt for pensionary benefit within months after entering
service can directly be admitted to G.P. Fund.
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(vi) The management prepares a monthly statement of recovery of
subscription called "change statement" in duplicate. This is prepared shop
wise this statement, name of subscriber, Account Number etc. do not appear.
Only the total amount, of subscription of the Section for previous month as
well as the total amount of subscription the current month will be indicated.
If there is any change between the amounts of the previous and those of
current month, the name, Account number, amount of subscription which
contributed towards change will only be indicated.
275. On receipt of the statement in Account Office of the arithmetical accuracy of

the total, amounts the Factory as a whole as worked out on the top sheet will be
verified and a punching medium debating the pay head of, I.Es and crediting Fund
head will be prepared by Accounts Office, on receipt of the Recovery/withdrawal
schedules from Labour/ pay Section, Fund cell of Accounts Office will reconcile
total amounts compiled to Fund Leads the printed compilation and sent them for
computer Processing in monthly batches for preparation of G.P. Fund/C.P. Fund
Annual Accounts statement.
[Authy : C.C. of A (Fys) Cal. No. F/Tech/130-II Part dated 27-5-87]
Works Committees and Production Committees
276. Members of the above committees will be treated as on duty for the time
spent at the meetings of the committees held during the normal working hours. If
the normal working. hours are exceeded during a meeting, the time spent will be
similarly treated and overtime will be allowed if admissible under departmental
rules governing overtime pay, provided, however the rate of ,overtime allowance
will not exceed the normal time rate. All expenditure in connection with the above
committees including pay and allowances of industrial employees will be booked
to Work Order 01/ 00006/00.
Attendance as a member in the aforesaid committee meetings or as an

observer in the trade test board although falling outside normal duty is to be
reckoned as duty performed. Besides this, appointment otherwise than on normal
duty during normal working hours e.g. work in connection with factory canteen or
co-operative organisations, except on leave, is irregular and should be objected to
in audit.
Audit of Manufacture Warrant
277. A manufacture Warrant duly checked with estimate or rate forms the- basis
of admitting payment claimed through piece work cards. No operation shown on
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the cards in excess of the number authorized the warrant will be paid but it will be
referred back to the factory.
278. A test check of the postings in the warrant will be carried out while
reviewing the primary documents. A second check will be made while linking the
accounts copy of a completed warrant with the shop copy, which is due to be
received in the Accounts Office early in the following month of its completion. It
should be ensured that no extension of the working life of the warrant i.e. six
months or one year as the case may be, is made without prior approval of the
D.G.O.F. From the completed Warrants, it may appear that certain operations
have not been executed, while a greater number than those provided in the original
warrant have been actually executed, through additional operation on the
authority of non recurring rate forms The Accounts Office, will, therefore examine
all warrants with a view to suggesting amendments where such over or under
estimation of rates are of recurring nature. Again rejection at each operation of
stage may a be scrutinised with reference to postings in the warrants and the actual
number of warrants on which the warrant is completed to see that they do not
exceed authorized limit without satisfactory reason.
279. The number for which a replacement order or warrant is issued for the
purpose of making good the number of articles rejected at any stage or operations
should be duly reconciled with the number of rejection posted in the original
warrant.
Note: - The posting of day work cards/piece work cards does not ensure the
correctness of pricing of these cards.
Provisional Payment
280. Provisional payment of pay and allowances, pending receipt of the L.P.C.
can be made by the w establishment from the date of reporting for duty in that
establishment on the basis of pay shown the transfer orders. For this purpose, the
designation and the rate of pay (including the scale of pay) in the old establishment
should be shown in he transfer memos.
281. The above procedure will apply in cases of transfer to post carrying higher
scales of pay. In the case of transfers to a grade/post carrying lower scale of pay,
rates of pay to be admitted should be restricted to the minimum of the scale of pay
of the lower post pending, verification and readjustment on receipt of the L.P.C.
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Training of Boy Artisans
282. The main schemes in operation in the Ordnance Factories for training of
Boy Artisans are indicated below. Payment to the trainees will be regulated in
accordance with the Government Orders, sanctioning the scheme as amended from
time to time..
---------------------------------------------------------------------------------------------------
Training Scheme Govt. letter under which the scheme
has been a sanctioned
---------------------------------------------------------------------------------------------------
1. Training of apprenti- M of D letter No. 716/
ces in Ordnance Factories Rev/A/TG/455/II/D(Fys)
underApprentices dt. 10-3-69.
Act 1961.
2. Scheme for- the trai-, M of D letter No. 716/

ning of skilled crafts-. Rev / SC / A / TG / 3000 /
man 17/D (Fy) dt. 25-11-70.
---------------------------------------------------------------------------------------------------
Register of Boy Artisans
283. A register will be maintained to ensure that1he total number of Artisan

trainees authorised to be trained is not exceeded and that their pay and allowances
are regulated as laid down in Government letters Actual productive work done by
them will be charged to out-turn work order and the balance booked to relevant
work order in 01 series.
284. The pay of the workmen trainees will, to the extent laid down for the
purpose, be booked to work order 01/00010/00 and the balance charged to the out-
turn orders on which they are employed. When competent trainees are put, on
piece work, they will be treated as full fledged workmen and their entire earning
debited to the out-turn orders concerned.
Subsistence Allowance
285. In the matter of grant of subsistence allowance and grant of pay and
allowance on reinstatement, industrial employees are treated on par with non-
industrial Employees with effect from 10-6-63. Subsistence allowance will
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therefore be granted to the I.Es under the provisions of Article, 193 Civil Service
regulations.
Trade Test
286. Promotion to a higher grade in the same trade or transfer to a different trade
as also appointment as a tradesman will be subject to passing the prescribed trade
test. For this purpose: a trade test board will conduct tests as per details of speci-
fications approved by the DGOF for each trade and grade.
287. Labour representatives from industrial employees appointed as òbservers'

will be treated. as on duty for the time spent by them in the meetings of the board
held during the normal working hours. If the normal working hours are exceeded
during a trade test board meeting the time spent will be similarly treated and
overtime, allowance etc. If admissible under the departmental rules governing
overtime pay, provided however, the rate of overtime allowance will not exceed
normal time rate.
288. The pay of the workman for the period he undergoes trade test or acts as an
observer will be charged to W.O. O1/00010/00.
Promotion
289. A workman may be promoted to higher grade in the same trade, or

transferred to a different trade provided the following conditions are fulfilled
(i) The workman has passed the prescribed trade test,

And
(ii) There is a-, vacancy in the new grade/trade.
Note: - To ensure in audit that the above conditions at fulfilled in each case, all
part-II Factory Orders notifying fixation of pay on promotion to a higher grade in
the trade or transfer to a different trade should have prior concurrence of the
Accounts Officer.
Fixation of Pay
290. Fixation of pay of industrial employees on appointments, promotions etc. or

transfer from one post to another should be regulated under relevant order
applicable to non-industrial employees ended from time to time. In case of promo-
tion/reclassification made from lower industrial/ non-industrial to higher non-
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industrial posts, the pay of the higher industrial/non-industrial post will feed on the
analogy of provisions of Art. 156-A CSR
Re-employed personnel
291: Initial pay of personnel re-employed in industrial posts is also to be fixed in

accordance with of relevant provisions of CSR applicable to NIEs.
292. Marking of attendance in respect of industrial employees working in the

detachments men below, where the procedure prescribed above can not be strictly
adhered to, being located at considerable distance from the factory proper is to
regulated in the manner indicated below :~
(i) Kataya Ghat Pumping Station, Filter plant and similar places of
work under OF Katni
(a)-Register should be maintained at the work Shops with direction to

the IES to sign, or affix thumb impression as the case may be on these
registers in the presence of in-charge shift as and when they attend
duty shifts.
(b) These registers should be sent daily to the Section for preparation
of casualty reports.
(c) The casualty report will be forwarded by the Section to the Gate
Section.
(ii) Power Station, Kateri and catchment area at Cordite Factory,

Aruvankadu
(a) Attendance of I.Es who report directly at Power Station, Kateri

should be supervised by a NGO who is permanently stationed at the
site. Daily mustering should be completed with reference to absentee
numbers indicated over phone and casualty reports prepared daily
should be submitted to Accounts Officer once in three days.
Note 1- As regards men detailed at catchments area their casualty should be

ascertained over phone at the opening hour of the factory, provision for an
attendance register at the workspot should also be made. The attendance
register should be sent once in three days to the factory for checking the
casualty already ascertained over phone and reporting discrepancy, if any, to
the Accounts Officer.
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Note 2- As a general rule, the industrial employees will not be allowed to go

out of the factory for lunch alongwith their section tickets. In respect of
certain factories e.g. A.F. Kirkee, H.E. Fy., Kirkee and Cordite Factory,
Aruvankadu in a very limited number of deserving cases industrial
employees may, however, be permitted by the G.M. to leave the factory pre-
mises for lunch. In such cases, late attendance after lunch shall not be
permitted beyond 15 min-Rtes. An I.E. coming late in excess of 15 minutes
will not be admitted in the factory for the rest of the day and he will be
treated as on unauthorised absence from the place of work, for which
disciplinary action may be taken on the merits of each case at the discretion
of the G.M. in addition to the normal deduction of wages.
293. Casualty report in respect of late attendance and non-attendance of I.Es

after lunch period will be furnished to the Accounts Office in the same manner as
in the case of late attendance at the opening hour on the same day.
Departure - Workmen should leave their section only after the hooter.
Exception -In the case of Ammunition Factory, Kirkee and Ord. Fy. Khamaria,
however, workmen working in buildings site far from the main gates due to
employment in the danger areas may leave their sections slightly in advance of the
hooter but should not pass through the gate before the hooter.
Transfer of Industrial Employees
294. The following concessions are admissible the Workmen, non-industrial and
non-Gazetted who are transferred from the existing factories/ inspectorates to the
new Ordnance Factories which have been/are being established and may be
established in future. These concessions will be admissible in all the above
categories of employees who may be transferred to the new factories/inspectorates
either on a temporary or a permanent basis to the extent indicated below provided
that these concessions will not be admissible to individual who may be transferred
owing to shortage of work and/or to avoid retrenchment in the existing factories.
(i) Permanent Transfer
An advance of one month's pay repayable is not more than twelve equal
installments is admissible.
Note - For this purpose the basic monthly pay of the individual at the time of
his transfer will be, taken into account. The recovery of the advance will
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RTC KOLKATA 125

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commence from the wages of the month following that in which the
advance is drawn.
(ii) Outstation Allowance
An outstation allowance of 25% of the individual's basic monthly pay at the

old station at the time of transfer will be allowed for the first 3 months and
20% of the basic pay for the next 21 months.
Note - (a) Monthly pay will be 'exclusive of overtime pay drawn as well as
dearness and other allowances.
(b) The outstation allowance will not be treated as pay for

determination of the amount of dearness and other allowances.
(c) In factories/inspectorates, where a project allowance has been

sanctioned a workman may be allowed to draw for the first two years
from the date of journey in the new factory/ inspectorate, either the
outstation allowance or project allowance, whichever is more
beneficial from time to time. After two years, he would be entitled
to receive only the project allowance provided the same is continued
and is otherwise admissible.
(iii) Advance of traveling allowance, journey time, journey time pay

and traveling allowances
These will be admissible as on transfer, subject to the following conditions:
(a) If the transfer is in public interest and not at the request or in

consequent of misconduct on the part of the worker.
(b) Service will be treated as continuous.

(c) Joining time, joining time pay, T.A. will be admissible as on
transfer under the C.S.R. and T.R.
(iv) Minimum monthly earnings in new Factory.
Workmen will be granted a minimum salary equal to their average monthly

earnings until such time as they are put on piece work in the new fac-
tory/inspectorate or for 24 months from the date of transfer whichever is earlier.
This does not-apply to periods of leave or other absence from duty.
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Note- (a) The average earnings will be calculated on the basis of actual earnings of
the individual in the previous factory/inspectorate during the three complete
calendar months proceeding the month of their transfer.
(b) The term "actual earnings" in (a) above means piece work and/or day
work earnings including overtime pay, and overtime bonus but excluding dearness,
house rent, compensatory and other allowances. For maintenance workers
incentive bonus will be taken into account for the purpose of calculation of actual
earnings. The overtime Pay and overtime Bonus will, however, be included subject
to the following conditions: -
(i) That regular overtime was worked in the parent factory/inspectorate in

the department in which the workmen was employed for at least three
complete calendar months preceding the month of transfer, and
(ii) A quarterly certificate is furnished by the General Manager that he was

granted a. minimum salary equal to their average salary, including overtime
allowance and overtime bonus, wherever applicable in the three months
preceding the month of their transfer.
The payment of overtime allowance and overtime bonus in the above cases
will, however, be subject to the same conditions as laid down under Notes
(b) above.
In addition they will be entitled to advance of TA/DAB as admissible under

normal rule.
For the purpose of the above concessions, a new factory will be treated as
"New" till three years from the date production starts and the same holds
'good for new inspectorate also. For this purpose, production would be
deemed to have commenced even if there is only trickle production for each
particular line of production of an identifiable product of the
factory/inspectorate. Identifiable products of a new factory/inspectorate will
be those as stated and accepted at the time of setting up of production. These
concessions will be admissible for a period of 24 months to all employees to
whom they are applicable and who are transferred to a new
factory/inspectorate before it ceases to be new.
DGOF/DGI is to issue instructions indicating all identifiable items of

production for the new ' factories/inspectorates.
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RTC KOLKATA 127

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(iii) This sanction is operative from 1st September, 1972. Manager of the
parent factory/inspectorate is to certify to the General Manager of the new
factory/inspectorate that the workman concerned would have continued to
have drawn overtime pay if he had continued there. Overtime pay and
overtime bonus will not be increased/decreased corresponding to in-
crease/decrease of overtime hours in parent factory/inspectorate from time
to time, but the same will cease to be included in the actual earning from the
date ion which regular overtime working is stopped in the parent
factory/inspectorate.
Note (c) Workmen will be paid at their monthly rates at the new
factory/inspectorate (including annual increment or pay increase due to
promotations) and in addition they will be paid the difference, if any,
between their basic monthly pay at the new factory/inspectorate and their
monthly earnings. This additional payment will be treated as part of pay for
the purpose of calculating leave pay.
Note (d) Should the basic monthly rate at the new factory/inspectorate exceed
at any time, the average earnings at the old factory/inspectorate, addition
will cease to be made.
Non-Industrial Staff
295. They will be granted protection of salary equal to their average salary
including overtime allowance and overtime bonus for the last three months
proceeding the month of their transfer. The payment of overtime allowance and
overtime bonus will be subject to the same conditions as for workman. In addition
they will be entitled to advance of TA/DA as admissible under normal rules.
This concession of protection will be admissible in respect of all NIEs

transferred to new factories/ inspectorates for 24 months from 18-5-67 or from
their date of transfer whichever is earlier.
On temporary basis for a period of not less than one month
Workmen will be granted a minimum salary as at (iv) of para 294.

Forest Operation
296. The Government of India in the late Army Department. letter No. 3543-3-
N.G.I.A. (AO-3) dated 14th November 1928] sanctioned the grant of the following
concessions to the temporary staff and labour recruited at stations other than, the
seat of operations for employment under the direction of the General Manager in
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RTC KOLKATA 128

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connection with forest operations carried out by the Gun Carriage Factory,
Jabalpur every year for extraction of timber.
(i) Single railway fare of the class applicable to men of similar status under
the existing regulations from the station of recruitment to the station nearest
the place of operations ' and 'vice-versa. The cost of fare will be paid in cash
to the men under arrangements to be made by the General Manager of the
Factory.
(ii) Advance not exceeding 15 days pay may be given to approve temporary
staff and labourers. The advance will be recovered during the period of
forest operations at the discretion of the officer in-charge of the forest party
at a rate not less than 1/3rd of a month's pay or 1/3rd of the advance paid in
each case, whichever is less.
The above expenditure will be audited and passed by the Accounts Officer
of the factory and met from the industrial employees Grant and booked to the
appropriate work order under 01/02 series. Labour Welfare Fund
297. (i) The rates and conditions in regard to Welfare Fund as contained in
Ministry of Labour Employment and Rehabilitation (Department of Labour
and Employment) O.M. have been made applicable to civilians paid from
the Defence Service Estimates in Industrial Undertaking.
(ii) From the year 1969-70 onwards the rates of grants-in-aid will be Rs. 2
per worker per annum. In addition a grant in aid upto Re. 1 per worker will
also be paid to match the subscription collected by the Labour Welfare Fund
subject to the overall limit of Re. 1 per worker per annum.
(iii) The grant-in-aid referred to above will not be subject to the further
condition that the total grant payable to labour welfare fund will be reduced
to the extent the amount of income realized on credits to funds from sources
other than employees contribution such as fines, profits from canteens and
miscellaneous receipt like earned from cycle shedds, cultural programme
etc.
Strength of labour vis--vis Load position
298. As the labour strength is more or less related its production activities,
monthly comparison of actual strength of labour in a section with the load of the
section provides the basis for examining to whether any section of a factory is
unnecessary over manned.
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RTC KOLKATA 129

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299. A check to this effect should, therefore, be exercised by the Accounts

Officer, and if at any time, the strength of labour is not found to be commensurate
with the load, the matter should be taken up with the management. For this
purpose a register in the proforma given in Annexure À' will be maintained.
300. Blank.
301. Blank.
302. Blank.
Industrial Employees Grant Register
303. A watch should be kept over the I.E.s annual grant placed at the disposal of
the factory maintaining a register as per proforma given in Annexure À' showing
therein the progressive payment against the respective allotment.
304. Blank.
305. Blank.
306. Blank.
Pay Audit Work
307. Accounting of labour charges comprise mainly of pay audit work similar to
that done in pay Group Sections of the Main Office. In order to obtain greater
speed precision and scope for specializations, `Labour' Section should work
on a functional basis like those Sections under the groups is follows:
(a) Authorisation Groups
To deal with initial fixation of pay as well as subsequent changes, higher

audit and audit decision, complaint appeal, clarification of doubtful points
,and circulating of all important matters by obtaining orders of the C. C. of
A (Fys), if necessary. (The authorisation group being kept directly under an
Indian Defence Accounts Service Officer when available)
(b) Disbursement Groups
To deal with normal pay bills, noting and recovery of demands, all
complaints regarding delay in payment etc.
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RTC KOLKATA 130

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_____________________________________________________________________________________________
The most important functions of the Authorisation Groups are:
(1) Collection of orders connected with Pay Accounts of Civilians in

General and C.D.S.(R.P.) rules in ;particular duly linked. .
(2) Maintenance of Note Books showing the scales of pay in C.D.S. (R.P.)
rules for the various categories of personnel.
(3) Maintenance of a Master Note Book .and subject file as a consulting

library on all pay matters.
(4) Vetting of audit reports to higher authorities routed through the C. of A.

(Fys).
(5) Disposal of appeals on fixation of pay and connected matters.
(6) Initiation of original reference to higher authorities on matter of doubt in

the implementation of Government orders on pay matters.
(7) Rendering such assistance as the administrative authorities may seek on

pay matters.
(8) Fixation of pay wherever there is a change of entitlement other than

those of a transitory or routine nature and to have them scrutinised by Test
Audit Authorities e.g. initial fixation of pay under R.P.C. as well as fixation
on promotion/reversion will have to be made by authorisation Groups,
whereas change in pay consequent on the grant of increments need not be
scrutinised by authorisation group.
(9) Safe custody of the files containing original proforma indexed and
linked. The fixation proforma which are important documents vitally
essential for audit should be filled separately from the ordinary
correspondence files and arranged in separate files section-wise with proper
index and cross references and their safe custody on permanent basis
ensured for facility of reference at a future date.
Disbursement Group
308. In addition to the arithmetical and routine check of pay bills etc. duties of
disbursement groups are:-
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RTC KOLKATA 131

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(1) To receive documents pertaining to fixation check of pay initially and to
pass on to authorisation groups after verifying the actual pay drawn in the
existing scale with reference to audited acquaintance rolls.
(2) To prepare fair copy of the fixation proforma in duplicate and to send
one copy to the factory ping the other as office copy and also return the
original fixation proforma to Authorisation group. (The fair copy may be got
compared and intialled by the clerks concerned in the Authorion Groups.
who had fixed the pay).
(3) To audit and pass claims based on the fixation of pay and deal with all
other claims pertains to pay and allowance.
(4) Deal with ordinary correspondence and routine appeals direct and route,
important cases of' audit decision/reports etc. through the Authorisation
Groups.
(5) Feed the authorisation groups with all factual needed by them.
(6) Pass cent per cent Factory Order published with original pay fixation
proforma.
(7) Check increment sheets with the dates of increment shown in the
original fixation proforma view to accounting for variations, if any
(8) Check the acquaintance rolls of 2 months (say June and December) in a
year with the original ion proforma on record in the authorisation group
with a view to explaining satisfactorily variation pay occurring from time to
time. This may be done after payment, if' delay in the monthly payment is
anticipated. It is additional safeguard set right any lapses or clerical errors
that might have occurred in the intervening period due to change of staff or
omission in some quarters or others etc. After completion of this check,
the A.O. should furnish a completion report through the, mthly progress
report of July and January.
Claims of NIEs/NGOs etc,
309. Pre-audit and payment of all claims to pay and allowances and medical
reimbursement claims excluding traveling allowance; daily allowance and L.T.C.
Claims of non-Gazetted and non-Industrial staff serving in the following factories,
inspectorates devolve on the Accounts Officers attached to the factories. Problems
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RTC KOLKATA 132

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_____________________________________________________________________________________________
arising out of practical application of Rules and orders in this regard in Branch
Accounts Offices will be tackled by 'Pay' Section of Main Office.
(a) All Ordnance and Equipment Factories and allied inspectorates located
in West Bengal and Tamil Nadu.
(b) Inspectorate of Metals Rourkela, which is under the payment of

Accounts Office, Metal and Steel Factory Ishapore.
310. Payment of monthly pay bills of non-Gazettcd and non-industrial

establishments serving in all factories and formation other than those mentioned in
para 309 is done by the local Accounts Officer after preliminary scrutiny of the
pay bills, subject to detailed post audit by Pay Section. Thus `Pay Section' of
Main Office is concerned with- -
(i) Pre-audit and payment of all claims to pay and allowances and medical
re-imbursement, claims of non-Gazetted and non-industrial staff serving in-
(a) OFB Headquarters and A.D.T.D. Establishment at Calcutta.
(b) Proof and Experiment.
(ii) Post-audit of monthly pay bills -and pre audit and payment of all other
claims, to pay and allowances, medical reimbursement claims of all non-
gazetted and non-industrial staff serving (except those mentioned above).
(a) Ordnance and Equipment Factories and allied Inspectorates.
(b) Addl. DGOF, OEF, Group Headquarters at Kanpur.
Pay fixation in all cases is done by Pay Section of Main Office.
Industrial Establishment Group (pay Section)
3.11. This group deals with all questions relating to the following Subjects in.
respect of Industrial employees of the factories and allied inspectorates and R&D
Establishments. Necessary instructions issued for the guidance of the Branch
Accounts officer; after obtaining clarifications whenever required:-
(a) Pa y, Overtime pay. Saturday Bonus, CGEIS etc.
(b) Leave Pay.
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RTC KOLKATA 133

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(c ) Injury pay
(d) Dearness Allowance, House rent and Compensatory City Allowance,

Outstation allowance etc.
(e) Employment, Trade Test. Increment and promotion.
(f) Booking of attendance,
(g) Problems arising out of application of the relevant Acts, Departmental

Rules and Orders.
(h) Training of workmen and boy artisans
Note:- Matters regarding- medical re-imbursement claims of I.Es will

however be dealt with by the coup dealing with such matters in respect of
non-gazetted and non-industrial staff.
Claims for Overtime Allowance and Night Duty Allowance of N.I.Es/N.G.Os
112. Overtime pay bills in respect of non-gazetted non-industrial employees

serving in factories and allied inspectorate are drawn up by Heads of Offices and
submitted to the Local Accounts Officers for audit and payment. The bills will be
supported by Attendance Registers/Punch Cards. These, will be checked cent per
cent. Requisite certificate will be endorsed on the Bill. The rates of pay are
verified from the office copies of pay-bills and the memos issued by the main
Office in connection- with the audit of monthly establishment bills. The endorse-
ment on the bill should indicate the fact of verification of certificates and
completion of audit of bills. Those bills must be passed for payment as
expeditiously as possible and the due dates for receipt and payments of bills as
agreed with the GM of the factory. The method of calculation of overtime pay bill
be 1/200th of a month's pay for each hour worked in excess of the daily normal
working of the factory/inspection section.
313. The provisions of Para 88-A of Pay and Allowance Regulation Part-I as well
as other orders have been cancelled. The payment overtime allowance to non-
industrial and non-Gazetted employees to in Ordnance/ordnance Equipment Fac-
tories and allied. Establishments who have, either the same total numbers of hours
of work (irrespective of the time of commencement and closing of work) and have
the same holidays as the industrial Staff, when call upon ;to work overtime for
production purposes, will be the sauce as for Industrial Employees. They will be
paid at the time rate for work done between the prescribed hours of work and 48
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RTC KOLKATA 134

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hours a week or 9 hours a day. For this purpose, the `time rate' shall mean single
hourly rate of overtime allowance admissible in similar circumstances to the
corresponding industrial staff in tile same workshop/establishment.
314. For work beyond 9 hours a clay or 48 hours a week, they will be paid OTA
at the same rates as are admissible to the Industrial employees subject to the
conditions laid in M ,of Def. No, 14 (10)/68/D (Civ.-it) dated 30th April, 82
315. A day shift will be 12 hours from the normal time of work in a factory.
316. A night shift will be the hours worked between the termination and
beginning of a day shift as defined above. Rest intervals will be excluded from tile
time paid for.
317. Durwans, Fire Brigade Staff, Telephone Operators and Security Assistants
are entitled to overtime for work from 44 hours to 48 hours per week at single
rate and for work beyond 48 hours in a week at the rates as is admissible to I.Es.
[Authy: O.F.B. Calcutta No. 525/D/A/A (Pt)/V dated 13-5-881
318. Overtime pay of re-employed pensioners shall be regulated as indicated

below. -
(i) In the case of officers whose pay plus pension exceeds the sanctioned
maximum pay of the post, overtime allowance on the maximum plus
the includible allowances.
(ii) In the case of those officers whose pay on re-employment posts is fixed
without taking into account the entire pension or part thereof the amount of
pension so ignored shall be ignored for the purpose of overtime.
(iii) In other cases, tile overtime pay shall be calculated on pay plus pension
plus the includable allowance.
319. The following categories will be paid OTA at 'slab rate' as per M of D OM
No. 14(2)/76/D (Civ-II) of 25-6-83 and Ministry of Personnel Public Grievances
and Pensions O.M. No. 15012/3/86-Lstt. (Allowances) dated 19-3-91 viz.
(a) (i) Office staff (ii) non-industrial staff whose office hours are the same as
those of the clerical and who are not employed in workshops and do not
observe the same hours of works as industrial personnel.
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RTC KOLKATA 135

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(b) Cooks, water-carriers, khansames, chowkidars and Mallies etc. working
in defence installations and ordnance Factory who are regular employees
and have fixed hours of work.
320. In cases when the lost day of a month does not coincide with the last
working day of a month, time pay for Sundays, Gazetted Holidays and also if any
due, for normal working days should be claimed in the overtime bills of the
respective month. Thus if the last working day of a month 'is Friday and an
individual has completed the weekly limit of 44 3/4, hours of work on that day, the
time pay upto and for that day will be payable in the bill for that month and the
overtime pay due for Saturday in the bill for following month. Iii other words, if
by the end of the month one has become entitled to certain overtime, it should be
paid along with the earnings for the month without waiting for the completion of
the week in the following month.
Registers, Reports and Returns,
321. Lists of Registers to be maintained together with their Fly Leaf Instructions
and Reports and Returns to be rendered by the labour section are given in
Annexure À' & `B' respectively to this chapter.
322. Blank
323. Blank
324. Blank
325. Blank
326. Blank
327. Blank
328. Blank
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RTC KOLKATA 136

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ANNEXURE--À'
REGISTERS MAINTAINED IN LABOUR SECTION OF THE BRANCH ACCOUNTS

OFFICES AND THEIR FLY LEAF INSTRUCTIONS
--------------------------------------------------------------------------------------------------------------------
Sl No. Name of the Register Reference to para for
fly leaf instructions
--------------------------------------------------------------------------------------------------------------------
1. Register of Industrial employees 140
2. Register of piece work, individual piece work and day work cards 145
3. Register of payments for injury pay 177
4. Register of Review of Primary Documents 213
5. Industrial Employees' Grant -Register 303
6. Register of Profit and Loss of individual piece and gang work rates 238
7. Register of Boy artisans 283
8. Register of' gratuity claims 268
9. Register of scale audit showing the authorised strength and actual strength 256
10. Register of number of industrial employees enrolled and discharged
monthly together with corresponding load in the factory 299
11. Register for recording results of 3 per cent check 213 (Note 4)
12. Register for recording results of 20% check 213 (Note 5)
13. Objection Register ,

14. Demand Resister For fly leaf instructions, refer to Office
Manual
15. Register of losses Part II, Vol. II
16. Register of sanctions in respect of
recurring charges,
17. List of subscribers to IOFWP Fund For the leaf instructions refer to Chapter V,
O.M. Part-VI.
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Serial No.1
FLY LEAF INSTRUCTION FOR THE MAINTENANCE OF REGISTER OF INDUSTRIAL

EMPLOYEES (PARA-140)
Register of Industrial Employees

Section
--------------------------------------------------------------------------------------------------------------------
Ticket Name Trade/ IPW/DPW Rate of Date of
No. Grade of Gang Pay recruitment
--------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6)
--------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Date of Date of Date of Remarks
promotion transfer discharge
-------------------------------------------------------------------------------------------------------------------
(7) (8) (9) (10)
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Serial No.4
FLY LEAF INSTRUCTION FOIZ T11F MAINTENANCE OF THE REGISTER FOR

REVIEW OF PRIMARY DOCUMENTS (PARA-213)
The register will be maintained in the following manner:

-------------------------------------------------------------------------------------------------------------------
Sl.No. Section Total No. Total No. Initial Results Remarks
of piece' of documents of the of review of Accounts
work cards, selected for Accounts Officer
leave memo, review Officer
overtime
notes etc.
--------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6) (7)
--------------------------------------------------------------------------------------------------------------------
Object
1. For the purpose of recording the result of such review.

2, The review should be completed before the muster rolls are passed for payment.
3. The total number of documents received during the month under each category
will be entered in column 3.
4. The number of documents with particulars selected for review by the AO will be
posted in column -4
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RTC KOLKATA 138

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5. The result of the review will be recorded in column 6.
6. The register will be submitted to the Accounts Officer by last date of each month
and his remarks obtained in column 7 for further action.
Serial No.5
FLY LEAF INSTRUCTION FOR THE MAINTENANCE OF INDUSTRIAL EMPLOYEES'

GRANT REGISTER (PARA-303)
The object is to watch the progress of expenditure against the industrial employees'
grant.
The register will be maintained in the following proforma:-
Budget year..................................... Head of Account....................................

No. and date of sanction........................................ Amount allotted..................
--------------------------------------------------------------------------------------------------------------------
Sl.No. Expenditure for Amount Progressive total Remarks `
the month of..
--------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
A separate page will be allotted for each locally controlled head of expenditure.
The amount allotted for each head and the number and date of the sanction will be
entered on the top of the page against the space provided for the purpose.
The expended each month will be posted in column3andtile progressive total struck in
colunin4.
The register will be submitted to the Accounts Officer on the 20th of each month.
S1. No.-6
FLY LEAF INSTRUCTION FOR THE IVIAINTENANCE OF THE REGISTER OF PROFIT

AND LOSS OF INDIVIDUAL GANG PIECE WORKERS (PARA-238)
The object is to watch the percentage of profit and loss in respect of gang or
individual piece workers d report cases of high profit or loss to the management.
The Proforma is:

--------------------------------------------------------------------------------------------------------------------
Serial Ticket No. Name Percentage of profit and loss
or Gang
No Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.
--------------------------------------------------------------------------------------------------------------------
(1) (2). (3) (4 ) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)
--------------------------------------------------------------------------------------------------------------------
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The register will be maintained section-wise and where there is more than one gang in
each section; the entries will be shown by each gang separately.
The percentage of profit or loss as worked out will be recorded in column 4 under each
month. The register will be submitted to the Accounts Officer on the 25th of each month.
SL No.-7
FLY LEAF INSTRUCTION FOR THE MAINTENANCE OF REGISTER OF BOY ARTISANS

(PARA-283)
Object: - To ensure that the number of boy artisan's sanction for training is not exceeded
and also to; watch their rates of pay, increments and terms of training.
1. The register will be maintained in two parts-Parts I and Part II.

2. Part I of the register will be maintained section-wise in the following proforma:--
PART-I
SECTION
--------------------------------------------------------------------------------------------------------------------
Serial Ticket No. Name of the boy artisan Date of Rate of pay Scale of pay
No. appointment
-------------------------------------------------------------------------------------------------------------------
(1) (2). (3) (4 ) (5) (6)
-------------------------------------------------------------------------------------------------------------------
Date of increment Amount paid Date of promotion Remarks or discharge
Jan. Feb. Mar. etc.
-------------------------------------------------------------------------------------------------------------------
(7) (8) (9) (10)
-------------------------------------------------------------------------------------------------------------------
A separate page will be allotted for each section. .
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_____________________________________________________________________________________________
CHAPTER-VI
MATERIAL ACCOUNTING
Para
Basic Concerts 329
Material Control Procedure 330
Organization of the Store Department 331
Classification of Materials 332
Provisioning of Stores 341
Material Planning Sheets 348
Store Holders Inability Sheets 349
Control of Demands 354
Local Purchases 357
Purchase Orders Placed By OFB 364
Excess Supply 368
Provisional Payments 370
Cases where Prior Financial Concurrence is Necessary 380
Advance Payments 381
Payment of L.P. Bills 383
Loss of Cheques 390
Purchase of Coal and Coke, Timber, Gas & Electricity 391
Security Deposits 395
Agencies Making Payments for Purchase of Stores 403
Transportation and Sea Freight Charges 404
Customs Duty 405
Accounting of Receipts 407
Classification and Accounting of Scrap 409
Primary Store Documents 410
P.S,A. Schedule 411
Processing of Demand/Return Notes 412
Review of Primary Documents 413
Bin Card and Priced Store cum Provision Ledger 414
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Priced Store Account 418
Maintenance of Priced Store cum Provision Ledger 421
Monthly Average Rate 422
Unorthodox Balances 425
Reconciliation of Ledger and Bin Card Balances 428
Half-yearly Extraction of Ledger Value Balances 432
Review of Stock Holdings 435
Analysis of Stock 438
Computerization of P.S.L. at H.V. Factory Avadi 440
Accounting of Containers and Packages 442
Package Accounting 443
Control on Utilisation of Materials 450
Issues on Issue Voucher 455
Disposal of Surplus Stores and Waste Products 456
Stock Verification 464
Losses of Stores 471
Nominal Vouchers 489 Inflation
Accounting 492
Linking of Receipt of Stores 496 Linking
of Issue of Stores 503
A.B.C. Analysis 504
Contracts for Lease 505
Budgetary Control 506
Medical Stores 507
Deposit Stock 511
Reserve Stock-Pile Item 514
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CHAPTER-VI
MATERIALS ACCOUNTING
Basic Concepts
329. Direct materials constitute about two third of the production cost. Major
portion of the Revenue Budget relates to purchase of materials. Accordingly,
proper control on provisioning, purchase, storage, utilisation and disposal of
materials is necessary for ensuring uninterrupted utilisation manufacturing
maintenance and service facilities consistent with production programme. The
expenditure on purchase of materials should be Chin the allotment for the year.
The objectives to be achieved under a proper system of material control are:
(i) The provision of the required quantity of the right material at the right
time and right place.
(ii) Minimum amount of capital should be booked in working stock.
(iii) Comparing actual utilisation of materials with estimates for ensuring

corrective action.
(iv) Purchase of materials of the right quality and right quantity of

favourable prices.
(v) Prompt action for utilisation/disposal of scrap and other stores, which
are considered as "Surplus".
Material Control Procedure Covers
330. (i) Provisioning, purchasing and receipts of stores.

(ii) Storage of issue.
(iii) Usage.
(iv) Physical verification.
(v) Inventory Control.
(vi) Disposal of Scrap.
(vii) Proper accounting of the material.
331. (a) The Provision Section of the Factory is responsible for the
assessment of the requirements of various materials And for taking action
for obtaining the materials from various sources. '
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(b) The stores are received by the "Receipt Branch" of the Stores
Department and after proper inspection; these are accounted for under
"Receipt Voucher" and kept in "Stores" for issue.
(c) The Store Holder (Stock) issue materials on receipt of requisitions

(Demand Notes) after verifying the quantity etc. provided in the Material
Warrants.
(d) The physical verification of stock is carried out continuously through out
the year by stock verifiers directly responsible to the O.F.B. Hqrs
(e) The accounting of materials as well as payments to contractor is

entrusted to the Accounts Office. The check on purchase orders as well as
the disposal orders is carried out by the Material Section of the Accounts
Office.
Materials handled in a factory can be classified as
332.
(i) Materials on "Stores:" charge.
(ii) Materials on "Production" charge.
(iii) Stock pile items.
(iv) Inventory items.
333. Material oil "Stores Charge" includes
(i) Material used in the Factory,
(ii) Manufactured products, including components or processed material

produced in another Factory and
(iii) Miscellaneous items of trade supply e.g. electricity and water for
manufacturing purposes. .
334. The materials on stores charge may also be grouped as
(a) Metals and raw materials for, manufacture including components or

processed materials purchased in the market or received from other
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factories, or recovered from the break-up of unserviceable articles borne
either on the factory stock or deposit stock held on behalf of the D.O.S.
(b) Tools and gauges.
(c) General Shop Stores including:-
(i) Sundry Shop Stores e.g. oil, greese, brushes, buckets etc.
(ii) Plant stores e.g. screws, nuts drills, shovels etc.
(iii) Packing Materials e.g. boxes, cases etc,
335. These items are accounted for in the Priced Store Ledger maintained by the
Accounts Officers and the Bin Cards maintained by the Store Holder.
336. Materials falling under "Production'' are same. Which are manufactured in
the factories for issues to formation like arsenals, depots, other factories ,private
bodies and firms direct or which are utilized for further assembles etc. without
being light on Store Ledger charge.
337. Stock Pile Stores are strategic item of stores which are very difficult to
procure. Reserve of such stores is built up separately in order to meet the
demand of production in case of failure of supplies. The purchases are made from
the Capital Grant of the Factory. Separate ledger and Bin Cards are maintained.
Accounting is done through "R" Series of Vouchers.
338. Inventory Stores are items of expensive and quasi-permanent nature such as
Office Furniture, miscellaneous equipments, movable shop fittings etc. These
stores are accounted for by each Shop or Section. The Accounting Document is the
Inventory List opened under the Signature of the Foreman of the Shop or Section
and the Section Officer/Asstt. Accounts Officer of the Accounts Office. The entries
are made by the shop duly attested by the Foreman. Correct nomenclature.
Quantity, value, source of original receipt and location are shown.
During half-yearly audit the Accounts Office will ensure that stores drawn
or made on the inventory work orders are on the inventory list. All transactions for
inventory stores other than those Where demand and return notes are prepared
should be operated by "I" Series Vouchers arid any loss of inventory stores dealt
with as in the case of regular stock items.
339. Blank.
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340. Officers not below the rank of Assistant Store Holder are authorised to deal
with "Receipts" (from outside sources) and "Issues of Stores" whether to "Shops"
or "Outside the Factory". The authorization is to be notified by the General
Manager or any other Gaztted Officer. It should be ensured that the same
individual is not authorised to be deal with "Receipts" and "Issues" of Stores.
Receipts and Issue of Material
Receipts of materials- Raw materials are obtained by the factories by one of the
following means:
(a) Purchase from the United Kingdom or from other overseas countries.
(b) Central Purchase in India through a central authority.
(c) Local purchase by the G.M. of Factories.
(d) Supplies from other factories.
(e) Supplies from departments other than Defence.
(f) Supplies from other branches of Defence Departments.
Besides these, tile following internal transactions of the factories are also
accounted for on the receipt side of the store accounting records.
(i) Receipts from the production of own factory, e.g. components etc. which
are manufactured and taken oil store charge for Subsequent issue to
manufacture of outside parties.
(ii) Receipt fronts the returns to the Store Section of surplus materials, waste
etc. by manufacturing Shops.
(iii) Receipts from surpluses found at stock taking in the factories.
(iv) Receipts on account of transfers, from capital assets.
(v) Miscellaneous receipts from sources other than those enumerated above
i.e. estate produce, inventory etc.
Issue of Material- Material is issued by the Stores Sections of tile factory under
proper authority for the following purposes:
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(i) Issues of manufacturing shops.

(ii) Issues to other factories.
(iii) Issues oil payment to other Government Department etc.
(iv) Issues to T.D.E.
(v) Issues to other branches of Defence Department
(vi) Issues on account of sale by auction etc.
Besides the above, the following internal transactions of the Factory are also
accounted for as issues:
(a) Loss of Stores in Transit.

(b) Loss of Stores on Charge.
(c) Loss o Stores due to causes other than (a) and (b) above
(d) Transfers to Capital.
(e) Miscellaneous.
Provisioning of Stores
341. Proposals for purchase of stores whether in India or from foreign sources is to
be based on actual requirements, if it is justified with reference realistic production
programme, taking into a account the stock in hand , dues (i.e. orders placed for
which stores are still to be received) and liabilities i.e. requirements of materials
For meeting the demands). In the case of maintenance and other general purpose
store not forming part of the manufactured stores provisioning is made on the
basis of the monthly average consumption for past eighteen months.
342. In addition, provision of items of seasonal nature like timber, hides and
tanning materials, steel scrap etc. may also be made on the basis of the monthly,
Average Consumption for the past eighteen months. Provisioning has to be done in
each a way that the optimum level of stock held by factories at any time will be
following:-
(a) Ordinary indigenous 6 Months requirement.

Items
(b) Difficult Indigenous 8 Months requirement

Items (exclusive of stock pile whenever
authorised)
(c) Imported Items 12 months requirement for stock
pile items, 9 months requirement
(exclusive or stock pile) in respect of
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items for which stock pile is
authorised, elements are to be placed
for Imported Stores
343. (a) 36 months in advance of the period of utilisation which will be 12

months i.e. for requirements of 48 months less stock and clues against firm
demands (Indents planed by services are treated as firm).
(b) For difficult Indigenous Stores i.e. items where it is know from past
experience or from information available that supply did not materialize or
not likely to materialize in time and hence due to such anticipated long
delays, and hence provisioning for longer requirements is essential in the
interest of production 36 months in advance of the period of utilisation
which will be six months i.e. For requirement upto 42 months requirement
less stock and dues against firm demands.
(c) For Ordinary Indigenous items : Upto 24 months in advance of the

period of utilisation which will be six months i.e. for requirements upto 30
months less stock and dues against firm demands.
(d) For maintenance stores, 24 months in advance of the period of

utilisation which will be 12 months, 12 months and 6 months, respectively
for imported/ difficult indigenous and ordinary indigenous stores.
Note-- Provisioning should not be made on the basis or t le entire demand of

the services but on the basis of what the DGOF in consultation with the
G.M. realistically expects to produce during the provisioning period. The
production programme in respect of all end stores on a six monthly basis for
a period of three years, duly supported by (a) service indents, (b) backlog
carried forward from previous period and (c) other related information is
forwarded to the Finance Division of O.F.B. by each Production Branch of
O.F.B. for scrutiny and concurrence. The Production Programme thus
prepared and concurred forms the basis for provisioning action. From this,
the Data Processing Section of the OFB prepares and publishes a Consoli-
dated Production Programme incorporating these for tire components and
seamis (Work-in-Progress) also derived from the programmes for the
corresponding end stores. This is to be done strictly on tile standard scales
of requirement as per estimates. These production programmes" are
accepted for all planning purposes.
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Exceptions for arriving at monthly requirement of General purpose,
Maintenance, Stores etc.
344. (i) In the case of certain stores where provision is to be made based
on technical knowledge taking into account the life of the stores required or
for the minimum quantity of stores required for production or maintenance
purposes.
(ii) Where consumption based on past average is not considered adequate

due to high consumption of the items in the recent past or increased
consumption is due to commissioning of new plant etc. Full justification is
to be recorded with available data for the increased consumption. The
assessed requirement is also to be reduced in cases shore there is decline in
production trends, residual life of plant etc.
345. The delivery dates shown in the indent should be staggered so that as far as
possible the actual stock in the factory is restricted to the optimum level
mentioned in para 342 above. GMs have complete freedom according 'to their
judgment to maintain stock at optimum levels taking into account availability of
storage space and production targets.
346. Emergent Provisioning: There are certain items where stock should not be
allowed to go below the critical level viz.
(i) Imported items 9 months requirements for non-

stock pile items. 12 months
requirements including stock pile for
stock pile items.
(ii) Difficult Indigenous 6 month's requirements

items (inclusive of stock pile where
authorised).
(iii) Ordinary Indigenous 3 months requirements.

items.
347. In cases where suppliers do not agree for daggered deliveries. G.Ms may at
their discretion in take procurement action for lesser quantities than those
envisaged in Para 342 above.
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Material Planning Sheet
348. Material Planning Sheets are made out by the Data Processing Section of
the O.F.B. All products are identified 10 digit code number. The first two digits
indicate vocab section, the next three digits the Factory Code No. The last five
digits present the serial number of foliosm from 00001 to 99999. The input data'
for the computer are the opening, balance of stock as on a date estimates for
material requirements with relevant material code numbers, primary documents
connected with stores viz. Receipt and Issue Vouchers, Demand and Return Notes,
Adjustment for each month are to be punched on Cards by the Factory and sent to
DP Section with requisite certificates of last numbers of vouchers/demand notes
etc. and blank numbers by the factory. The initial data of stocks and dues are
recorded on magnetic tapes. Office copies of all Demands, Indents, acceptance of
Tenders etc. are sent to DP Section of O.F.B. Based on the Punched Cards for pri-
mary documents and other information available, DP Section of Ordnance Factory
Board makes out.
(a) Computerized Material Planning Sheet for Direct and Indirect

Materials based on 4-yearly production programme. Thus the sheets for the
review period o 1-10-1982 to 30-9-1986 will show the stock and due
position as on 1-10-1982 and the subsequent action for provisioning for
each half year period.
(b) Bill (Estimates) of materials up-dated,
(c) Critical Stock List.
Provision action is taken as per indication on Material Planning Sheets.
Note-- With tile introduction of M.P. Sheets, checks conducted by

Accounts office on provisioning of materials have been dispensed with. If
Material Planning Sheets are not made out, Store Holders Inability Sheets
will be floated. Bases of making out the Store Folders Inability Sheets and
the checks to be exercised are indicated in the next para.
Store Holders Inability Sheets
349. This is document ors which tile Store Holder represents his inability to
supply a store, when the stock has gone below a fixed limit, so that arrangements
may be made for replenishment. It shows stock in hand, dues, average
consumption- liabilities in sight and requirement to meet liabilities.
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350. A Register is maintained in the Accounts Office showing the date of receipt,
Inability Sheet Number and date, corresponding supply order and date, whether
value of store is Rs. 1 lakh or more, whether or not the sheet was selected for
audit, initial of Auditor and remarks. 10% of the Inability sheets are selected by
the Section Officer Asstt. Accounts Officer of Ledger Group of Material Section
for checks as indicated below:-
(i) The quantity of stock existing in the factory on the (late of inability sheet
as noted is correct.
(ii) The Average Monthly Consumption as noted in the Inability Sheet

is correct.
(iii) The figures for "dues'.", liabilities as noted in tile Inability Sheet is
correct.
In addition, Inability Sheets for items costing Rs.1 lakh and above are
invariably checked. The Register is submitted to the Sr. A.O. /A.O. in the first
week of each month.
351. The main steps in the manual system where Store Holders "Inability Sheets"
are floated and "Material Planning Sheets" under computerized system are :-
Manual System
1. Requirements of materials are worked out with reference to the

Production Programme and Standard Estimates. These are required to
be posted in the Priced cum Provision Ledger as Liabilities by
representatives of the Factories.
2 The stock as on a particular date may be checked with ledger and bin
card balances.
3. ".Dues-in" represented by S.Os, A.Ts & I.F.D. are noted in the ledger
by Factory Staff. Progress of supplies is also noted.
4. Net, requirement is worked out in the Store `Holders Inability Sheets

with full details of liabilities
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Computerized system
1. Basis is the same. Data is centrally maintained by D.P. Section. No

posting is made in the ledger. M.P. Sheet is circulated to concerned
Factories/Accounts Offices
2. The stock as per Bin Card as on a particular date is obtained from the
Factory and this is kept up elated with reference to data received in
the form of punched cards and office copies of demands, A/Ts etc.
3. Supplies received are noted from Punched Cards. Portion of dues is

updated by Computer.
4. Basis of Provisioning is the M.P. Sheet. No audit check is possible as

it is difficult link the programme with I.F.D. and products etc. Audit
check is not contemplated as per Government Orders.
Pricing of Demands
352. General Managers have been vested with full powers in regard to placing of
demands on Central Purchasing Authorities. Demands sheet together with
relevant documents are received by Accounts Officer for preaudit. The estimated
cost as noted in the Demand/Indent will be checked to ensure that the total value
of demands is assessed as correctly as possible. The Accounts Officer will return
the demands/indents duly audited/observed as quickly as possible. In respect of
specified items for which provisioning is done centrally by the O.F.B. HQrs and
imported items, the post-audit comments are intimated to the G.M. under advice to
OFB and finance Division/OFB within 10 days in the case of ordinary demands
and 7 days in the case of urgent demands.
353. In cases, where considered expedient by the Sr. A.O. A .O. a copy of the
audit report may be forwarded to the Chief Controller of Accounts (Fys) for
advance information and necessary action brining out the special and unusual
features of the Provision propose warranting special attention and action.
Note: - Supply Orders against Rate/Running Contracts upto Rupees one lakh are
post audited by the A.O.
Control of Demands
354. All demands should be scrutinized periodically at least once in a month to

check these with reference to their expiry dates of supply and change in
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requirement, if any, so that where necessary, prompt steps may be taken by the
G.M. of the factory for their initiating action in communication with O.F.B. either
for expediting supplies or for cancellation of demands. Two registers steps should
be maintained separately-one for Central Purchases and the other for Foreign
Purchases for watching the progress of the respective demands.
355. Monthly reports separately for local purchases, Central purchase N.M.D.
and Foreign Purchases of Stores as received by the Sr. A.O./Accounts Officer from
the Factory will be scrutinised and forwarded to the O.F.B. by the 7th of the month
following.
356. In the case of Inter-Factory demands, the supplying factory should furnish
to the indenting factor list of L.F.D. outstanding for more than one year so that
the indenting factory can review the stock of components held and the
manufacturing programme as modified and confirm that the materials are still
required.
Local Purchases
357. Financial powers of the General Managers have been enhanced from Rs.
25,000 to Rs. 25 lakhs. In the case of Vehicle Factory, Jabalpur the financial power
is 50 lakhs. The work managers and officers above the rank of works managers
have been delegated powers for local purchase of stores upto specified limit. The
object, of delegating such vast powers is to ensure availability of right materials at
the right time for maintaining continuity of production an achieving production
targets with least hindrance. The delegation involves shouldering of
responsibility.
358. These powers are to be exercised in consultation with the Sr. A.O./Accounts
Officer/Local Finance. The expenditure should be restricted within allotted budget
grant. The purchases should conform to the stipulations laid down in financial
Regulations and Orders issued from time to time viz.-
(i) Every Public Officer should exercise the same vigilance in respect of
expenditure from public money as a person of ordinary prudence should
exercise in respect of expenditure of his own money.
(ii) The expenditure should not he prima facie mote than the occasion
demands.
(iii) No authority should exercise its powers of sanctioning 'expenditure to

pass an order which will be directly or indirectly to its own advantage.
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(iv) The purchase is authorized. ,
(v) Quantity ordered is in conformity with the quantity of net requirement

for the provisioning period as shown in Material Planning Sheet. In other
cases it should conform to the requirement taking into account the realistic
production programme for the provision period or average consumption for
general purpose stores, stock and clues in.
(vi) Utmost publicity is given.
(vii) The adequacy or otherwise of competition, whether all established past

suppliers including the last, were covered by the tender enquiry, in case tile
competition is inadequate, whether there is scope for retendering consistent
with the required delivery schedule. The lowest tender has been accepted or
the reasons for accepting other than lowest tenders are satisfactorily
explained in the Comparative Statement of Tenders
(viii) The rates accepted compare favorably with last paid rate.
(ix) Terms of delivery and date of delivery have been specified and are
related to rate of consumption.
(x) In cases of articles proprietory nature necessary certificate has been

rendered.
(xi) Tender is on the approved list of contractors of the Factory or the

Central Purchase Organization and has not been black listed and the
financial stability has been ascertained by the Factory.
(xii) Preference as to price or selection of tenderer is covered by existing

orders.
(xiii) Sanction for advance payments, if, desired by the supplier, has been
accorded by the competent authority as per prescribed policy.
(xiv) Grounds of emergency where- necessary have been clearly explained

and action to reduce clues-in, against earlier orders, when feasible has been
taken.
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359. The systems of tendering adopted are:
(i) Open tender by advertisement.
(ii) Limited tender.
(iii) Single tender of proprietary articles and small orders not exceeding Rs.
1,000 in value.
(iv) Purchase by negotiation.
360. In respect of purchase of stores worth more than Rs.50000.Tender Purchase

Committee will scrutinise tenders received and decided about
the purchase. The composition of the Committee is-
Purchase upto Rs. -Works Manager, Accounts

4 lakhs Officer.
Purchase of Rs.4 lakhs --Deputy General Manager,

to 10 lakhs Accounts Officer.
Purchase of Rs. 10 --General Manager, Joint C

lakhs and above. of A/Deputy C of A.
For V.F.J. purchase -Joint G.M./Joint C of A/

upto Rs. 20 lakhs Deputy C of A (Fys)
and above Rs, 20 -GM with Joint C of A (Fys)/

lakhs Deputy C of A (Fys).
361. The association of the Finance Representative is to bring in financial

expertise in the decision making process. The Committee has to ensure adherence
to various rules as Supply Orders based on purchases approved by Tender
Purchase Committee are subject to audit in the normal manner.
362. In the T.P.C. headed by G.M./Jt. G.M., the Manager (user) the Manager
(Procurement) and other concerned Officers will also be members. Financial
scrutiny should clearly bring out financial implications and repercussions of
exercise of any-power and alternatives available to aid decision to the best course
from financial point of' view.
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363. Contracts are ordinarily required to be made on the authorised tender form.
Comparative Statement of Tenders indicates the names of' tenderers, their
respective quotation and the recommendation of the authority delegated with
powers of placing the order. The last paid rate will invariably be quoted on all
C.S.Ts. In cases where a store is being purchased for the first time, a suitable
remark explaining why this information cannot be indicated will be made out on
the C.S.T.
364. Composition of Tender Committee at O.F.B. level are:
(a) Level-For purchase of stores exceeding Rs. 1 Crores in Value-
Chairman-D. G.O.F.
Members - (i) Member/P&MM
(ii) Member of the Concerned Operating Division.
(iii) Member/Finance.
Secretary--D.D,G./SP.
(b) Level-II-For purchase of' Stores exceeding Rs. 50 lakhs in value but
within Rs, 1 Crore in each case-
Chairman -Member/P & MM
Members- (i) Concerned Member,

(ii) Member/Finance.
Secretary-D.D.G./SP.
(b) Level- III -For purchase exceeding Rs.25lakhs in value, but within Rs.
50 lakhs in each case-
Chairman-Concerned Member
Members (i) Controller of Finance,

(ii) D.D.G./ SP. '.
Secretary-A.D.G./SP. .
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(d) Level-IV-For purchases exceeding Rs 5 lakhs in value but within Rs. 25
lakhs in each case-
Chairman -D.D,G./SP.
Members -(i) DDG/ADG Concerned.
(ii) Joint Controller of Finance.
Secretary-A.D.G./SP.
Note- For purchase of vehicle components the composition is the same except that
the Secretary will be DDG/ADG Concerned.
365. No Tender Purchase Committee is necessary for the following: -.

(i) For purchase of analyzed items, where both the price and source of
supply are determined by Govt. and Semi Govt. Agencies.
(ii) For purchase of stores, Sub-Assemblies, Components etc. from

collaborators under - collaboration Agencies. ..
366. Supply Orders are received in the Accounts Office for Post Audit. These are
audited to the extent indicated below:
(i) Supply Orders of the 16-2/3%

Value below Rs.500
(ii) Supply orders of the 33-1/3%.

Value between Rs.500 and
Rs. 5000.
(iii) Supply orders of the 100%.

Value exceeding Rs.5, 000/-
367. Both the copies of Supply Orders arc et1dorsed over the signature of the
Section Officer (A)/ Assistant Accounts Officer with the words "Post Audited".
Such of the Supply Orders which arc 'Dot-selected for Post Audit are endorsed to
this effect over the signature of the Section Officer (A)/ Assistant Accounts
Officer. One copy of each Supply Order is retained and the other copy is returned
to the Factory. The entries in the Supply Order Register are made of all Supple
Orders including those returned with observation. Suitable "Note" is kept in the
Supply Order Register to watch the return of the Supply Order "Returned with
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Observation". Since the commitment is noted in such cases the progressive
expenditure of commitment will with the figures furnished by the factory.
Excess Supply
368. Excess supplies should not be treated as separate transactions Acceptance of

supplies in excess of the quantity ordered will not be held to be a modification in
the conditions of a contract provided that (i) the value of excess supplies does not
exceed 5 percent of the original value and (ii) the total value of the supplies made
does not exceed the financial powers of officer originally sanctioned the contract..
If an excess supply is made to avoid cutting bars or rods or due to an other

valid reasons e.g. to suit trade unit for complete barrel, packet, pieces etc. the
following procedure should be observed in regard to the payment of supplies bills.
For orders placed by the General Manager when the total value of supply
(inclusive of the excess) is within his financial powers, a covering sanction of
G.M. will be required before payments of the bills. . When the value of total
supply exceeds G.M.'s financial powers, bills may be passed as ad-interim
payments for excess value Objection can be waived by C of A (Fys) and the
A.O in terms of Rule 177 F.R.-Part I (Vol. 1). In all other cases where sanction of
the O.F.B. is required, ad interim payment may be made with the prior approval of
C of A (Fys).
A similar procedure will be observed in respect of orders placed by O.F.B.
Important Points
368. (a) Acceptance of supplies in excess/short of the quantity ordered will not be
held to be modification in the conditions of a contract provided that the
value of the excess/short supply does not exceed 5 % of the original value.
For acceptance of supplies in excess/short of 5 % of the original value, the
competent authority will be determined by the value of the original order
plus the excess/short value. This does not refer to contract made on "As
Required Basis".
(b) G.Ms. may allow price increase upto a ceiling of 5%, of the contracted
price. This may be allowed if-
(i) Alternative course of making risk purchase arrangements is either

not practicable or would adversely affect production, and
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(ii) The increase claimed by the party is due to factors beyond their
control. The increase should not be a owe, as a matter of routine and
5% is the n1aximum limit.
(c) The general directive regarding purchase of components for which

capacity has already been created in Ordnance Factories for production is that
clearance should be obtained from the Ordnance Factory Board. To meet
immediate requirements when the item is used by more than one factory, the
factory initiating the purchase against their own requirements should inform sister
Ordnance Factory/Factories using stores regarding price at which order has been
placed. Last purchase price paid by factory or sister factory for the item will be
taken into consideration before placement of new orders. When orders are placed
by G.M.s to meet emergent requirements for which O.F.B. has placed orders, care
will be taken to ensure that the orders are not placed with defaulting firm.
(d) Price differential may be allowed at the discretion of OFB with the
concurrence of Member (Finance) in respect of contracts placed on different
sources for the supply of identical stores. This should not exceed 10 % in special
cases.
(e) General Managers may enter into contracts for fabricating /

processing of raw materials/ stores including purchase of machined components
and semi-fabricated items such as forgings, castings etc. upto the limit specified in
relevant Govt. order.
(f) In respect of fixed price contracts, O.F.B. can accept increase upto 66-
2/3 percent of the Contract Price. Normally as a principle no price increase should
be accepted, but in exceptional cases negotiations could be done and the final,
decision taken by O.F.B.
Supply Orders beyond the Powers of the General Manager
369. Comparative Statement of, tenders in triplicate on which the names of the
various tenders with their respective quotations and the recommendation of the G.
M. regarding the tender selected is sent to Accounts Office for financial
concurrence. After exercising necessary checks the statement will be signed and
transmitted to the OFB for necessary sanction. A copy of the C.S.T. duly
sanctioned will be received in the Accounts Office and recorded. When the
relevant Supply Order is forwarded to Accounts Office for concurrence, it should
be carefully checked with copy of the sanctioned C.S.T. on record to ensure that
the name of supplier, the quantity and rate of material are correct.
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Long term contracts and contracts given to other than the lowest tenderer
370. These are scrutinised regularly by A.O. Report is sent on 15th April
showing-
(a) Number of cases in which C.S.T. were scrutinised.
(b) Number of cases in which contracts were given to other than the
lowest.
(c) Details of the cases in which the reasons for the rejection of the
lowest tender were not found to be satisfactory. For this purpose, a
register showing statistics in regard to tenders other than the lowest
accepted by Administrative authorities is maintained.
Local purchase against Inter-Factory Demands
371. Factories situated far away from big trade centres like Calcutta, Bombay
experience considerable difficulty in procurement of materials which are urgently
required at times to avoid delay in production. To meet such emergencies, a
factory encountering such difficulties may be allowed to ask another factory
located near big trade centres to made local purchase on its behalf. Such local
purchase will be made by the latter factory on the authority of inter-factory
demands placed by the former factory duly concurred in by the A. O. of the
indenting factory. The Supply Order to be issued by the purchasing factory will
be checked by the A.O. with reference to the inter-factory demands. Since such
occasions will be rare, no transfer of funds will be made between factories. It
should be ensured that the method of purchase' is resorted to only in exceptional
cases.
Sanctions issued by Ordnance Factory Board
372. Audit of Supply Orders/Contracts concluded by O.F.B. is done centrally by

the Store Section of the office of the Chief Controller of Accounts (Fys). Copies of
these Supply Orders/ Contracts are invariably sent by the OFB to the concerned
Accounts Officers. Objections/Observations arc dealt with in consultation with
O.F. Board. To ensure that all Supply Orders/Contracts are received by concerned
Accounts Office, the A.O. will solid a communication and obtain an
acknowledgement from the Main Office that the relevant S.O/Contracts have been
received by "S" Section.
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373. Store Section would also advise about the receipt of the Supply
Orders/Contracts purely for the purpose of Cross Check. This communication and
their acknowledgement' should not in any case hold up the payment of the supplies
against the contracts, strictly in terms of the Supply Orders/ Contract. Receipt of
communication should be watched through a Register, where the payments will be
recorded.
Provisional Payments
374. General Manager/DDGOF, OFB HQrs. are competent to authorise

provisional payments with the approval of the Accounts Officer concerned, Jt. C of
A/Dy. C of A/Asstt. C of A (Fys) respectively.
375. Payments made in exception circumstances in anticipation of the receipt of

the sanction of appropriate authority or of additional funds to cover the
expenditure are known as "Provisional Payments"
376. Cases may arise where sanction of appropriate authority exist and funds are
available yet final payments cannot be made to the parties concerned on account of
lack of documentation or for lack of time for verification of the particulars or
for the completion of audit requirements.
377. Provisional Payments will not be authorised where there is no authority. In

the case of lack of funds, it should be ensured that, funds would be
forthcoming from Ordnance Factory Board. When third parties-are involved e.g.
contractors, and there is it definite legal liability to pay, payment should not be
withheld but each case should be decided on its merits and on the strength of the
legal aspects of the claims, legal advisers being consulted in doubtful cases.
378. In rare cases where the General Manager does not agree with the views of
the A.O., he may authorise provisional payments on his own responsibility and
report such cases to the Member concerned with copy to Member (Finance). Res-
ponsibility for watching clearance of provisional payments cases vests with the
General Manager. Progress is watching by the Chief Internal Auditor.
379. In the case of Hqrs. cases of disagreement will be referred to the Member
concerned for finalisation of the case in consultation with the Member (Finance).
Cases where prior financial concurrence is necessary
380. (A) All orders placed by the Ordnance Factory Board DGOF except in the
following cases:-
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(i) Contracts for fabrication, professing of raw materials/semis upto-

Rs. 50,000 in each case.
(ii) Waiving of compensation or loss due to failure of contracts upto Rs.

10,000 in each case.
(iii) Despatch of stores by other than the shortest route or cheapest mode
of carriage Rs. 50,000 on each occasion.
(iv) Payment or earnest money in connection with procurement of

canalized items of stores through canalising agency (upto 2 per cent
of C.I.F. Value).
(v) Repairs of M.T. Vehicles by Trade Sources upto Rs. 2,000 in each
case.
(B) All orders placed by the General Manager except: -
(i) Purchase of stores upto Rs. 15,000 in each case for all factories
except H.V.Fy., Avadi where the limit is Rs. 50,000.
(ii) Cash Purchase upto Rs. 2,000 in each transaction each item for all
factories except H.V.Fy. Avadi where the limit is Rs.4, 000
(iii) For H.V. Fy. Avadi only emergency purchase upto Rs.1 Lakh in each
case
(iv) Air Lifting of Stores:
(a) Rs. 500 per occasion For GN, HVF

within India only
(b) Rs. 30,000 in each For GM, HVF/

case (annual ceiling VFJ only.
is Rs. 2 Lakhs)
(v) Loading/Unloading and transporting of materials by private contracts

Upto Rs. 2,000 in each case.
(vi) Waival of liquidated damages,

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According to financial powers, provided there is no loss, damage or
inconvenience' caused to the consignee due to delay in supply and also subject to
the condition that there is no loss in production and/or no idle time wages were
paid.
(vii) Waival of security deposits provided the concerned authority is

satisfied as regards the status, financial standing of the firm on the
basis of their registration with DGS&D, DDS, ordnance Factories etc.
(viii) Lodging of Security Deposits with Gas Suppliers.
(ix) Sanction of Demurrage/Wharfage upto Rs. 2,000 per transaction.
(x) In the case of contingent and miscellaneous upto Rs. 2,000 in each
case or up to the ceiling the financial powers whichever is less.
Advance Payments
381. Powers of Ordnance Factory Board/DGOF for authorizing Advance

payments are: -
(i) Canalized items

Full powers for 100% payment against proof of inspection and despatch that
the Firm would, bear the cost of rejected materials including transportation
charges.
(ii) Steel items to the Main Producers

100% payment within 14 days of the presentation of the bill duly supported
by proof of Inspection and Despatch
(iii) Steel items to Me Steel .4uthorfty.gfInclia Limited Stock Yards

Upto 105 per cent of the contract value subject to subsequent adjustment
after inspection at the stock Yards
382. In addition, to the powers stipulated at items (i), (ii) and (iii) above for
purchases within their financial powers advance payment may be authorized by
the G.Ms in the following cases:
(i) 100% advance payment to private Oil Companies for purchase of oil
an lubricants where these are not available with M/s Indian Oil Co. or these
are proprietary articles of private Oil Company.
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(ii) 100%Spot Payment against proof of inspection upto Rs. 5 lakhs in
each case.
(iii) Advance payment to Contractors where ''competitive condition do no

exist or goods are in sort supply or monopoly supply.
Note:-The claim for 100% spot payment would be preferred by the G.M. on behalf
of the contractor and cheque in payment thereof would be handed over to the
General Manager. The cheque will be handed over, to the Contractor after delivery
of the stores duly accepted by the, Competent Inspection Authority.
Payment or Local Purchase Bills procedure in Material Section dealing with

payment of bills
383. (i) Bill is checked with relevant Supply order in respect of the quantity, rate
and terms of delivery. It will be seed that the enfacement of "Post
Audited" or "Not Selected for Post Audit" under the dated Signature of the
Section Officer/Asstt. Accounts Officer has been made on the Supply Order.
(ii) Bills are in the prescribed form and in original.
(iii) Bills have been duly receipted and signed in full by the suppliers and
that vernacular signatures are translated.
(iv) Details work upto the total and the total are in words as well as in
figures.
(v) There are no erasures and alterations and that any alteration in the total
tire attested by the Officer concerned as many times as they are made.
(vi) The bills are signed in ink, no bill or voucher signed with a rubber
stamp being accepted.
(vii) That Revenue Stamp is affixed to bills for sums in excess of Rs. 20.
(viii) That the signature of the Officer certifying the bill tally with the
Specimen Signature held in Accounts Office to ensure that the signature on
the bill is genuine. For this purpose, suitable ' Register containing the
Specimen Signatures of Officer authorised to certify such claims should be
maintained. ,
(ix) Funds are available.

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(x) Prescribed Certificate on payment of "Sales Tax" and other Govt. Duties
has been rendered.
(xi) Receipt of Stores has been certified by Section Officer/Asstt. Accounts

Officer, Material Section.
(xii) In the, case of advance payment, prescribed documents viz. Inspection

Note and No. and date of Rly. Receipt/Postal Receipt No. has been
furnished.
The bill is passed for payment when the above requirements are complied
with.
Procedure for Passing Bill
384. (i) Endorsement of paid and cancelled is made on the bill and relevant
Supply Order. The amount passed for payment and No. and date of Receipt
Vouchers are entered on the reverse of the Supply Order. The bill is also
stamped "Paid and Cancelled". In cases where part supply is made only,
entry is made on the reverse of the Supply Order with suitable indication
against items for which payment has been made. The Contractors' copy of
the Supply Order will be received only with the final bill for supply against
the order.
(ii) The amount passed for payment will be noted in Supply Order Register
maintained as per Sl. No. 10 of Appx. "A" against the relevant Supply Order
(iii) The details of the bill will be entered in the Register of Payments to
local purchase contractors.
(iv) Endorsement for passing the bill is made, on the reverse of the bill
under the. Dated initial of the Auditor passing the bill showing:
(a) The amount passed for payment.
(b) Treasury on which cheque is to be issued.
(c) Name of Contractor.
(d) Amount in figures.
(e) Reference to page number in Register of payments. The Section
Officer/Asst. Accounts Officer initials the bill after checking
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(v) Enfacement to the effect "Paid and Cancelled" vide D.V. No. and date
should be endorsed on bills and connected documents under the dated
initials of, the Section Officer (A)/Asstt. Accounts Officer.
(vi) In cases in which more than one bill is disposed of on the same day in
respect of one and the sage contractor the consolidation of the amounts
passed for payment will be done an any one bill quoting reference to other
bills and one cheque be issued. Each bill will be endorsed "Audited and
Passed" paid by inclusion in Bill No.........for Rs................. Use of IAF
(CDA-13) shou1d be avoided as far as possible.
(vii) Punching Medium in duplicate will be prepared by carbon process

duly signed by the Section Officer (A) where the amount is Rs. 10,000 and
by Asstt. Accounts Officer when the amount is upto Rs. 50,000 and by the
Accounts Officer when the amount is more than Rs. 50,000.
(viii) Cheque forwarding memo (Cheque Slips) with copy to the G.M. is
made out under the signature of the Section Officer(A)/A. A.O, of the
Material Section.
Submission of Bills to the Accounts Officer
385. The bills with all the relevant documents and registers referred to above will
be' submitted to tile Accounts Officer. Alter necessary scrutiny, lie will sign the
bills for payment. Supply Order Register endorsement on the reverse of the Supply
Order on record in Accounts Office, Register of Payments to contractors (income
tax Register), and Punching Medium for- amount over Rs. 50,000 cheque
forwarding memos will be initialed by him. The practice of calling for
acknowledgements from contractors in prescribed form has been dispensed with
from 1974. All corrections will be, attested by him.
386. Passed bills are entered in Daily Payment Sheets and sent along with bill to
Disbursement Section for issue of Cheque. The No, and date of the
Disbursement Vouchers is noted oil the passed bill by the Section making out the
Daily Payment Sheets. Disbursement Section forwards the cheque with the
"Forwarding Memo" 'made but by M. Section. Copy of the forwarding memo
is sent to the General Manager. On return of bills from Disbursement Section the
No, and date of the Disbursement Voucher should be noted in "Bill Register" and
"Register of Payment to Contractor" against the relevant entry. This step is very
important as the issue of cheque for bills passed for payment is ensured by this
noting.
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387. Register of Payments to Contractors (Income Tax Register) should be
reviewed quarterly by the Accounts Officer for ensuring compliance with the
above instruction. Double payments to contractors are avoided by referring, to the
entries in this Register.
Income Tax Clearance Certificate
388. (a) Contracts of the annual value of Rs. 10,000 or less may be given
without production of Income Tax Clearance Certificate. The details of such
contracts including payments made to such contractors 'as also to
other should be intimated periodically to tile Regional Commissioner of
Income Tax. Production of Income Tax Clearance Certificate need not also
be demanded for contracts of annual value exceeding Rs. 10,000 from the
firms exempted by the 'Govt. from 'time to time. In such cases also, full
details of the contract including the name of the firm and the value of the
contract should be forwarded periodically to the Regional Commissioner of
Income Tax. Contracts should not be given to any firm not mentioned in
such lists unless Income Tax Clearance Certificate is produced by it. The
Accounts Officer makes out quarterly statements of payments of Rs. 1,000
and above to each contractor and furnishes it to the Regional Commissioner
of Income Tax.
(b) Sales Tax: Levy of Sales Tax on Stores purchased by Ordnance and
Ordnance Equipment Factories will be regulated in accordance with Govt.
Orders on the subject.
Special Instructions of Payment of Bills
389. (a) All local purchase bills should be disposed of within seven days of
receipt in Accounts Office.
(b) In cases of bills for supply of Electricity etc.-where there is a provision

for rebate for payment "' by stipulated date, care should be taken to accord
priority, so that the cheque reaches the party by due date. loss of rebait due
to dely by Factory/Accounts Office has to be regularised as Cash Loss.
(c) Bills will be taken for payment according to the date of receipt: When
General Manager personally makes a request in writing for payment of a bill
by a specified date; payment should be made by that date. If for unavoidable
circumstances, the G.M.'s request cannot be complied with, the fact should
be explained to him well in advance if possible by personal discussion.
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(d) All points of Objections/Observations should be raised in the first
instance and piece-meal Objections/Observations must be avoided. If the
reply to the Objections/Observations gives rise to a further query, the same
should as far as possible be settled by personal discussion/contact. If in any
case a bill is required to be returned twice over or when a request made by a
G.M. cannot be acted upon lie same should be put up to the Group Officer
(or in his absence to the Senior Accounts Officer) for his consideration and
orders.
(e), In regard to bills for Spot Payment, cheque would be issuable only
against bills preferred by the G.M. on behalf of the contractor duly
supported-by the proposed Supply Order. The relevant Supply order should
invariably be audited before the bill prepared for the proposed Spot
Payment is admitted and Cheque is handed over to G. M. of the concerned
factory. As and when the cheque is issued, it will be entered in the "Register
of Payments to Contractors" in the usual manner. These advance payments
are noted in the Demand Register. Factory Authorities will forward
covering bill from the contractor duly receipted for the amount of cheque
and indicating other usual particulars e.g. reference to the Supply Order,
description of stores, unit of quantity, total -quantity of stores delivered, rate
and total ' cost duly certifying the receipt of the stores in. good condition. In
cases, where Receipt Vouchers do not accompany such receipted bill, it
should be ensured that they are received within a reasonable time. Cases
of unusual delay should be brought to the notice of the Factory Management
at the appropriate level and discussed in the Liaison Meeting.
(f) In the case of local purchase made by the General Manager, invoking
emergency powers, it should be seen that (i) the date of delivery has not
been extended beyond the date of delivery by lowest tendered and, (ii) that
materials received in time are not lying unutilized in stock. It should be
ensured that store procured under the financial powers vested in the General
Manager is utilized in production within a reasonable period of
procurement. For this purpose, a Register indicating details of such cases of
emergency purchase together with the information whether the delivery
dates were extended and whether the stores were utilised within reasonable
period will be kept.
(g) Bills of local contractors for sums less than Rs. 10 and those of
outstation contractors for suns less than Re. 1 will after audit, be sent to the
factory for payment in cash out of impress. The factory will recoup its imp
rest by including such amounts in contingent bills duly supported by tile
contractor's bill.
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(h) Bills for purchase of steel and other items in respect of which 'purchase
orders have been placed by factory/OFB will be paid expeditiously by tile
Accounts Office on receipt, having due regard to tile terms and conditions in
each such order.
(i) In the case of part supplies a certificate to the effect "Supply Not
Completed" will be endorsed on the bill and Contractor's Copy of Supply
Order will be forwarded with the Last Bill. In cases where a contractor
loses the original supply order, a certificate on the following line should be
obtained from the contractor before payment is made: "It is certified that
payment has not been obtained by me previously and I shall not again prefer
a claim if, the lost copy of the supply order is found"
LOSS of Cheques
390. In cases where Cheques are reported as lost, intimation should be sent to the
banker under 'Registered Post/Ack. Due" to stop payment of' the cheque. On
receipt of intimation from the Bank, Accounts Section should be addressed for
Confirming that the cashed cheque has not been received. After this fresh cheque
will be issued to the contractor on receipts of Indemnity Bond duly scrutinized by
tile factory authorities. Indemnity Bond is not necessary in the case of cheque
issued in favor of Govt. Departments/Bank. The payee should furnish a certificate
stating that lie has not received the cheque alleged to have been. Lost and that it
will be returned to the drawer it found.
Purchase of Coal and Coke
391. (a) Demands for certain items e.g. steel, timber, leather, coal and coke are
submitted when requirements are specially called for by tile OFB from time
to time. On approval of the demand for coal and coke, which are central
purchase items, a supply order will be placed by the G.M. on the Deputy
Coal Commissioner (Distribution) Calcutta in the same way as in tile case
other local purchase stores.
(b) As bills for the cost of coal and, coke will be paid by tile C.C. of A (Fys)
Rly. Section, one copy of the supply order will also be forwarded to him.
Freight charges, Wagon charges, Labour Department Central Cess and Sales
Tax where leviable, are also paid along with the cost of, coal and coke. Of
these, sales tax is booked to central purchase code and others to
transportation head. These charges are incorporated in tile demand note
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enclosed with colliery bills for cost of coal submitted by them to the GM of
the Factory for countersignature.
(c) The Vouchers for coal and coke will be priced provisionally taking into
account all tile charges mentioned above and necessary adjustments made
with reference to tile paid bills received from the office of the Chief
Controller of Accounts (Fys), Rly. Station. No inspection fee is to be
added to the cost of coal and coke as no separate debit on this account
for inspection carried out by the -Organization of tile Coal Commissioner is
received.
Purchase of Timer
392. In regard to the supply of seasoned timber for the various branches of the
Army in India (except the M.E.S. Much arranges for its own requirements), the
supply of' the under mentioned classes of seasoned limber will be arranged by the
OFB in tile manner stated below: -
(i) High grade are generally bard-wood timbers such as sat, Sissoo etc. will
be purchased, seasoned and supplied by tile Gun Carriage Factory, Jabalpur
to the extent necessary to meet demands, the cost involved being net within
the allotment on which the Ordnance Factories now work according to tile
present financial system, i.e. within tile Priced Vocabulary or other Eastimed
Value of orders placed on them in any financial year: The D.O.S. (who will
consolidate the requirements of the various branches o1' tile Arm,. and 'of
the Indian Air Force as in the case of other stores) should demand, as
required, the timber falling under the above mentioned category from the
O.F.B./D.G.O.F.
(ii) The purchase of seasoned Deodar and soft woods such as Chir, Kail etc.
will be arranged by the Director General of Supplies and Disposals by
placing firm purchase orders with the State Forest Departments against
definite indents of D.O.S. and OFB/DGOF. All supplies will be treated as
departmental supplies from State Governments, "stock and supplies will
ordinarily be made after inspection by an authorized Officer of the
Forest Department. For all supplies, separate issue vouchers will be
prepared by State Forest Department for different consignees, as well as for
different purchase orders.Inward claim for the supply will be received by
the Accounts Section of COA's Office from the concerned State A.G. for
settlement on cash basis by issuing cheque. After payment, tile vouchers
will be scheduled to the Audit Section/ Branch Accounts Office. The State
A.G. will be responsible for the collection of the consignee's receipts in all
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cases excepting cases of 100% advance payments when the collection of
consignee's receipts will rest with the consignee's Accounts Officer and the
C C of A (Fys).
The State A.G. will include in the debits the rates stipulated in the purchase
orders inclusive of the agreed State Government Overhead Charges and 1%,
(Or 1% forOverseas Consignees) Works, Housing and Supply Ministry
purchase fee, where leviable.
393. The factory Authorities should dispose of receipt and inspection certificates
for receipt of timber normally within 14 days and, if it be not practicable ail,
concerned should be informed accordingly. Proposal, if any, for rejection may be
made in the receipts certificates together with proposed recoveries for losses and
the purchasing officer who made the contract will issue final orders on tile same. If
it is established after investigation that State Government officials are responsible
for losses or shortages, and that deficits or discrepancies are not attributable to
negligence of the Railway or pilferage after dispatch, the State Government will
make appropriate refunds.
Purchase of Gas and Electricity
394. Supply of gas and electricity is arranged with tile companies as per terms of
agreement, a copy of which is supplied to Accounts Office. When the bills are
preferred by the companies the same will be checked with reference to conditions
of supply, stipulated in tile agreement form and payment regulated accordingly.
Special care will be taken to ensure maximum advantage to State in respect of
days of grace, maximum/minimum demand clause etc.
Security deposits
395. The Accounts Officers are authorized to receive/release/forfeit and renew

security deposits lodged by Contractors/Suppliers Lease Holders in the shape of
Bank Deposit at call. Bank Fixed Deposit Receipts, Post Office Savings Bank Pass
Books, National Defence Certificates, Govt. Papers, Bank Guarantee etc. For
deposits tendered in. cash, Treasury Receipt should be forwarded to the Accounts
Officer for adjustment. Govt. will not pay any interest on. Any deposits -held in
the form of cash.
396. All Security Deposits on' receipt will be recorded in the Security Deposits
Register which will be maintained in two parts one (IAFA-525) for security
deposits tendered in cash and the other (IAFA-285) for all other security
deposits. All transactions must be noted at the time of their occurrence and a
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receipt of IAFA-299 granted to tile depositor. Transaction on account of a security
deposits tendered in cash and refund of these will be entered in, the cash security
deposit register (IAFA-525) accordingly to relevant columns.
397. Physical Stock Verification of securities will be conducted annually in the

Month of April as well as at tile time of transfer of charge of Accounts Officer
and. the result of such Stock Verification endorsed on the Register of Securities
(IAFA285) under the signature of Accounts Officer in the following manner.
"Certified that all the securities as shown in tile Register of, Securities are
physically in existence"
398. An agreement will be elected between tile figures on account of Security

Deposits appearing in the printed compilation received from EDP Section through
Accounts Section and those in the Cash Security Deposit Register (IAFA-525).
Accounts Section will be furnished with the necessary agreed figures for the
purpose of Annual Review of Balances.
399. (a) Balances outstanding as result of the security deposits remaining un-
refunded on 31st March each year will be verified direct from the entries in
the Register (IAFA-525).
(b) As soon as the balances have been proved (for tit: purpose of Review of
Balances), a Certificate to that effect will be endorsed in the Register
(IAFA-525) under the signature of the Officer-in-Charge of the Section.
Refund of Security Deposits
400. On the expiry of a contract and after fulfilling all undertakings the
refund/release of a security deposit will be made to a contractor on production or a
"No Demand Certificate" duly completed in all respects and signed by the General
Manager. After verification, necessary entries will be made in the Security Deposit
Register and initialled by the Accounts Officer before the refund of security
deposit/release of documents deposited is made.
401. The period of limitation for recovery by contractors of security deposit from
Govt. is 30 years, from the date of deposit as provided in Article 145 of the First
Schedule- of the Indian Limitation Act 1908.
402. At the close of each financial year all cash security deposits remaining
unclaimed for three years exclusive of the year in which tile deposit was made and
all balances of security deposits of not more than one rupee in amount will be
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transferred to the Govt. Suitable note will be kept in the Security Deposit
Register. In the case of Cash Deposits, the G.M. will be informed, so that suitable
entries may be made in the register maintained by him. Sums credited as above
will not be refunded without the sanction of the Officer- in-Charge, Accounts
Office, who will authorise payment after ascertaining that the amount was really
received and was carried to the credit of the Government, as lapsed and that the
claimant's identity and title to the money arc certified by the Officer signing the
application for refund.
Agencies making payment for purchase of stores and the inclusion of

the payments in the cash compilation statement
403. (a) Procedure for payment of bills relating to local purchase contract is
outlined at Para 383 above.
(b) (i) Payments for the cost of stores purchased in India for supply to
Defence Services against contracts placed by the Director General of
Supplies andDisposals are made by the Regional Pay Accounts Officers at
New Delhi, Calcutta, Bombay and Madras. After payments, the amounts are
debited direct against the "Proforma Balance of the Defence" through the
Central Accounts section of the Reserve Bank of India, Nagpur. At the end
of each week the respective Pay Accounts Officer will send an advice to the
"Accounts Section" of the Chief Controller of Accounts (Fys), in respect of
payments debited to the "Proforma Account". This advice will be supported
by bills and Vouchers. The supporting bill, inter-alia, invariably contain the
following information
(I) Reference to the consignees' connected supply order.
(II) head of Accounts giving also sub-heads, grants etc. to which the
expenditure is dubitable.
(III) Accounts Officer in whose books the debits are adjustable.
[Particulars at (1) and (II) will be furnished on the basis of.' the information
given in the Supply Order by the Consignee].
(ii) Transactions during the period from 17th March to 29th March will be
sent on 5tlt April and 30th and 31st March on 15th April by telegram.
.Advice from 17th March will be sent daily by Registered post except in the
case of Accounts of Rs. 5lakhs and above. Advice in these cases will be
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sent daily by telegram. Accounts for the last two days will be sent by 5th
April.
(iii) On receipt of the advice along with bills and vouchers from, the
Regional Pay & Accounts Officer, Accounts Section debits the amount to
"Reserve Bank Suspense".
(iv) The bills and vouchers are forwarded with I.D. Schedule IAF (CDA)-
338 to the Stores Section of the Office of the Chief Controller of Accounts
(Fys) for scrutiny and compilation' to the Central Purchase Code of the
different factories under the appropriate head via Revenue / Capital by
credit to Reserve Bank ' Suspense. In cases where the vouchers do not relate
to the Factory / Formation under the audit control of the Chief Controller of
Accounts (Fys) or where details are not available, the entry will be reversed
to P&AO concerned by operating relevant "Remittance Account". In this
case the vouchers are returned to Accounts Section for further action.
Details of amount compiled with relevant No. and Month of the Punching
Medium along with supporting vouchers are sent to the respective Accounts
Officers and the acknowledgements are watched by Stores Section. The
Punching Medium is included in the batch sent to EDP Section, Office of
the Chief C of A (Fys) for inclusion in the month's cash compilation
statement. One copy of I.D. Schedule with details of adjustment is
returned to Accounts Section.
(v) Proper care should be exercised by "Store Section" in compiling the

amounts to the correct Code Head of Accounts. The Accounts Offices
should, on receipt of the advice with the vouchers, ensure that the
correctness of compilation is checked immediately and transfer entries made
out as necessary under intimation to "Stores Section". This work should not
be allowed to pend till posting in Register etc.
(vi) To ensure that the Pay & Accounts Officers despatch the vouchers in
time, close liaison by the selected Group Officers in the different Accounts
Offices at Avadi, Kirkee, Muradnagar is kept with the PAO's at Madras,
Bombay and Delhi. At Calcutta the Group Officer. Accounts check the
position from PAO, Calcutta. Periodical reports on the actual expenditure
and flow of vouchers are sent as per requirement of OF Board. The objec-
tive is to ensure booking in time and that heavy booking during March and
subsequent period i.e. March (Final), March (Supplementary) are avoided to
the extent possible.
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(c) Purchase through the Department of Defence Supplies
The orders are placed by the Director of Defence Supplies. Payments are
made against the supplies by the CDA (HQrs), New Delhi. The amount is
compiled to the Central Purchase Code Head (Revenue/Capital) without the Unit
Code No. of the Factory. The amount compiled is to be reflected in the All India
Compilation. Individual allocation to the factories is done by Accounts Section on
receipt of detailed statement of factory-wise allocation from the CDA (HQrs),
New Delhi. The Accounts Officers get the paid vouchers pertaining to their factory
direct from CDA (HQrs), New Delhi and the detailed of allocation (i.e. month's
Accounts, Amount) from Accounts Section. The scrutiny and further action to be
taken by AOs is the same as in the case of Central Purchase Vouchers.
In the case of these payments these will be difference between the figure
reflected against Central Purchase Code in the All India Compilation and the
CCO-2 statement of all factories on this account for any month due to tune lag,
in the booking of expenditure by CDA (HQrs), New Delhi and its detailed
compilation by Accounts Section.
(d) Direct contract for supply of materials concluded by OFB with foreign
suppliers
Based on the terms of contract and after ensuring availability of foreign

exchange OFB advises "Store Section" of the Chief Controller of Accounts (Fys)
to open "Letter of Credit" through Reserve Bank of India or through Bank
Remittances which are also arranged by the Reserve Bank. When the foreign bank
makes payment to the supplier, reimbursement is made by the Reserve. Bank of
India to the State Bank 'of India or any other Bank authorised by Govt. for dealing
with such "Letters of Credit" against, documents which are required to be
produced as per terms and conditions of the contract. The Reserve Bank of India
sends the original dOCLU71CI1iS to OFB -and OFB advises "Stores Section" of
the amount, paid-for value, of stores and other incidental charges. After noting the
details in "Register for Letters of Credits", Stores Section advises "Accounts
Section" about the detailed code head to which the payment is to be booked. Copy
is endorsed to the concerned Accounts Officer for1inking the transaction with the
amount to be booked in the. Cash Compilation. Accounts Section carries out the
necessary adjustment and advises the concerned A.O. suitably.
It is necessary for "Store Section" to watch for the receipt of intimation

about payment from "Reserve Bank of India". To facilitate this, O.F.B. should
intimate "Store Section", as and when they get the document from Reserve Bank
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of India. The expenditure is booked to the appropriate cod-head only after
allocation is varied out by Accounts Section.
(e) Import of stores from U.K. for which payments are made by D.G.I.S.M.
London
The contracts are concluded by DGISM London. These transactions are

finally audited and adjusted in U.K Summary of the transaction is passed through
Inward-London Account Current to CDA HQrs., New Delhi for inclusion in the
relevant expenditure statement. For transaction relating to the factories, the
amount is compiled to the Revenue Head for Central Purchase in lump. Supporting
Vouchers are forwarded to Stores Section of the Chief Controller of Accounts
(Fys) sometimes by CDA HQrs, New Delhi and at other times by Officers of High
Commission of India direct. Stores Section scrutinizes the vouchers and intimates
the amount, Heads of Accounts and the factory to which the amount is to be
booked to "Accounts Section". The Accounts Section allocates the amount and
takes further action as in the case of supplies arranged by Director Defence
Supplies, New Delhi.
(f) Imports from U.S.A.

Intimation of payments made are received by Accounts Section from the
Ministry of External Affairs. The intimation with supporting documents are sent to
"Stores Section" who scrutinise and adjust the amount to relevant code head.
Further action is taken as in the case of supplies by DGS&D.
(g) Book Debits

In the case of supplies received from Non Military Departments, book
debits are raised based on accepted copy of voucher from consignee. In regard to
stores received from Navy Air Force and MES the adjusting punching medium: is
prepared by the AO on receipt of the priced copy from the LAO of the consignor
indicating the code to which the credit is to be afforded. `
(h) Incidental to the purchase of stores is the charges on account of customs

duty, sea freight and transportation charges.
(i) Customs duty is payable by the CDA in whose audit jurisdiction the port
of Disembarkation is located with the exception of the bills for stores is
landed in Calcutta Port. For Ordnance factories the main Ports are Calcutta
and Bombay. For stores landing at Calcutta, Customs duty Paid by "Stores
Section" of the Office of the Controller of Accounts (Fys). The bills of entry
prepared and countersigned by the Embarkation Commandant and duly
completed by the Customs authorities is submitted to the Stores Section for
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issue of cheque in favour of the customs authorities concerned. The
following audit checks are exercised: -
(I) That the duties relate to goods duly authorised for purchase.
(II) That the debit is a proper charge against work or other expenditure
unit etc. Cheques are to be made out within twenty four hours of the receipt
of bill of entry and handed over to the representative of the Embarkation
Commandant. Responsibility for obtaining refund in case of provision
assessment vests with the Embarkation Commandant. The Payments are
booked to the relevant Head of Account and the concerned A.O. is advised
about the details of the amount booked, Invoice No. and date etc. to faci-
litate linking of payments and allocation of' the correct amount to the cost of
Stores /Machinery.
Transportation charges Sea Freight etc.
404. The amounts are booked to the Transportation Head by the Rly Section of the
Office of the Chief Controller of Accounts (Fys) with reference to M.C. Notes etc,
Transportation Charges oil the Stores will not be directly allocated to the Cost of
Stores. The said charges will be booked to the Variable Overhead Expenses of the
Factory concerned. Sea Freight charges are booked by the Controller responsible
for payment to the "Transportation Head".
Customs duty on imported parcels received by post
405. Customs duty on imported parcels will be paid by the factory concerned in.
cash to the postal authorities from their imprest. In case the amount exceeds the
amount available in imprest, the factory will obtain an advance from the Accounts
Officer concerned. The Accounts Officer will treat such payment as ad-interim
payments and note the same in the Register and watch its clearance. A Contingent
Bill duly supported by the postal cover will be forwarded by the factory to the
A.O. for adjusting such ad-interim payment. Contingent bill will be passed and
demand cleared. In the case of items to be brought on "Stock Charge", Customs
duty paid will be added to the cost of Stores.
406. Other receipt where financial adjustments are not made:
(i) Receipts from other Ordnance/Ordnance Equipment Factories

Production/Stores.
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(ii) Receipts from production of own factory components etc. which are
manufactured and ken on stores charge for subsequent issue for
Manufacture.
(iii) Receipts from the stores returned by Production Section on return

notes comprising of materials not utilized, scraps etc.
(iv) Receipts from surpluses found at the time of stock-taking.
(v) Receipts on account of transfers from Stock file
(vi) Miscellaneous Receipts e.g. transfers from inventory.
Accounting of Receipts
407. (a) All materials handled by Receipt branch will be entered in Material
Inward Slip in Form IAF (Fac) 151, recording full particulars of the stores
and the results of their examination and inspection. Materials not handled by
Receipt Branch, such as material received by post will be similarly entered
on a M.I. Slip, on its being handed to Store Holder for custody, if it is to
come o stock or deposit ledger charges M.I. Slip will be given consecutive
serial No. from 00001 to 99999. From the number it is possible to know the
month of transaction. M.I. Slip will normally be prepared, timbered and
dated on the same day of the receipt of stores. The No. of copies to be made
out will be according to local convenience. For taking stores on regular
stock or deposit stock charge, the M.I. Slip itself will be allotted "S" or "D"
series Receipt Voucher. In other cases e.g. machinery, stock pile, medical,
nominal etc. items, a voucher on Form IAF Z-2096 is prepared quoting M.I.
Slip No. and allotting specific series of vouchers e.g. "M", "R", "Med", "N"
etc.
(b) Surplus Voucher in Form IAF (Fac)-45 is made out for receipts from
surplus found at stock taking.
(c) Transfer Vouchers on IAFZ-2096 made out or transfers from Stock

Pile/Capital are allotted Receipt Voucher No. in stock series.
(d) Receipts from Factories Own Manufacture
The Inspection Note made out is used both as an issue Voucher and Receipt
Voucher.
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(c) Miscellaneous Receipts
These are taken on charge by a certified Receipt Voucher (IAFZ-2096).
408. Receipt Vouchers are allotted continuous Serial No. under "Stock Series" and
forwarded to Accounts Office. Drill followed in regard to the receipt and
accounting of the Receipt Vouchers is outlined as para 411.
Pricing of Receipt Vouchers
409. (A) For proper and quick pricing of Receipt Voucher, it is necessary that
Supply Orders, ATS, Priced copies of inter Factory Vouchers paid bills, paid
Vouchers/Invoices received from various sources etc. are properly arranged and
kept. When a voucher is priced with reference to paid vouchers/priced copies of
vouchers received from A.O of Consignee Factories/Formation, the pricing is
viewed as final. In cases where these documents are not available, it is necessary
to rice the receipt vouchers with reference to the rates in the relevant supply
orders, acceptance or tenders, last available rate, rate in the priced vocabulary of
Ordnance Stores. Such vouchers are treated as "Provisionally Priced Vouchers"
and are recorded in a Register as per Sl. No. 12 of Annexure "A" to facilitate the
noting of the actual expenditure on receipt of relevant documents like priced copy
of the voucher, invoice, paid vouchers etc. The difference between the value
provisionally taken and corrected value is adjusted by making out an adjustment
voucher. The adjustment vouchers are classified as Plus Receipt Adjustment (KOD
21) where the actual value is more than the Provisional Value, minus
Receipt Adjustment Voucher (KOD 29) where the actual value is less than the
provisional value. Consecutive Nos are allotted for Adjustment Vouchers from a
Register, where in the serial No. brief particular and amount are recorded. To
ensure proper accounting adjustment pertaining to plus receipt adjustment are
given serial No. 210001 onwards. This is left to local arrangement. Care should be
taken to sec that the adjustment voucher No. and date are quoted on to the relevant
Receipt Vouchers and that all adjustment vouchers duly approved by
AO/SO(A)/A.A.O. are accounted for both in the Priced Store Account and
Priced Store Ledger.
(B) Method of Pricing Receipt Vouchers
(i) Local Purchase Stores
The Receipt Vouchers should be priced by the Accounts Office with

reference to the rates quoted on the Supply Order including Sales Tax,
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Excise Duty etc. but excluding Railway Freight/Transportation charges, if
any.
(ii) Central Purchase Stores
With reference to paid bill if available. Otherwise with reference to rates in

the ATs etc. Drill followed in regard to the-receipt and accounting of the Receipt
Voucher is outlined at Para 403 (b).
(C) Receipt of Coal and Coke
Provisionally priced with reference to the supply order taking into account
other charges such as labour, departmental, central cess and sales tax where
leviable. Necessary adjustments are made on receipt of vouchers for linking
purposes.
(D) Receipts from other branches of the Defence Departments including

transfers from Deposit Stock
The voucher will be priced at the rate in the t relevant stock book or priced
vocabularies concerned.
(E) Receipts from Production of own Factory
The receipts under this category (with the exception noted below) should be
valued at the actual cost of production as shown in cost cards. In cases where
complete costs are not available in time, the vouchers will be priced provisionally
at estimated rates noted in-the cost cards and modified to the extent necessary with
reference to any changes brought to light since the estimation of aforesaid rate.
Note- Vouchers in respect of timber, leather and other items of manufacture for
stock, the production cost of which cannot be ascertained till the end of the
year will be priced at predetermined standard Production Rates. These rates
will be fixed in consultation with the G.M. The difference between the
standard and "actual" production cost will be, included as Profit or Loss in
the Annual Accounts.
(F) Receipts from other Factories
These are valued as per priced espies of vouchers. If these are not received
in time, they should be valued provisionally at the latest receipt rate or on
estimated.
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(G) Receipts from the Departments other than Defence (including MES,
IAF, IN and Defence Production and R/D Organisation)
These are priced with reference to priced copies of vouchers received.

Otherwise provisional pricing has to be done based oil latest rates available.
(H) Receipt by return of surplus materials or scraps from shops
These will be priced at the ledger rate for the month.
(I) Receipts from surplus found in stock taking
These will be priced at the ledger rate for the month.
(J) Receipts on account of transfer from Stock Pile/Capital
At the rate at which issues are priced i.e. the value taken from ledger for
stock pile items/capital block register.
(K) Care should be taken to include incidental charges like customs duty,
insurance, etc. while valuing the stores. The assessment of customs duty must be
made with reference to rates available in the customs tariff book/details available
with factory to ensure that tile allocation will compare favorably with actual
charges.
(L) There are two categories of scrap ferrous and non-ferrous scraps. Value of
non-ferrous scraps is periodically revised with reference to the orders issued by
OFB. Ferrous scraps are also required to be valued based on instructions issued by
OFB. The rate quoted on the priced copy of the vouchers received from the
Accounts Officers may be different from the rate at which the scraps are revalued
by the Accounts Office. The difference is adjustment by means of an adjustment
vouchers and booked to Code 27 Adjustment of the P.S.A. Such adjustments are
kept out of Production Account. Nonferrous scraps are grouped in 27 grades
according to the composition. For the purpose of revaluation of the scrap, the
revaluation of virgin metals like zinc, copper etc. will be made based on the rates
given in "Eastern Metal Market Review". If the price as on the date notified by the
OFB for revaluation is not available, the price as on the nearest date available
should be taken. For purposes of pricing, the scraps are divided into ten major
categories. The valuation is to be done on the percentage of current market rate of
virgin metals as noted in the orders issued by O.F.B.
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Primary stores documents and theirtransmission to the Account Office
410. The primary store documents are the Receipt Vouchers; issue Vouchers,
Demand Notes and Return Notes. With the introduction of computerized Material
Planning Sheets, the documents are sent by Store Section to the Accounts factory
Accounts Office through Data Processing Cell of the fact' under a covering Note
giving total No. of each type of 'document forwarded in the batch. These docu-
ments are properly serialised, item code wise, showing the 10 digit code No. for
material code indicating on the reverse of these documents the two digits bin line
No. and the bin balance correct to two places. The documents are punched,
verified and transmitted to the A.O. within two days from the date the transaction
took place. The In-Charge D.P. Cell keeps a track of all documents and expedites
"Stores Section" for missing documents. At the end of the month, Stores Section
furnish to D.P. Cell/Accounts Office a Skeleton List showing the first and last
number of each type of document for the month and also the documents either
cancelled or left blank.
Drill for Processing of Receipt and Issue Vouchers and for maintenance of
Price Store Schedule for Receipt and Issue Vouchers
411. (a) The Receipt and Issue Vouchers on receipt by the General Clerk
will be passed on to individual responsible for maintaining the P.S.S.
(b) Separate schedules will be maintained for "Receipt" Issue transactions

as per S1. No. 15 Annexure "A". The Vouchers will be entered; in Serial
Order and the date of receipt will be posted against; the voucher
immediately on receipt.
(c) Thereafter the vouchers will be priced, classified and posted under
relevant heading of the, P.S.A. and passed on the same day 'for posting in
the P.S. Ledger after 'batching them. This should be done expeditiously.
(d) As the month advances the Auditor maintaining the P.S.S. will contact
the Staff of Factory for missing numbers.
(e) When the month is over, the receipt of list from management showing
the serial number of vouchers cancelled, blank numbers should be watched.
It should be ensured that all vouchers have been received. Missing/Wanting
vouchers may be called for from the factory.
(f) When all the vouchers have been accounted for the P.S.S. will be totalled
and closed. Except blank and cancelled numbers the serial number of
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vouchers that could not be received/accounted for should be noted as
opening number for the next month's account.
(g) When closing the P.S.S. in addition to the certificate regarding, the
agreement of the P.S.L. and P.S.S. balances the number of vouchers not
accounted for, brief reason therefore should be recorded in the P.S.S. over
the signature of A.O. of Material Section.
(h) In the case of Issue Vouchers, in addition to the above drill, it should be
ensured that copies meant for Consignee A.Os are sent immediately after
pricing. This should not wait till the preparation of LAX. (Fac)-17 at the
time of closing; the accounts for the month. In the case of payment issues,
action for recovery and intimation to other Audit Officers should be initiated
without any delay.
(i) The Material Ledger Group should also make out a list of
Demand/Return Notes not accounted for on the line indicated above. The
figures of outstanding should also be checked with the Annexure to figures
reflected in the month's progress report-Proforma "B".
Processing of Demand and Return Notes by Material (Ledger) Section
412. Demand and Return Notes on receipt will be entered in the schedule of
Demand/Return Notes (Sl. No. 14 Annexure "A"). The object is to watch the
receipt of all documents except cancelled and blank Nos. and for ensuring that the
documents received are posted in the Priced Store ledger Demand and Return
notes are received in duplicate. These are arranged ledger- wise and rated. After
rating the documents are priced and made into convenient batches ledger-wise. A
top sheet is attached showing batch no. K.O.D., total of quantity and total of value.
These are entered in the Control Register. The batches are handed over to the
Machine Group for posting. After posting, the duplicate copies of Demand Notes/
Return Notes are made into convenient batches (not numbering more than 100 in
each batch) and totalled for value. These batches are dispatched to the EDP
Section concerned on or before the 5th of the following month. The Section will
Sake out the Material Abstract and indicate batch nos where the total values do not
tally. On receipt of the intimation, immediate action should be taken to rectify the
mistakes by making out adjustment documents as necessary. The total value of all
Demand/Return Notes including adjustment documents will be intimated to the
P.S.A. Group for inclusion of these figures in the Monthly P.S.A. Details of
Demand/Return Notes which could not be accounted for in the month with reasons
for the same will also be furnished. The duplicate copy will be sent to Material
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Section for posting the Demand/Return Notes in the accounts copies of relevant
Material Warrants.
Note 1 - The Demand and Return Notes pertaining to a month will be

despatched to the E.D.P. Section concerned on or before the 5th of the
following month. The E.D.P. Section will prepare a material abstract
showing the necessary details from the demand and return notes and furnish
it to the Accounts Office by the 13th of the month for further action.
Note2- In factories working on the "Except system" components

manufactured in the factories are not taken on charge in store ledger but are
borne on production ledger charge (having been kept in component store)
from where they are drawn for purposes of assembly on "Red Demand
Notes". Any surplus components so drawn will be returned through Red
Return Notes. These documents will not, therefore, be accounted for in
Store Ledger or Store Account.
Review of Primary Documents
413. All store documents of the value of over Rs, 500 will be reviewed by the
Section Officer and (pose over Rs. 10,000 by the Accounts Officer. The review
will cover rating, pricing and posting of the documents. In addition the Accounts
Officer will select at random 1 % of the ordinary vouchers including Demand
and Return Notes and 16% of payment issues and loss statements for review of
rating, pricing and posting by Section Officer. Result of review will be recorded in
a Register (as per S1. No. 18 of Annexure "A").
In the case of papers that are submitted to the S.O. (A) or to the Accounts
Office through him for approval, the S.O.(A) should satisfy himself by a test check
that the work lie passes has been done correctly. There are, however, certain items
of work e.g. posting in Principal Ledger, Block Register, Production Cards, check
of Warrants with Standard Estimates, Posting of Warrants, Linking of Vouchers
etc. which are finally dealt with by the assistants concerned and are not ordinarily
submitted to the S.O. (A) or the Accounts Officer for his approval. In these cases,
the S.O. (A) should exercise a test check at least to the extent of 2 per cent, except
where a lower percentage of check is specifically laid down. Items checked will be
initialed by the S.O (A). In the case of more important items, 2 per cent check may
be insufficient and the Accounts Officer, therefore, has the power to raise the
minimum upto 5 percent.
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Bin are and Priced Store-cum-Provision Ledger
414. The important records used for the Accounting of Stores are Bin Cards and
the Priced Store cum-Provision Ledger.
415. The Bin Cards are maintained by the Store keeping staff of the factor. One
in card is maintained for each item of stock. In cases in which more than one bin
card are maintained for one item of stock a suitable note is kept in the relevant
ledger folio of the number of bin cards maintained for the item concerned and the
locations of stock. Receipt, Issues and balance quantity of stores are reed in the
Bin Card. The balances in the Bin Car must at all time agree with actual stocks and
ledger balances. To ensure that ledger balances do not fall out of line with bin card
balances, the factory management should ensure that adjustment vouchers are
prepared in cases where the physical receipts are different from the quantity shown
on the Receipt Voucher.
416. The Priced-Store-Cum-Provision Ledgers are maintained in the Ledger

Group of the Material Section of the Accounts Office. This Section is located in
the Provision Section to facilitate reference to the Ledger Sheets by the
Management. The Ledger Folio is opened for each item of stores; the ledger sheet
will bear the initial of the Senior Section Officer of Material Section and the head
of 'Provision Section" in order to prevent substitution. The postings of "dues" and
"liabilities" will be carried out by staff of "Provision Section". Posting of the
"Quantity" and "Values" for actual "Receipts" Issues" and "Balances" will be done
on Remington/Ascota Accounting Machines (Remington operation) by Accounts
Staff specially trained or this purpose. The Remington Operator will be assisted by
"Feeder Clerks" whose duties are:-
(i) He will be responsible for Long the Operator i.e. he will have at all time
data for machining together with the requisite folios for handing over to the
Operator so that the Operator can without the need for further sorting or
rearrangement proceed unhindered with the posting operation,
(ii) Before handing over the hedger Sheets and the documents to the
Operator for pasting, the feeder will invariably compare the Lodger FAA
and the nomenclature shown on the documents with these on the
corresponding Ledger Folio.
(iii) The posted documents will be checked for ensuring that the batch total
as obtained from the machine agrees with the preconceived totals on the
reverse of the last documents in the batch and as noted in the Control
Register.
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(iv) All Opening Balances (quantity as well as value) carried down in 'the
ledger folios will be checked to ensure their corrections. The folios will be
replaced in the proper place in the binder.
(v) He is responsible for ensuring that no folios in the binder get loose
immediately he comes across any loose folio he should arrange to keep it
properly at the appropriate place.
(vi) He is responsible for receiving new ledger folios opened by the

management. Before placing them in the proper place in the binders he will
see that the folio bears the initials of the Section Officers, "M" Section and
In-charge, Provision Section. He also maintains list of new folios opened.
(vii) He is responsible for opening continuation sheets and entering the carry
forward particulars and other entries to be made on the top of the ledger
sheet such as folio number, nomenclature, unit of quantity etc. These sheets
will be initialed by Section Officer and In-charge "TV" Section.
(viii) He is responsible for the maintenance of "Ordering" and Danger

Level Registers (Vide S1. No. 20, Annexure "A")'.
(ix) He is responsible for the maintenance of the "Register of the Column

for serial No., Ledger folio balances, quantity and value immediately they
are noticed. He will get these noted by Auditors responsible for reviewing
ledger for completing the column Voucher number and date under which
adjusted with initials of Auditors . These register will be submitted to the
Accounts Officer once a month.
417. The Operator is thus in a position to concentrate on posting of documents

only. The work connected with the maintenance of Provision-cum Price Ledger is
very important. Responsibilities of the Staff, Section Officers and Accounts
Officer are listed below: -
(i) The work in the Ledger Section should be distributed by allotting a

specifio number of ledgers to each number of staff. He will be responsible
for rating all documents, for reconciliation of Bin Card with ledger Balances
and for reviewing the ledgers periodically. Detailed statistics should be
maintained in a register showing the names of staff, the number of ledgers
allotted to each period etc. so that responsibilities may be pin-pointed at a
later stage.
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(ii) The Section Officer will keep a list of Ledger Folios ranging between
Rs. 50,000 to Rs. 1, 00,000 and carry out a detailed review of the ledger rate
with reference to procurement rate from time to time.
(iii) The Accounts Officer will keep details of folios of Rs. 1, 00,000 and
above for review on the above lines. By these reviews it is possible to elimi-
nate abnormal results in the accounts of factories due to erroneous Pricing
of material documents.
(iv) The registers at (ii) and (iii) above should be handed over whenever
there is a change of Section Officer/Accounts Officer. These facts should be
recorded in the handing over/tanking over report.
Priced Store Account
418. A price store account detailing, the receipt and issue transactions from stock
in each month under the various heads specified in forms I.A.F. (Fac) 15 for
receipts and I.A.F. (Fac) 16 for, issues will be prepared by the Material Section and
submitted to the Costing Section by the 15th of Month following for the purpose
of posting in the Principal Ledger.
The Accounts Officer is required to watch that the recovery and adjustment of the
cost of store issued from stock on payment and issued to Departments other than
Defence, Department as also to I.A.F., I.N., MES., R & D Organisation are
effected promptly. In the case of book adjustments, necessary debits will be raised
against the consignee's Accounts Officer on receipt of the receipted copies of
vouchers from the consignee. For payment issues, the value of which is
recoverable through pay bills, recovery memos to Controllers concerned will be
issued on IAF (A); 57-A. Cost Accounting adjustment will be made in the Prin-
cipal Ledger as and when the amount appears in the cash compilation, but in the
case of other Controllers, such adjustments will be made on receipt of
acknowledgement of the IAF (A) 57-A. A Statement showing the details of
outstanding on the last day of the previous quarter in respect of payment issues to
other than Defence Departments (including Air Force, Navy, MES, and R&D
Organisation) should be sent to the C.C.A. (Ft's), Stores Section so as to reach
on or before the 10th of the month following the quarter.
The Profit or Loss on sale or surplus, obsolete, scrap and waste stores will
be determined taking into account the condition of the store and its book value and
the sale price recoverable. The profit and losses so arrived will be accounted for
against proper Code Nos. in priced store account to facilitate entry in Principal
Ledger.
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A watch should also be kept over loss exhibited in the Priced Store Account
but awaiting sanction of the Competent Financial Authority.
At the end of the financial year, the quantitative balance, of the Priced-
Store-cum-Provision -Ledger will be agreed with those shown in the Bin Cards.
When the issues already priced require adjustment on account of Provisional Rates
haning been adopted or on account of adjustments being intimated by other
agencies, or for incorrect pricing, necessary adjustment vouchers should be
prepared and accounted for in the accounts then open. All such adjustments must
be completed by the time the March (Supplementary) accounts are closed. The
Monthly Store Accounts including March (Supplementary) Accounts will then be
consolidated and the Annual Score Account submitted to the C C of A (Ft's on or
before the date prescribed by him. Balance Sheets for each category of Stores pur-
chased should also be prepared separately at the end of the year for reconciliation
with the balances struck out in the Principal Ledger.
Codification of Material
419. Each item of material is identified by a Code Number allotted to it by the

Ordnance Factory Board. In all accounting documents, the material involved is
identified by using tile code number consisting of 10 digits. The first two digits
present the volume or priced vocabulary of Stores Number of the Ledger, the next
4 digits represent the Folio Number of the Ledger concerned, and the last 4 digits
denote the Sub Numbers.
420. As soon as any new material is purchased Code No. under 99 Series is
allotted as a temporary measure. After finalization of nomenclature, identification,
specification etc., a ten digit Code No. is allotted by the Ordnance Factory Board
for uniformity and control of the same material in all Ordnance Factories. The Unit
of Quantity is identified by two digits Code No.
Review of Ledgers
421. (i) A Monthly Average Ledger Rate should be worked out in respect of each
e 9Jo o. The rate is based on the total values of receipts during the month as per
receipt voucher and the opening value divided by the total quantity of receipts
during the month and opening quantity. Thus if VI and V2 be the Opening Value
and Value of Receipts during the month and Q1 and Q2 be the Opening Quantity
and Quantity of Receipts-
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V1 +V2
Monthly Average Ledger Rate = Q1+Q2
(ii) This rate is adopted for pricing issues during the next month. New
rate is worked out whenever there are fresh receipts during a month.
To facilitate this visible tags are attached to the concerned folio.

Alternatively, the postings as per back-sheet should be reviewed for locating such
folios. The work should be done expeditiously after posting for a month is
completed to facilitate pricing of issues.
Note - In Ordnance Factories where computerized P.S.Ls are maintained

Average Ledger Rates in such cases to be worked out at-tee posting of every
receipt vouchers instead of a month.
(iii) The rate is worked out correct to two decimals and is indicated in the
rate column of P.S.L. under the dated initials of the Auditor.
(iv) It is of paramount importance that the working out of such rate is

correct. Incorrect working out of the rate, lead to wrong pricing of material
documents which in turn result in wrong compilation of the cost of articles
manufactured in the factories. Even when the incorrect rating is detected
subsequently to set right the same involves a chain of adjustments. With a
view to ensuring that the ledger rates have been correctly worked A.Os in-
charge of Ledger should periodically keep with them a register wherein they
should record details viz. the latest procurement rate, actual ledger rate etc.
of important items held on ledger charge. The latest procurement rate may
either be those contained in the A/T or Local Purchase Orders estimated or
actual cost of manufacture as may be appropriate. The A.O. may select
such of the items for inclusion in the ledger which are held in the ledger
charge at a value of rupee one lakh or more. Section Officer I/c will
similarly maintain a register of Items held on ledger charge at a value
between Rs. 50000 to Rs. 1 lakh and review, the items in the same manner.
The Register will be scrutinized by them once a month or at more frequent
interval if considered necessary and they should ensure that the register is
kept upto date by revising the procurement rate, ledger rate etc. from, time
to time. Any abnormal rates etc. noticed at the time of scrutiny should, be
set right at once and the reasons therefore investigated. It may be found, that
the reasons are of general applicability. If so suitable corrective action
should be taken to ensure that the irregularities of the nature do not recur.
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Adoption of Monthly Average Rate for Pricing Documents
422. The following categories of issues are priced at monthly average ledger
rates:
(i) All issues to Shops on Demand Notes.
(ii) Issues to other factories on Issue Vouchers or Stock Transfer Notes.
Note: - In the case of factories located in the same area, provision for
common user store is made by one factory. The issue of such stores to other
factory will be on stock transfer note instead of issue voucher.
(iii) Issues on payment to Air Force, Navy, Research and Development

Organisation. No departmental charges will be levied in respect of such
issues.
(iv) Issues on payment to MES, Departmental Charges at 5% will be levied

only if the cost of the scores is debit able to work/projects. Issues to other
Branches of Defence Department.
Issues to Capital.
Losses-D.D. Vouchers.
(v) Issues on payment from stock in other cases should be priced on the
following basis:
(i) Ledger Rate plus.

(ii) Departmental Charges of 5 % plus.
(iii) An additional charge of 5% on the inclusive rate of (i) and (ii)
423. When adjustment Receipt Vouchers are made out for the difference between
the correct value as per paid vouchers/priced copies of vouchers etc. and she value
provisionally taken into account, adjustment of the Monthly Average Ledger Rates
and adjustment to past issues are involved. The, following procedure will be
adopted:
(i) When the numbers of transactions involved is small, the difference will
be adjusted into the store ledger and consequent adjustment to all issues
documents will be made.
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(ii) When the above course is not practicable, the difference will be adjusted
in the outstanding balance in the stores ledger provided the monthly average
rate is not affected seriously.
(iii) When neither of the above courses is possible, the difference should be
adjusted by making an adjustment receipt voucher and booking it to code 27
of the P.S.A. (Adjustments). Prior approval of the C.C. of A (Fys) should be
obtained in cases where variation of 10% or more is proposed to be adjusted
against this code.
424. The Average Monthly Ledger Rate is also adopted for pricing materials
provided in (a) Standard Estimates (b) S.W.O.Ds, (c) Replacement Warrants, (d)
Non-Recurring Revisions to Materials, (e) Semi Statements, (f) Receipt from
Other Defence Departments (when P.V.O.S. rates are not available). In such case
freight charges are not added as the ledger rate is inclusive of these charges.
Rating, pricing and hatching of Demand/Return Notes and Issue Vouchers is

done by the Review Group.
Unorthodox Balances - Review of
425. Types of Unorthodox Balances are:
(i) Plus Quantity Minus Value

(ii) Plus Quantity Nil Value
(iii) Nil Quantity Plus Value
(iv) Nil Quantity Minus Value
(v) Minus Quantity Plus Value
(vi) Minus Quantity Minus Value
(vii) Minus Quantity Nil Value
426. These balances arise in the ledger as:
(i) Stores documents are not promptly priced and posted chronologically in
the ledger. Priority also not given to the posting of receipt documents in the
chronological order over the issue documents
(ii) Monthly Average Ledger Rates are not worked
(iii) Receipt adjustments including counter adjustments are not countered by

adjustment to sine where necessary.
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(iv) Prompt action is not taken to obtain the wanting receipt documents.
127. An Unorthodox Balance Register (as per SI. No. 16 Annexure "A") should
be maintained wherein all file unorthodox balances should be noted. The
unorthodox balances recorded in the register- should be reviewed promptly and
adjustment documents as necessary made out every month and certificate to the
effect furnished to the Stores Section of C. C. of A (Fys) through the monthly
Progress Report '(Proforma B). As the Bin balance is reflected on the reverse of
each documents reconciliation quantity should be effected by calling for the Bin
card as balance as per Bin Card can never be a minus figure.
Reconciliation of Bin Card and Ledger Balances
428. Results of physical stock verification are recorded on Stock Taking Sheets:
in Form No. IAFO-1935. The form interalia contains the actual e physical balance
and bin card balance against each item as on the date of stock taking. These sheets
are received in the Ledger Section for entering the ledger balance as on the date of
stock taking after a reconciling with the bin card balance. This reconciled balance
should be entered in the Stock Taking Sheet under the Column Ledger Balance.
Enfacement on the ledger folio to the effect balance as on----------reconciled with
ledger balance found to be--------------should be made on the ledger folio under the
dated initials of the Auditor. He should also ensure that the discrepancies between
the physical balance and ledger balance are noted in the register for Progressing
Discrepancies and watch the receipt of the discrepancy (excess) / discrepancy
deficiency voucher. In part "A" of the Registers the progress of Stock verifications
recorded. It must be ensured that the date of stock taking is noted in the
appropriate ' column by the O.F. Directorate Stock Verifier. This is necessary for
ensuring that Physical Stock Taking as per orders has been carried out for all
verifiable items during the year.
Note 1- When any surplus is found in respect of items not borne in Priced
Stock Ledger or Deposit Stock Ledger the above procedure will be
followed with the only exception that Certified Receipt Voucher (CRV) on
IAFZ-2096 will be prepared instead of Discrepancy Voucher on IAF (Fac)-
145.
Note 2- Ledger folios which contain entries more than three years old and
record "Nil" balance both in quantity and value continuously for three years
or more should be removed from current volumes and filed separately for
future reference. Corresponding bin card also should be removed. These
folios and bin cards are termed is "Non-effective folios". Such non effective
folios should be reviewed at the end of each financial year and ledger folios
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and bin cards older than ten years should be viewed as dead and destroyed
unless reference to these old ledger sheets/bin cards is necessary for settling
discrepancies, disputes etc. at the time of destruction.
Note 3- List of Non-Effective Folios and Bin Cards removed is furnished

to the OFB SV Group and A.O.
Co-ordination Group in Ledger Group
429. Apart from the Review Group, Central Group should control the allotment
of adjustment vouchers under the various kinds of documents. Separate pages
should he allotted to each kind of document plus or minus. Thus the Group will
normally dealt with the followings K.O.Ds.
KOD 21, 29 -- Plus and Minus Receipt

KOD 24, 26 --- Plus and Minus Issue
KOD 27, 42 -- Plus and Minus Demand Notes
KOD 22, 47 - Plus and Minus Return Notes
430. The group should ensure that the adjustment documents duly approved are
batched, entered in Control Register and posted in the Ledger and the P.S.A.
431. In addition, there are certain adjustments which are tormed ledger
adjustment only "or" P.S.A. adjustment only. In the case of wrong codification of
L.P. of Store to C.P. of Stores Code, ledger is not affected. An adjustment voucher
for P.S.A. only is made as under:-
P.S.A. Only
02 05 Net effect
---------------------------------
(+) (-) Nil
Similarly where a transaction is posted in a wrong folio "Y" instead of "X"

the adjustment
+
Folio x Amount
Folio y (-)
Amount Net effect Nil
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Half yearly extraction of ledger balances for reconciliation with P.S.A.
Balances
432. Once in every half year, the value and balance at the close of the month on
each ledger folio will be copied from the various ledgers and the Sheets containing
these extracted balances will be kept recorded. The balances as copied from the
ledger folios will be totalled ledger-wise and aggregate total agreed with the
balance for the factory as a whole as recorded in the contort cards and the P.S.A.
433. In the case of balances as on 30th September, the adjustments effected in

March final and March supplementary accounts will be included in the P.S.A. and
these adjustment documents are to be posted in the P.S.L. The balance will be
inclusive of the adjustment. Care should be taken to ensure that the closing
balance figures of stock as on 30th September as per P.S.A. is inclusive of
these adjustments. Detailed procedure for reconciliation is as under:
434. The Control Register contains the following columns
1. Ledger No.
2. Kind of Document
3. Batch No.
4. No. of Items,
5. Quantity,
6. Value.
Separate totals are taken according to the K.O.D. and agreed with P.S.A.
figure.
Control Card indicates
Opening Balance, Receipt Issues, and Closing Balance

---------------------- --------------------- -----------------------------
Value Value Value
These are opened ledger-wise when the posting of batch is complete. The
control cost is also posted with the batch total under the appropriate column and
the closing balance is arrived at Reconciliation of the extracted balance is made
with the Control Card balance. A.O. should check all folios having extracted
balance over Rupees one lakh and Section Officers between Rs. 50,000 and
Rupees One lakh. Special attention should he given to folios having minus value
balance. The Register containing extracted balances should be kept under safe
custody.
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Review of Stock Holdings
435. Factory Management submits to A.O. quantitative or Folio-wise dataof the

stores under the following categories:
(i) Working Store

(a) Ordinary Stores
(b) Maintenance Stores
(ii)
(a) Stores surplus to the provisioning period
(b) Stores declared as surplus.
(iii) Waste and Obsolete Stores.
(iv) Buffer Stock.
(v) Reserve Stock.
(vi) Stock Pile.
436. Based on this Accounts Office furnish the value of the stores under the
above categories periodically to OFB with copy to Finance Division and C .C of A
(Fys). This enables the authorities at HQrs to find out whether the stock balances
are at appropriate levels.
Half yearly Review of Slow-Moving/Non-Moving Stores
437. Factory carries out with the assistance of Accounts Staff a review of all non-
moving and slow moving items of stores. Slow moving items are those which have
not drawls for a continuous period of one year from the date of receipt. Stores
which have not been drawn for a period of three years or more from the date of
receipt should be classified as "Non-moving". Careful review is carried out for
ascertaining the reasons for such accumulation and also for exploring the
possibilities of utilisation in own or other factory or for disposal action. A.O.
renders the review report to C.C. of A (Fys). O.F.B. is kept informed about the
result of review by the G.M. Such of the slow-moving and non moving items
which are found ultimately in scrutiny as surplus to requirement of factory are
included in the material aid list and circulated to other factories. During the course
of scrutiny of purchase order A.Os are required to see that the certificate on the
following lines is endorsed on these orders:
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"Certified that the items of stores proposed to be purchased is not included
in the materials aid list reports".
Analysis of Stock
438. The value of stock at the close of month by A.O. is analysed under the
following categories
1. Working Stock ,
(a) Ordinary Store,
(b) Components
2. Maintenance Stores
3. Surplus Stores
4. Obsolete Stores
5. Waste Products.
439. The correct classification is the responsibility of the factory: Reports

received from '' A.0. are consolidated and rendered to O.F.B.
Computerization of Provision-cum-Priced Stores Ledgers
440. The Priced Stores Ledger is printed out every month through IBM-, 1401-H
Computer from basic store documents. Pricing of Demand/Return Notes and
working out Average Ledger Rate is done through the Computer. In addition
material abstracts receipt and issues P.S.A. are prepared from the priced
documents generated by the computer. Except receipt vouchers, all other
documents are priced by computer. To facilitate punching of cards form of
adjustment voucher has been standardised. The processing is done separately for
various sections of the ledgers. The opening balances of the ledger are punched
and arranged ledger folio-wise. These are merged with the transaction card for a
month by means of a collector. The output is (i) printed priced stores ledgers (ii)
printed issue vouchers and demand/return notes in the form of punched outputs in
separate stockers (iii) updated closing balance cards.
441. Computer gives count of the various types of Cards-Receipt Vouchers, Issue
Vouchers, Demand Notes, Return Notes and adjustment documents and printed out
at the end of the operation. Due to limited space on the printed units, quantities
and values for opening balance, receipts, issues and closing balance are printed in
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two lines under the respective columns with distinguishing symbols ,.Q" and "V"
to denote "Quantities" and "Corresponding Values". Type of controls adopted are
has totals, monetary totals, card counts and balances totals for the different
documents/operations involved. The documents and control figures ere entered in
Document Control Register. Test Check is carried out to ensure that the "input" is
correct number of items not moved during the month is provided at the end as
"Number of old Closing Balances". Printed Ledger is normally to be ready by 15th
of the following month and subsidiary statements by 20th.
Note- As regards working out of Average Ledger Rate procedure to be

followed as referred in note below Para 421 (ii).
Accounting of Containers and Packages
442. (1) All containers and packages either received free or on payment will be
accounted for separately in the same M.I. Slip for main stores. Containers and
packages for which value has been charged for separately by the supplier will be
priced and taken on ledger charge.
(2). Containers/Packages which are received free i.e. are not charged for
separately, will not however be, priced separately.
(3). Containers received free but expected to be of some value will-be

sentenced by' Works Inspection Section s "Miscellaneous Receipts". These should
be priced at Ledger Rates/Last Auction Rate /Assessed rates applicable. If they
are of insignificant value which are not charged separately i.e. supplied free along
with the stores e.g. small tins bottles, gunny bags; other packing stores etc., which
are expected to be of no value except as scrap, will be accounted for as scrap only
after the contents have been emptied. These packages will not be accounted for at
the time of receipt itself. These scraps will be returned by shops to stores on a
periodical basis as in the case of shop scraps. The scraps will be priced at Ledger
Rate/Last Auction Rate/Assessed Rate as applicable.
(ii) Accounting of Special Packing Crises/Crates for Machinery Items
The cost of packages i.e. Packing Cases/Crates in which the machinery

items are packed as shown in the Consignor's issue voucher will be added to the
cost of machinery treating the charge as incidental to the transfer of machines and
taken on charge accordingly. The scrap or repairable packages will be returned to
stores as "Miscellaneous Receipt" This procedure is applicable when packing
cases are used for bout old and new machines.
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(iii) Accounting of Packing Cases, Crate, all types of bags and similar
packing stores used for transport of materials between factories.
All containers and packages after manufacture or purchase used for

transport of materials between factories will be vouchered first as serviceable and
after use may be vouchered as "Repairable", if found in such condition. The
consignor factory will indicate the condition in which they have been vouchered
and the value thereof. The Consignee Factory will take them on charge in the
condition in which they have been vouchered.
(a) If the packing cases have not been vouchered for separately they should
be brought on charge by the consignee factory as found on receipt.
(b) If they have been vouchered as serviceable, but on examination are

found as "Repairable", they will be brought on charge as such and the
difference in value will be written off on an expense voucher but if on
receipt they are sentenced as Unserviceable/Scrap, difference in value will
be regularised under a Loss Statement/Transit Loss.
(c) If vouchered as "Repairable", the Consignee Factory will bring them on
charge as found on receipt. If found as scrap, the charge in condition will be
adjusted by expense voucher. No Loss Statement will be necessary.
(d) If the empty Packing Cases/Containers other than those despatched for
the first time after Manufacture/Purchase are sent to another factory for re-
use, they will be vouchered by the consignor factory as "Repairable" and the
Consignee Factory will bring them on charge as "Repairable/Scrap" as the
case may be. The transaction being viewed as transfer as stores between
factories and change in condition, if any, found on receipt will be
regularised as loss in transit. If the empty packing cases are despatched first
after they have been made/purchased they shall be vouchered by the
consignor factory as serviceable. If at the consignee factories and they are
sentenced as repairable/ scrap the change in condition will be regularised
under a Loss Statement.
Package Accounting
443. In certain cases, specially in case of big projects like Vehicle Factory,
Jabalpur, Components Parts, Accessories etc. are received in packed condition. It
may become necessary to account for the stores in packed condition on the basis
of marking on the packages without opening of the packages and inspection.
Accounting of the stores in terms of packages without prior inspection is called
"Package Accounting". The inspection is carried out only at the time of assembly
when the packages are drawn for utilisation in production. The work should be so
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phased that the packages can be drawn, opened and inspected within the guarantee
period prescribed in the contract for obtaining free replacement of deficiencies for
which claims have to be preferred. The following Register should be maintained
by Accounts Office.
Proforma-"A"
Register for verification of packages preferring claims with collaborators

-------------------------------------------------------------------------------------------
Consignment 1 2 3
--------------------------------------------------------------
Package Serial Nos. 1-20 21-40 -
--------------------------------------------------------------------------------------------
Rt. Vr. No. & Date Date of Receipt Date of Intimation Date of Receipt Date of Intimation
Package No. of Deficiencies of Deficiencies
---------------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)

--------------------------------------------------------------------------------------------
444. The Factory Management also furnish a Certificate to the Accounts Officer
in the Proforma given glow indicating the position of receipt of the consitr1mcnt
and verification of contents.
Statement shoeing the receipt of consignments and verification of contents
Consignment No. Name of Carrying Vessel Date of Landing Serial No. of

of Package in Packages
India From To
---------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
---------------------------------------------------------------------------------------------------------------------
Date of Opening and Verification of Shortages/Damn- Date of Comrnunication Remarks

contents ges detected, if any of shortages/ damages
to M/s
---------------------------------------------------------------------------------------------------------------------
(5) (6) (7) (8)
---------------------------------------------------------------------------------------------------------------------
"Certified that the entries shown above have been verified and found correct."
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Accounting Procedure
445. Normal procedure of accounting i.e. preparation of Receipt Vouchers, Issue

Vouchers, and Demand Notes is followed except that the Unit of accounting is
packages.
(1) Packages comprising of one set of subject store is accounted for

separately and is posted in the Ledger Folio for tile set.
(2) Separate folios will be opened when the composition of set changes due
to deletions.
(3) After the stores are accounted for in the main folio (1) above,
components will be transferred to other different folios depending on the
type of sub-assemblies according to which the components ,ire drawn by
different manufacturing sections of the Factory. The transfer wilt be
effected by adjustment vouchers to be accounted for in the Priced Store
Accounts as adjustment under Issues" and "Receipts" (P.S.A. Code 80 and
27). The drawal of components is made by Demand Notes.
(4) Another ledger folio is maintained for recording all deficiencies

/damages detected in the packages seals of which are broken open for one
reason or another.
(5) First ledger folio will be hosted with reference to documents mentioned
in (1) above.
(6) Second ledger folio will be posted with value only with reference to the
discrepancy 'voucher for deficiencies/damages. This folio will always indi-
cate minus balance. When the shortages etc. are made good by
replacements, the item replaced will be taken on charge and posted in this
folio.' Receipt Vouchers should be linked with corresponding discrepancy
vouchers. Tile credit balance will progressively reduce when free
replacements are made.
(7) All packages brought on charge of the second folio should initially be
brought on charge on tile first folio and then transferred to second folio.
(8) The management maintains two registers in addition.
(i) Package Accounting Register (PAR)

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(ii) Broken Scale Register (BSR).
446. P.A.R. records details of' receipt of all packages. B.S.R. records details of'
packages seals of' which are broken. Transfer to B.S.R. from P.A.R. is made
through transfer voucher. Reconciliation of total C.K.D. packs with balances of
P.A.R. and B.S.R. will only be verified by audit.
447. A deficient packages is transferred from P.A.R. to B.S.R. only when:
(i) Payment to the firm is involved in replenishment i.e. shortages/Damages

occurred during Ocean/ train journey.
(ii) When a non-trivial discrepancy is detected after it has been issued to and
opened in the production line, such deficiencies are made good by drawal of
the deficient items, from another similar package through Nominal Demand
Notes and the packages is transferred to B.S.R: by Nominal Transfer
voucher. There is no necessity for the section to give other Demand Notes
as the original Demand Note is for the full pack including deficient items.
448. In the case of these non-trivial deficiencies, the value of deficiencies and
value of replacement will be charged to a Suspense Account called "Due from
M/s...................." This amount ill be posted with reference to the Discrepancy
vouchers on and receipt vouchers prepared for deficiencies and replacements,
respectively. This account is a nominal one and will not be reflected the Principal
Ledger. The balance of account will represent "Value of Stores" due for
replacement by the firm.
(i) When the packages are damaged in transit they will be taken on charge at
full serviceable value and the deficiency adjusted by means of D.D. Vou-
chers. Recoveries from the carrying companies will are watched in the
normal manner.
(ii) The normal procedures for allocation of Rly. Freight, Customs Duty etc.
will be followed, is usual in this case.
449. As the value of the vouchers will be over, Rs. 10,000 and as the balances in
the ledger folios f will be several lakhs of Rupees, the Accounts Officer should
exercise 100 per cent check on rating, pricing and posting of all documents
relating to C.K.D. packs. The extracted value balances as on 30th September and
31st March should also be checked ', by the Accounts Officer.
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Control on Utilization of Materials
450. Materials which form part of production are called Direct Materials.
However, direct materials of small value which are not critical from production
point of view and the total value of which does not exceed the maximum of half
percent of the total amount are treated as indirect material. Immediately on receipt
of warrants Costing Section checks the Material Warrant with the relevant
Standard Estimate to ensure that the quantities of drawls and recoveries are as pet
the Standard Estimate. The following stamp is affixed on each warrant with dated
initials on "Top Sheet":-
1. Date of receipt in Costing Section.

2. Date of sending to Material Section.
3. Date of receipt of shop copies in Material Section.
4. Date of return to Costing Section duly passed.
451. The progress of movement of warrant is watched through top sheet. The
Warrant is to be forwarded expeditiously but not later than two working days after
the receipt of warrant in Costing Section. -Pie initials of the staff dealing with
Material Warrants posting is obtained on the Warrant Register maintained by
Costing Section. While forwarding Material Warrant, all Demand. and Return
notes including Transfer Vouchers Foundry Cost Statement, Scanting Statements,
Red Demand and Return Notes for drawal of Components will be posted on the
relevant warrant with the least possible delay anal the balance struck off on the
warrant in order to verify that :
(i) the material demanded is provided for in the warrant and that no
excess demand has been made.
(ii) the work order and warrant numbers quoted in the demand and return
notes are correct, and
(iii) in case of excess materials, the surplus materials have been duly
returned.
452. Any discrepancy noticed will be reconciled by reference to management.

Cases of over issues and under recoveries should be vigorously pursued for
regularisation or satisfactory reply justifying the drawals etc. All warrants on
completion should be carefully examined with a view to suggesting amendments
to the Standard Estimates. Instances where cheaper substitutes have been used will
be examined with a view to consider the possibility of their permanent
incorporation in the Standard Estimate.
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453. A test check of tile postings of Demand and Return notes on Warrants is
carried out monthly by a section officer not belonging to the material section
nominated by the Accounts Officer. The selection is made by tile Accounts Officer
front tire Material Abstract for the month. In carrying out his test check, the,
Section Officer should specially verify the nomenclature of stores and tile unit
thereof shown ors the Demand/Return Notes with that noted as the Material
Warrant. As soon as tile check is over, the result there of with particular of
demands of Demand and Return Notes subjected to test check will be submitted
to the Accounts officer for approval in a Register maintained for this purpose (S1.
No. 19 Annexure "A" refers). Any discrepancy noticed should be pursued till tile
objection is finally settled. Arrangements should be made with the management
for sending shop copies of completed Manufacture Warrants to Labour Section and
Material Warrants to Material Section together with tile list of Completed
warrants. Additional copy will be received in Costing Section for completing the
column, "Date of completion as per list of Completed Warrants". The postings in
the shop copy will be compared with these in the Accounts Copy and action taken
to reconcile any discrepancy between the two. The pairing should be completed.
Objection if any raised and the warrant should ordinarily be passed on to Costing
Section within 3 working days from the date of receipts of shop copies from the
management. The posting on the warrant should be done in the neat and tidy
manner. List of Demand/Return Notes etc. which's could not be posted due to non-
availability of warrant, or quoting, of fictitious work order should be pursued wills
Costing Section/management to finality.
454. In the case of indirect Series Warrants, Warrants/S.W.O.Ds should be an

addition. In additions details on non-extendible items drawn against Work Order
No. 01/00037/00,- 02/00017/00 and 02/00019/00 should be made out and
furnished to tile Group concerned for verification of the countries in the Inventory
List.
Issues of Issue Vouchers
455. Number of collies of Issue Vouchers to be made and their disposal are as
under:-
(A) Issues to other defence department viz. Army, Navy, Air force, M.L.S., R &
D Organization and Inspection Organization:-
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6 copies of Issue Vouchers
(i) One copy retained by the Consignor

(ii) Two copies to the Consignee.
(iii) Three copies to the Consignor's A.O.
Consignee will return one copy duly receipted. Consignors A.O. will price
the vouchers at the Average Ledger Rate and return third copy as Office Copy. He
will forward file first copy duly adjusted along with a copy of Punching Medium
to tile Controller of Receiving Services. The second copy will be forwarded
simultaneously to the Consignee L.A.O. for verification of necessary credit in the
ledger.
Note- In file case of Issue of Stores to M.E.S. debit for the same will be
raised by the A.O. of the Consignor Factory through Defence Exchange
Accounts. For this purpose, the D.I.D. Schedule duly supported with copies
of vouchers and Punching Medium will be forwarded to the Account.
Section of tile C.C. of A (Fyc) Calcutta by tile Accounts Officer concerned
for onward transmission to the Regional C.D.A.
(B) Issues to Non-Military Departments and Payment Issues
(1) One Copy retained as Consignor's Copy.

(2) Three Copies to the Consignee.
(3) One Copy to the Consignor's A.O.
Out of three copies transmitted to the consignee two copies should be sent
back duly receipted to the consignor of which one copy (duly receipted by the
consignee) is sent to Accounts Office. A.O. raises debits against the consignee
department or watches credit recovery as the case may be.
(C) Issues to Ordnance Factories including Ordnance Equipment Factories

(LF.D. Issues)
Six Copies of Issue Vouchers to be prepared. One copy to he retained as

Consignor's Office Copy.3 copies to be forwarded to tile Consignee Factory along
with the Stores(Out of which one Issue Voucher will be priced by the
Consignor Accounts Officer). On receipt of tile stores along with the Said copies
of issue voucher the Consignee Factory will return one copy of the unpriced Issue
Voucher to file consignor duly acknowledging receipt of stores. The consignee
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factory will prepare Receipts Voucher for the said store and forward one copy of
the Receipt Voucher along with the priced copy of Issue Voucher of the consignor
factory to his Accounts Officer for necessary accounting in the P.S.A. and P.S.L. at
his end.
The balance two copies, of Issue Vouchers to be forwarded to his Accounts

Officer by the Consignor Factory. Both copies will be priced, one copy will be
retained by the Consignor Accounts Officer for accounting proposes and the other
copy will be sent to, the Consignee Accounts Officer.
(D) Detailed Procedure for receipts and issues (Linking of Stores)
(1) The receipts can be sub-divided into two clauses those supplied by order
factories
(i) from their stock and
(ii) from their production. Priced copies of the vouchers are forwarded
by the Accounts Officer of the Issuing Factory, An I.D. List (in duplicate) is
made out by the Accounts Officer of the Issue Voucher indicating the
number and date of the vouchers and th,ir amounts. Before issuing the list,
the total will be agreed with the total in the P.S.A. Issues against the code
number of each consignor factory for issues from stock. Similarly for issues
from "Production", agreement with the figures in the manufacturing
statement will be ensured.
On receipt of the monthly lists the vouchers received from the A.O. of the
Issuing Factory will be checked with details of the vouchers noted on the monthly
list. Missing Vouchers will be called for while acknowledging the receipt of the
list. Accounts Officers of the Issuing Factory will watch with reference to the
Office Copies the prompt receipt of acknowledgements.
(II) To ensure that
(i) all issue vouchers relating to inter-factory transactions have been

received and properly linked with receipt vouchers and
(ii) all receipt vouchers have been properly linked with the respective
consignor's issue, voucher and
(iii) all the Stores-in-Transit figures have been correctly arrived at. A
Register for linking Inter Factory receipt is maintained in two parts. In the
first part separate pages are allotted for receipts from cacti factory. Priced
copies of issue vouchers as and when received from the Accounts Officers
of the issuing factory are noted in the Register. On receipt of the monthly
list, it will be verified that all the vouchers have been received and the
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amount of each voucher agrees as per list. Immediate action should be
taken to call for wanting vouchers and sort out discrepancies if -any. The
Register will be maintained in the following proforma :
--------------------------------------------------------------------------------------------
Serial Consignor's Name Issue Vr. Description Qly. Value
No. No. & Date of Stores
-----------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6)
-----------------------------------------------------------------------------------------------------------
I.D. List for Receipt Vr. No. Month of Value Difference bet- Adjustment Vr. Remarks
the month & Date the P.S.A. ween value in No. & Date
Col. 6 and
Col. 10
---------------------------------------------------------------------------------------------------------------------------------
(7) (8) (9) (10) (11) . (12) (13)
---------------------------------------------------------------------------------------------------------------------------------
The No. and date of the receipt voucher and the amount will be noted on the
duplicate copy of the I.D. List. Completed lists should be forwarded to the A.O. of
the issuing factory within a period of three months. In respect of issue vouchers for
which receipt particulars could not be quoted oil the list, progress of clearance
should be communicated from time to time to the consignor's A.O. The Register
should be submitted to the A.O. by 10th of each month.
(III) On his part, the consignor's A.O. should watch for the return of the
duplicate copies of the I.D. List and ensure that the corresponding Receipt
Vouchers are quoted.
A summary of each month's transaction should be made out in the following

proforma:
(i) Opening Balance (No. of Vouchers and Value).
(ii) Receipts during the month (No. of Vouchers and Value should agree with
the total of I.D. Lists received during the month).
(iii) Linked during the month (No. of Vouchers and Value).
(iv) Closing balance-No of Vouchers and Value.
(IV) At the end of the financial year, consolidated I.D. List for issues from
Stock/Production is sent to the consignee factory. This list will be compared by the
A.O. with the monthly I.D. List to ensure that details agree month-wise and the
consolidated total is corrcct. A summary in the Proforma at above should be
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prepared duly reconciled with consolidated I.D. list figures and Stores in-Transit
figures. Cases of delay in accounting of stores should be taken up with Factory
Authorities.
(V) Normally the priced copies of issue vouchers should be received well in
advance of the receipt voucher for accounting the stores. Cases do arise where
issue vouchers are not floated in time. To have pro per record of such receipt
vouchers (C.R. Vrs), Register in the following proforma is maintained:-
---------------------------------------------------------------------------------------------------------------------------------
Serial Consignor's Name Receipt Vr. No. P.S.A. for the Description of
No. & Date month Stores
-----------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Quantity Value Issue Vr. I.D. List Vaule Difference AdjustmentVr. Remarks
No. & for the between No. & Date
Date month Value in
Col. 6 &
Col. 10
-----------------------------------------------------------------------------------------------------------
(6) (7) (8) (9) (10) (11) (12) (13)
-----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
The Register should be submitted to the A.O. by 10th of each month.
(VI) Other procedure is as for Part I of the Register. The unlinked items
represent receipt vouchers for which issue vouchers/priced copies of issue
vouchers have not been received. These should be pursued with the factory and
A.O. of the consignor factory.
(VII) The figures reflected in the Annual Audit Certificates Quarterly

follow-up reports and the Statements of Assets and Liabilities should be based on
the summaries and details of unlinked vouchers should total up to the figures
reflected as outstanding.
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(VIII) Normally there should not be any outstanding items for more than
three months as the procedural instructions on accounting of inter factory transfers
covers all types of cases. In cases of disputes between two factories, the consignee
factory is require to bring on charge the materials as vouchers and float a D (D) Vr
Cum loss statement. The loss statement is to be referred to the OFB for deciding as
to which factory should bear the loss.
Disposal of surplus stores and waste products etc. in Ordnance Factories
Definitions
456. (a) Waste Products- Items such as coal dust, coal ashes, sand. dust,
zinc droys, Metal resides (sieved dust) mazak alloy din, brass/ H.F.
splashing and finance sweepings.
(b) Scrap- The item scrap means' stores beyond comical repair
unserviceable (beyond economical repair) waste stores which 'have been
utilised and have served their purpose and have been condemned under
proper authority to be of no use except as scrap.
(c) Metallic Scrap- Both ferrous and non-ferrous including borings

and turnings swarfs and other type of metallic scraps of industrial re-rollable
and melting categories.
(d) Surplus Stores- These are stores which cannot be utilised against
present or anticipated requirement over a period to be determined on the
merit of each case or which are liable to deteriorate by the time they could
be issued in the normal course of events. The term includes waste products
scraps, obsolete, obsolescent, Unserviceable,repairable and serviceable
stores.
Note- All stores and waste products in excess of the factories requirement
for the provisioning period will be treated as "surplus". This definition is for
purposes of reviewing factories stock and does not necessarily mean that the
quantity so arrived at will be disposed of.
(e) Declared surplus- The declared surplus are those which on being
determined as surplus stores have been declared to DGS&D/D of S&D for
disposal in the best interest of the State.
457. Having determined the surpluses they will be disposed of by transfer to

other factories, Defence Services and priority indenters and/or (i) by sale to private
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parties under factory own arrangement or through the DGS&D in ''accordance
with order in force. Issues to priority indentors will be at book value except
salvage stores which will be released based on the latest auction sale rate for ';
similar items. In addition to the value of the stores, the packing and incidental
charges incurred in connection with the despatch of stores at a fiat rate of 5% of
the sale value. In addition to the 5% of the sale value, actual cartage charge
worked out should he levied for sale of scrap and waste products. Ordinary
packing and incidental charges will be levied at the flat rate of 10 % of the Sale
Value, which will be deemed to include cartage charges also. In the case of transfer
of surplus stores and waste products to any priority indentor free of charge, 2 % of
the book value of the stores should be levied for the incidental charges to cover
packing, loading, cartage charges etc. Such incidental charges will not be
recovered, if arrangements for removal are made by the priority indentors.
458. Reserve/Guiding prices for surplus stores upto Rs. 10,000 in a single
category andsurplus M.T.Stores upto Rs. 25,000 in a single category and guiding
prices of waste products, scrap, unserviceable stores etc. or reserve/guiding prices
of these stores for reauction are fixed by the General Managers of Factory with the
concurrence of their respective Local Accounts Officers. In the case of
disagreement between the Factory Management and the Local Accounts Officers,
the case should be referred to D.G.O.F. (Section SP/D) for decision. Guiding
Prices should be fixed not more than two days before the auction. The guiding
price should made known to the auction supervisor on the day of the auction itself,
half an hour before the auction. All Officers including the Accounts Officers
connected with the fixation of guiding price and the auction supervisor must treat
the reserve/guiding price as Strictly Confidential. An Officer not below the rank of
a Section Officer should be deputed to attend the auction on behalf of the Accounts
Officer. Method of fixing guiding prices as outlined in the relevant Govt. Orders
should be strictly followed. The Section Officer attending the auction sale should
note description of stores, quantity, rates of highest bidder in accounts copy of
auction list and sign the factory copy for surplus with supporting documents viz.
sale account, auction catalogue, treasury receipt, guiding price with alteration
approved by competent authority will be checked and forwarded to the CDA
mentioned below for further action. Similar action will be taken on receipt of
auctioneer's commission bill. With reference to the note in the Sale Register the
receipt of the adjusted copy of the Sale Account will be watched.
(i) Calcutta Region - J.C.D.A, Patna
(ii) Bombay, Nagpur & Pune Region - C.D.A. SC, Poona.
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(iii) Kanpur Region (Com- - C.D.A. Central
prising the area under Command,
the audit jurisdiction Meerut.
of CsDA, WC & EC).
459. The Sale Account received from the CDA concerned for stores sold in
auction by DGS&D and sale, release order received from Factory Management
will be checked in respect of quantity, value, purchase etc. The correctness of the
amount booked the cash compilation received from EDP Section will be verified
for sale value, sales tax, excise duty with reference to the Register and adjustment
should be carried out as indicated below.
460. For advertised tender by factory of all categories of stores, the tenders
received should be checked With Comparative Statement of Tenders received from
the factory. The CST is forwarded to GM /DGOF through the CC of A (Fys) with
remarks as regarding ledger Rate, last sales rate ad rate approved by GM.
461. On receipt of approval full details are noted in the Sales Register, MRO
received for Security. Deposit is adjusted and noted in the Security Deposit
Register. MRO received for sale value is adjusted for sale value, sales tax etc. after
verification of monthly statement. The MROs are forwarded to Accounts Section
of the Office of the C.C of A/Fys in the normal manner. Action to pay dues on
account of sales tax/excise duty to the relevant authorities should be taken on
receipt of contingent bill from tile factory. All the sale proceeds will be reflected in
the cash compilation statements via. Deduct head under "Revenue Expenditure"
for realization on account of "Sale of Scrap" and revenue liead for receipts for
realisation on account of sale of surplus stores. In the case of stores disposed by
DGS&D, credits for sale proceeds are passed on by the P.A.O. "concerned to the
CDA concerned depending on the location of auction. The credits are compiled to
the final factory head of account .and the sale accounts are forwarded to Stores
Section, who allocate the amount to the respective factories and forward the sales
account to the concerned Accounts Officer for linking. On receipt, the sale
accounts are linked by the A.O.
462. Sinders (flicked), saw dust and coal dust may be sold to staff' of the
factories and allied establishments e.g. Inspectorates and Accounts Staff as well as
Tea and Cooked food Canteens attached to factories at tile following rates. Sinder
(Picked) 33 1/3% of the local control rate of soft coke, Saw dust @10% of the local
firewood rate, Coal dust @, 66 2/3 % of the local Controlled rate of soft coke
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463. Payment issue rate for unserviceable timber/ scrap wood should be fixed in
consultation with A.O.
Stock Verification
464. The Stock Verification Group working in the factory directly under the
O.F.B. will furnish the Accounts office with Stock Taking Sheets in duplicate. The
group is responsible for physical verification of stock (including Stock-pile Items),
Deposit Stock Items, Inventory Articles (including technical books in the library
and school books), Machines and Buildings, Electrical installation and Medical
Stores on Factories books at least once during each financial year. List of certain
valuable items will be prepared by the O.F.B. Stock Verification Group in
consultation -with the Factory Management and approved by OFB. These items
will be verified at more frequent intervals. Certain items like non-ferrous/ferrous
scraps, optical 'glass items at Dehradun, limbs at G.C. Factory, Jabalpur are
verified once in a cycle of three years. In addition, at least 10% of the items should
be verified by the factory staff. The Accounts Office may carry out surprise
Physical Stock Verification.
465. In selection of 10% items, factories- should select those items which are
already costly per unit, those frequently received and issued and easily saleable in
the market and in general items which deserve greater Vigilance. Valuable items
which are checked by OFB S.V. Group more frequently than once a year should
not be included in the items selected for factory's verification. As far as possible
stock verification of items held both in stock and stock pile should be done
simultaneously.
466. Result or stock verification of stock and stock pile items will be entered in
Form IAFO1395. Stock Verifiers will enter in the appropriate columns the Date,
Serial No. Nomenclature of Stores, Ledger Folio No. (Material Code. No.) Store
Accenting Unit, Bin Card balance on date, of verification, physical balance found
on physical check and the date of last verification. Each sheet will be signed by
the Stock Verifier and the associated Factory Representative.
467. The following Certificate will be endorsed on the Stock Taking Sheet by the
Factory Representative
"I Certify that all of the stock or godown pertaining to the item or items
mentioned in the Stock f Taking Sheets have been shown to the Stock Verifier."
468. In the next line below the last entry in the ' "Balance" Column of the Bin
Card, the Stock Verifier will enter in Red Ink, the balance found on physical
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verification and the word "Verified". The entry will be signed and dated by him on
the date of stock-taking. The figures will be entered as above even if agreeing with
the balance shown in the Bin Card. Subsequent postings in the Bin Card will be
carried out on the basis of this balance. On each stores ledger folio, the stock
verifier will enter the date of latest stock verification in the place provided and
initial the entry.
469. The Accounts Office receives the original and duplicate copy of the Stock
Taking Sheets. The Accounts Office will compare the balance as per Bin Card with
the ledger balance taking into .account all documents upto the date of stock veri-
fication. Reconciled balance will be noted on both the copies of the Stock Taking
Sheets and passed on to the factory. This reconciled balance will also be endorsed
on the concerned folio under the dated initial of the Auditor Concerned. As
annual reconciliation of Bin Card with ledger balances as on 31st March of each
year have been dispensed with. Great care will be taken in reconciling these
balances. It will be ensured by Accounts Office that-
(i) Stock verification as laid down in standing orders is carried out.

(ii) The results of stock verification of stores as laid down in various
regulations are recorded periodically by a responsible officer of the Stock
Taking Staff (this will be ensured by checking the Stock Taking Sheets for
ledger items and standard memo for other items with the Weekly Progress
Report).
(iii) The system of verification adopted is adequate and proper.
(iv) The discrepancies found are simultaneously accounted for by means of
proper documents signed by proper authority.
(v) Where possible the staff responsible for the verification of the items is
independent of the staff for physical custody or for keeping accounts of
stock.
470. A Self-contained explanatory note giving the general position and results of
stock verification carried out during the year should be appended to the Annual
Audit Certificate. The note should inter-alia contain information as to whether
stock taking was completed, the particulars of factory where the position was not
satisfactory. Whether the results of stock-taking revealed a satisfactory state of
affairs, the particulars of factory where the position was not satisfactory and
whether the discrepancy between ground and book balances were considerable and
if so their extent and their values and such other information as will enable a
complete appreciation of stock-taking carried out during the year. A Register in the
following proforma is maintained for this purpose.
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Proforma "A"--Stock Verification Progress Chart Month................

--------------------------------------------------------------------------------------------------------------------
Nature of Total No. Addition No. of items No. of items Balanceon Remarks
items of items during the to be verified verified during the last date
month during the the month of the month
month
-------------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6) (7)
-------------------------------------------------------------------------------------------------------------------------------
. Proforma "A" will be maintained for each month separately.
Proforma "B"-Chart to watch the progress of discrepancies
--------------------------------------------------------------------------------------------------------------------
Stock Taking Sheet Particulars of Discrepancy Adjusted Under
No. & Date . Surplus Qty. Deficient Qty. No. & dt. of No. & dt. of
surplusVoucher deficiency voucher
------------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
------------------------------------------------------------------------------------------------------------------------------
Quantity and Value of Date of Sanction Remarks
Surplus Voucher, Loss Statement

-----------------------------------------------------------------------------------------------------------------------------
(6) (7) . (8) (9)
-----------------------------------------------------------------------------------------------------------------------------
This Register is submitted to the Accounts Officer on the last day of each month.
Loss of stores due to various causes
471. In the case of discrepancy between the Priced Store ledger balance and the
actual stock, a discrepancy voucher on IAF (Fac) 144 for the gross loss will be
prepared and posted in the ledger with a view to keeping the ledger balance always
and at any time in agreement with the physical ground balance. The discrepancy
will subsequently be investigated and settled. Pending settlement of the discre-
pancy, the Discrepancy Voucher should be entered in the Objection Register and
watched. It on final settlement a loss settlement is necessary the loss a. statement
portion IAF (Fac) 144 will be completed and written off or sanctioned for the net
loss.
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472. Before the Accounts Officer agrees to write off the amount involved he, will
scrutinize each item of loss to ensure that :
(i) the loss statement has been correctly prepared and priced.
(ii) no breach of accounting rules has contributed to- the loss.
(iii) the loss has been properly investigated according to rules.
(iv) the loss is real one and not fictitious.
(v) the remedial measures suggested are satisfactory,.
473. On receipt of the loss statement duly sanctioned, the objection' should be
cleared from the Objection Register. In other cases, where no loss is involved and
the discrepancy is settled otherwise by suitable action after investigation, the
relevant objection should also be cleared from tire Register.
Deficiencies and Damages in Transit
474. The full quantity as vouchered is brought on charge and a discrepancy

voucher in Form IAF (Fac)-144 is oracle out for the quantity less received.
Claim is Preferred against Rlys for the discrepant item as detailed below
475. Cost of stores its as per invoice rate/S.O.,rate /AT Rate etc. plus 5%
Departmental-charges plus cost of Specialcial Packing if ally plus Freight Charges
its per Credit Notes. For recovery of any compensation for loss etc., a formal claim
(priced claim) must be received by the Rlys. Within six months from the date of
Rly. Receipt. All such claims received from management should, therefore, be
priced and returned expeditiously.
476. Loss in Transit in respect of foreign supplies is due to
(a) Losses occurring in transit upto the Port of Disembarkation in India.
(b) Losses occurring in India during transit from Port of Disembarkation to

the ultimate destination.
(c) Articles taken on charge in uno- ened packages as per marking on the `
packages, and found deficient by the consignee at tire time of actual issue.
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477. In view of the fact that losses occurring in items (a) and (b) above arise
before accounting for the stores by consignee, the loss which would represent
value of stores paid but not received are treated as "Cash Loss" and no adjustment-
to Store Account is necessary.
478. Item (c) will be treated as "Losses in Stock" as the consignee has in fact
undertaken a responsibility for the content of packages while accounting for the
stores in terms of marking oil the package. The receipt vouchers for tire stores will
be prepared as per markings on the packages and the vouchers will be priced by
the Accounts Officer for quantities is per markings at the rates shown in the
invoice. The difference between this quantity and the quantity actually passed in
inspection should be treated as stores loss and accounted for as such.
479. The amount of gross loss posted in the ledger will also be e accounted for in
the P.S.A under the appropriate head for the discrepancy. The loss thus accounted
for will be booked to Work Order 02/00023/00 and 02/00024/00 as the case may
be through Allocation Sleets. If during the same year as that of Discrepancy
Voucher, the discrepant store is physically received in part or in full, it will be
brought on ledger charge as usual and necessary adjustment voucher should be
prepared to reduce the amount accounted for in the Priced Store Account.
Recoveries/Replacement effected subsequent to the year in which the discrepancy
voucher was prepared should be accounted for as miscellaneous receipts in the
accounts for tire year in which they materialize. The net loss written off by
the Competent Authority will be included in the Appropriation Account for tire
year ill which the sanctions are accorded.
Loss on Sale of Stores
480. No loss Statement is necessary for tire difference between the book value and
sale value of surplus, obsolete and waste stores.
481. (a) The vouches s are priced at the sale rate. As the postings at tile sale
rate will affect the ledger value balance, an adjustment voucher is
simultaneously made out for the difference between tile book value and sale
value. If the difference is plus i.e. (Loss) adjustment issue voucher is made
out. If the difference is minus i.e. (Profit) adjustment receipt voucher is
floated. These are posted in tile Priced Store Ledger and accounted for
against the appropriate code head in the P.S.A.
(b) Issues from stock on payment will be made in accordance with the
procedure laid down in Para 422(v) ante the loss if any, arises will be
regulated in accordance with the provisions of FR Part-1.
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Losses due to change in Condition of Stores
482. Sentencing of the serviceable stores as repairable or unserviceable should

be done by the authorised inspector on examination order. Serviceable stores
sentenced as repairable
483. The stores should be drawn on Demand Notes at their full ledger value
against work order 02/00022/00 and after repair returned to stores on Return Notes
against the same work order at the original value at which they were drawn for
repair. The repair cost will thus remain charged to production against work order
02/00022/00. A formal doss statement is, therefore, to be obtained. The loss
statement should, however, be sanctioned by the CFA and included in the
Appropriation Accounts.
Serviceable stores on stock charge found unserviceable
484. The factory will prepare "D" statement on IAFZ-2096 and send them
together with tile examination order to the Accounts Office for pricing and counter
signature. The "D" Statement for scraps should be priced at the, ledger rate for
scraps. If such rates are not available in the ledger, they may be ascertained from
other factories and if these are not forthcoming the managem6nt may be asked to
fix a rate, failing which I/10th of the, ledger rate for stores fund unserviceable
should be adopted as a last resource. The difference between the ledger value and
scrap value will be written off on loss statement as in other cases.
485. When repairable stores are drawn from stock against work order
02/00022/00 and are rendered serviceable after repair, they should be returned to
stock at the rates for repairable stores at which they are originally drawn for repair.
Subsequently, a condition voucher appreciating the condition from repairable to
serviceable should be prepared. "
Important Rules on Losses
486. Court of Enquiry is necessary for
(a) all losses which require the sanction of the Govt. of India.
(b) losses due to inaccuracies in previous stock taking.
(c) loss of arms, ammunition and explosives.
(d) loss due to theft, fraud, neglect, fire or due to any unusual occurrence.
_____________________________________________________________________________________________
RTC KOLKATA 216

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487. Holding of court of inquiry may be dispensed with when reported loss is
than Rs. 5000/-.
488. Holding of court of inquiry is discretionary in cases where loss of stores is

not due to theft, fraud or neglect or when the amount of loss written off is within
tile financial powers of authorities lower than the Govt. of India. Consultation with
finance is not necessary. Administrative Authority and Audit Authority will be
responsible within their own sphere for the expeditious conduct of enquiries. .
Nominal Vouchers
489. Stores will be accounted for by nominal series of vouchers for very limited
and., essential purposes. Broadly tile following categories of transactions will be
documented .by nominal vouchers-
Receipt- (a) Loan items

(b) Stores wrongly received.
(c) Stores returned by parties to whom the same were issued on
loan/as assistance for fabrication.
(d) Stores received for rectification or/ repair or processing.
(e) Samples for test.
490. In order to show the true physical balance of any item of stores, loan
transaction which are accounted through nominal vouchers are posted in Bin Card
under the authority of nominal receipts and issue vouchers. These are not posted in
the Priced Stores Ledger as the issuing formation is still the holder of the stores in
question.
491. For reconciling the ledger and bin card balances, the nominal transactions
are ignored. The correctness of the nominal transaction will be verified from the
Loan Register maintained by the factory. The Loan Register is verified in the local
audit.
Inflation in Accounting
492. The Cost of Production of components and materials utilised in the out-lines
of a factory which are received from other factories is included in the Consolidated
Production and Finished Stock Account twice-once in the factories manufacturing
the materials and components and, then in the accounts of factories utilising the
same stores in the outturn. Thus the Cost of Production as shown in the Production
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RTC KOLKATA 217

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_____________________________________________________________________________________________
and Finished Stock is inflated to this extent. Similar is the position in respect of
materials and components utilised in the out-turn from those put to stock from own
factories production. With a view to eliminating this inflation in figures, a list of
items in the store ledger of which the major portion is supplied from own factory
production and/or from production of other Ordnance Factories will be completed
by the General Manager of the Factory and these items of stores will be termed
I.F.D. Stores even though some quantity thereof are received from other sources
like local purchase, central purchase etc. The ledger folios will be prominently
marked with a cross and Demand/Return Notes relating to these items will be
segregated by the provision Section of the Factory by allotting distinguishing Code
Number and separate material abstract will be prepared from such Demand/Return
Notes. The figures compiled in such abstract will represent cost of materials and
components received from other factories and own, factories' production and
utilised in the outturn and will be exhibited in the Production and Finished Stock
Account by a Foot Note.
493. The factory will review periodically any change of working or ledger folio
mentioned above in cases when the items of stores previously purchased from
trade are subsequently produced by the factory.
Components manufactured for further utilization in the slime factory
494. In some factories materials manufactured for stock are retained on

Production charge on priced -reduction ledger. Work Order Serial "41" will be
operated for manufacture of such components and component stock voucher will
be prepared for costing into P.D. Ledger. These components will be drawn for
utilisation on concerned out-turn orders on Demand Notes with distinctive colour
and code number, so as to differentiate them from ordinary demand Notes/Return
Notes. These Demand Notes arc accounted for separately by Accounts Office 41
Series work order is credited with the value of Demand Notes less Return Notes in
order to avoid inflation in accounts. Accounts Office maintains the Priced
Production Ledger on Store Ledger Sheets. These items are subject to stock
verification in the normal manner. Bin Card balances are reconciled with ledger
balances. The reconciled balance is noted by Accounts Office in the relevant Stock
Taking Sheets.
495. This procedure will not apply to (i) articles manufactured for stock for
utilisation against indirect work orders (ii) manufacture of Plant and Tools.
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Linking of 11cceipt of Stores
496. In the case of all stores for which payments are made/book debits are
received/priced copies of issue vouchers are furnished, hundred per cent linking
has to be done. Linking consists of two parts.
(A) Linking; payments with receipt vouchers. Unlinked items represent

payments made for which receipt vouchers are awaited. These are called
"Outstanding Assets".
(B) Linking of Receipt Vouchers with "Payment made". Where the unlinked
vouchers represent "Stores received" for which payments are to be made,
these are called "Outstanding Liabilities".
Proforma of Register for linking payments with receipts

---------------------------------------------------------------------------------------------------
Sl. Supply Order Invoice D. D. Nomenclature Amount Bill No./Disbursement
No. Schedule No. and date of Stores Voucher No. and date
------------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Receipt Voucher No. and date Value Difference No. and date of Adjustment Voucher
-------------------------------------------------------------------------------------------------------------------------------
(6) (7) (8) (9)
-------------------------------------------------------------------------------------------------------------------------------
Quantitative Linking of Stores in respect of paid vouchers as well as for

reconciliation of financial and cost accounts of debits/payments on this account is
done by the Accounts Office through Linking Registers.
Separate parts will be maintained for local and foreign purchases. The
register will be submitted to the A.O. on 25th of each month.
497. In regard to cases where 100%/90 % advance payments are made, a register
is maintained for watching the consignee's receipts as well as for ascertaining the
Outstanding Assets/Liabilities. Register is maintained in' the following proforma:
-
-------------------------------------------------------------------------------------------------------------------------------------------
Sl. A.T. No. & Date Nomenclature Amount of D.V
No. of Stores
S.O. No. & Date 100% 100% 90% 10%
Final Advance Advance Balance
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--------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6) (7)
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
D.V. Receipt Vr. No. & Date Amount of Receipt
Voucher
No. & Date Quantity No. & Date Quantity
---------------------------------------------------------------------------------------------------
(8) (9) (10) (11) (12)
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
Difference between value of Adjustment voucher outstanding assets outstanding liability D.V. & value
of receipt No. and date
voucher
---------------------------------------------------------------------------------------------------
(13) (14) (15) (16)
---------------------------------------------------------------------------------------------------
498. Separate Registers must be maintained for each type of purchase. These
Registers are submitted to the Accounts Officer on the, 25th of each month.
499. Review of the Register is made with a view to ensuring that:
(i) Total amount of payments/debits agree with the cash compilations figures
for the month.
(ii) The total figures as per Register agree with the figures booked under the
relevant code of the P.S.A.
(iii) In case of outstanding assets where advance payments are made for
local purchase of stores, details of cases pending over three months are fur-
nished to factory for expeditious action for accounting for the stores. For
Central Purchase Stores review should also be made on above lines.
(iv) It regard to outstanding liabilities, the receipt of the relevant bills will
be watched. It will be ensured that the outstanding liabilities do not relate to
cases where payments have been made by referring to the endorsement on
reverse of S.O. (A)/AAO by through scrutiny of outstanding items. As
claims are time bound, after 3 years no reminders should be sent to the
factory by A.O.
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500. The above procedure applies to Customs Duty debits also.
501. In regard to linking of inter-factory receipts detailed procedure is outlined at

Para 455(4).
502. Regarding free receipt from other Defence Departments receipt of "R"
copies from consignor's L.A.O. should be watched.Wanting copies should be
called for 100 % linking of quantity is done by the Accounts Office. At the end of
the year balance sheets are made out for store receipts category-wise viz. local
purchase, central purchase, other Govt. Departments, customs duty, foreign
purchase. Details of outstanding assets/liabilities should be listed out under the
dated initials of Auditor/SO (A)/ AAO/AO and kept in safe custody for future
reference.
Linking of issue of stores
503. (a) Stores issued to other factories -A monthly List (in duplicate) for each
factory will be prepared by the Accounts Officer of issuing , factory on
Form No. IAF (Fac) 17 giving in detail the numbers and dates of the
vouchers and their amounts. The totals should be agreed with the total in the
Priced Store Account and the list forwarded to the respective Accounts
Officers who will acknowledge receipt of the same. Accounts Officer of the
issuing factory will be responsible for watching ' the receipt of such
acknowledgement through his office copy of the list. The Accounts Officer
of the receiving factory will take immediate action to settle discrepancies, if
any. He will enter the receipt vouchers numbers and amounts against each
voucher and return one copy of the list duly verified. At the end of the year,
the values of the monthly lists will be consolidated and the consolidated lists
will be for aided to the respective Accounts Officers for verification.
(b) Stores issued to arsenals, depots -Separate lists in IAFZ-2014 will be

prepared for different formations in which the designation of the consignee
and the numbers and dates of the vouchers forwarded will be entered.
Theses lists with supporting vouchers will be sent to the L.A.O. concerned
for verification of the necessary credits for stores and their
acknowledgements obtained.
A.B.C. Analysis
504. This analysis is based on the concept of selective inventory management. It

aims at concentrating efforts in those Sections where attention is needed most.
Classification is made on the basis of the Value of materials, Closing Value of
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Stock, item of Outstanding Assets Outstanding Liabilities .over a certain value.The
monetary value for checking of primary documents has been laid down. Better
control is possible when the Accounts Officer personally reviews: -
(i) Ledger folios where the closing balance values as on 31st March/30th
September is more than Rs. 1 lakh.
(ii) Items of Outstanding Assets/Outstanding Liabilities over Rs. 1 lakh per

item. To illustrate on review of receipt vouchers for local purchase for over
Rs.1lakh, A.O. may find that payment might have been made as per
endorsement on the reverse of the supply order. This will facilitate further
review of the items in tile Balance Sheet.
Checks prescribed are essential for broadly ensuring the correctness of`
figures in Store Accounts/ Balance Sheets.
Contracts for Lease
505. Contracts for the leasing of Canteens, Shops etc. on Factory Estates will be
concluded by the General Manager in the manner stated below:-
As far as possible, advertisements should be published calling for tenders

and giving general particulars of the rights which it is proposed to lease and the
address at which detailed particulars can be obtained. Tenders may also be invited
by letters to well known contractors. The last date for submission of tenders and
the minimum sum per month which will be accepted should also be specified in
tile advertisement and notices .(The minimum sum should be assessed rent of the
building or buildings to be leased but it is not necessary to mention it in the tender
notice). The tender should also be asked to quote prices he may charge for the
various articles or classes of articles which he is called upon to sell and also give
an idea of the quality of articles which must be maintained. Advertisements and
calls to tender must be issued sufficiently (but not exceeding six weeks) before the
day of opening of tenders. Tenders should be opened on a date sufficiently
previous to the date on which the contract is to come into force. The period
between the issue of tender notices and the date on which the contract becomes
effective may be as much as six months ahead for every important contract and
normally not less than six weeks.
The Comparative Statement of Tenders together with the remarks and

recommendations of the General Manager and the draft agreement should be
forwarded through the Accounts Officer to the C.C. of A (Fys) for audit scrutiny, if
the contract is made for one year or under. If the contract is made for a longer
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periodthan one year, the above documents should be forwarded through the
Accounts Officer and the C.C. of A (Fys) to the OFB/ DGOF for his approval.
When financial concurrence has been obtained, the contracts will be signed in
accordance with the rules on the subject.
Note- Contracts for leasing of immovable properties such as land, house,

etc. will be signed by the OFB/DGOF. In the case of petty contracts for
other than immovable properties such as selling rights of sweetmeat stall
etc. may be signed by the General Manager.
Budgetary Control
506. The review of expenditure in relation to available funds is one of the

essentials of budgetary control. In order to enable the financial authorities to
discharge this function properly, the Accounts Office will maintain locally a
continuous watch over commitments vis--vis cash allotments. Cases in which
progress of expenditure is unusually low or abnormally heavy should be brought
to the notice of the General Manager concerned for necessary action. When
additional allotment -is required, action to obtain the same should be taken by the
Management promptly and sufficiently early to avoid delay in the settlement of
claims as no payment in excess of sanctioned allotment can be made. Where it is
found that the authorities fail to be vigilant in applying for additional allotment, a
specific report should be made by the Accounts Officer to the Controller of
Finance, OFB HQrs with details under intimation to the General Manager.
Medical Stores
507. Medical Stores are received in the factories from two sources, viz. (i) by local
purchase, the cost being debited to "incidental and miscellaneous expenses
miscellaneous" and (ii) by transfer from other departments of the Army e.g.
medical stores depots. The cost of those stores received from both the sources will
be debited to work order under 01/00024/00.No priced Store Ledgers or Priced
Accounts will be maintained for these stores by the Accounts Office.
508. The factories will maintain a quantitative ledger for medical stores and this
ledger will be audited to the extent of 33 per cent with reference to copies of
receipt and issue vouchers received by the Accounts Officer every month. The
audit will be carried out to see that:
(i) the receipts as shown in the receipt vouchers audited have been
accounted for in the factory ledgers;
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(ii) all issues struck off from the factory's ledger are supported by proper
vouchers;
(iii) the balances as shown in the ledgers, have been correctly calculated.
509. During audit, it will also be confirmed that the receipt vouchers received
from the factories incorporate in them all issues made by medical store depots and
other departments of the Army as per copies of issue vouchers received from the
consignor's L.A.O.
510. The procedure outlined in L.A.O's Hand Book should be followed in

auditing the ledgers.
Note 1 - The cost of lymph vaccines supplied by Civil Institutions to the

Dispensaries. attached to the Ordnance and Equipment Factories will be
adjusted as Cost Accounting transaction and included in the general indirect
charges and charged to the Production Accounts of the factories.
Note 2- Inter-Departmental Adjustments are required in respect of stores and

equipment supplied from one service to another (viz. Army, Navy, Air Force
and M.E.S.). But issues of stores and equipments to institutions like the
Inter Services Wing of the Armed Forces, intended for the benefit of all the
Services will be treated as free issues and no inter-departmental adjustments
will be required.
Deposit Stock
511. Stores which are the property of other branches of the Armed Forces
(D.O.S, Air Force, and Navy) sent to Ordnance Factories for repair, conversion,,
utilisation or break up and ultimate disposal axe called Deposit Stock: Such stocks
will be stored physically separate from stocks which are the property of the
factory. The factory will maintain a un priced ledger for them and no correspon-
ding priced ledger will be maintained in the Accounts office. The factory will
submit to the Accounts Office, every month, skeleton lists of receipt and issue
vouchers and demand and return notes. The entries in the factory Bin Card will be
checked monthly with reference to the above documents. Audit of Bin Cards for
Deposit Stores will be conducted on the general principles laid down in the
L.A.O's hand Book.
Note 1- Component; rendered surplus by cancellation of service demands may

also be placed in Deposit Stock.
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RTC KOLKATA 224

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_____________________________________________________________________________________________
Note 2- Plan size stores as distinct from over size which can be utilised by
factories in major assemblies to be issued against service demands may be
held in factory stock.
Transfer of Deposit Stock to Factory Stock proper
512. No repair to -stores of deposit stock should be carried oat until a definite
need for repair becomes known. The actual cost of all repairs is chargeable to the
owner (D.O.S., Air Force or Navy). Such cost should not, include any profit or
involve any loss to the factory.
If, after repair, the stores are not required by the owner but they are
required by the factory, they should be transferred to factory stock proper with the
prior approval of the OFB/DGOF and specific concurrence of the owner is not
required. In case where a factory has an urgent need of any item, the transfer
maybe carried out and the ex-post-facto sanction of the OFB/DGOF obtained.
Thus Deposit Stock can be classified into the following categories: -
(a) Stores held in Deposit Stock and which when drawn are to be
rectified or repaired and issued in part or in full satisfaction of an extract or
an inter factory demand; and
(b) Stores held in Deposit Stock, and which are required to be drawn for
rectification or repair and after completion thereof are to be issued direct to
the owner.
Those falling under (a) will be drawn from Deposit Stock on regular "D"
Series Issue Vouchers and will be brought on charge in the Factory Stock at Priced
Vocabulary Rate. Issues of such stores, from stock will be made in the usual
procedure. Those falling under (b) will not be taken on charge, in the
Factory Stock. Issues of such stores will take place on "D" Vouchers.
Break-up and Disposal of Surplus Deposit Stock
513. The prior concurrence of the owner is necessary before the break up of or
declaration as surplus of stores or the produce arising from break up of such stores
can be effected while the store is still held in Deposit Stock. All packages or
components found to be beyond economical repair will, however, be deemed to
have been held as unserviceable and prior approval of the owner for declaring
them as scrap is not necessary.
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RTC KOLKATA 225

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_____________________________________________________________________________________________
If the owners do not give concurrence to the break up or disposal by
declaring as surplus, they should be asked by the factory to give definite disposal
orders by the stores to enable the deposit stock to be removed from the factory
custody.
As regards adjustments involved in respect of disposal of surplus deposit

stock, procedure outlined by the C.C. of A (Fys) from time to time should be
followed.
Reserve Stock Pile Items
514. Strategic items of stores, which are very difficult to procure in case of
failure of normal supplies, are classified as stock pile item by the OFB/ DGOF.
Accordingly, a reserve of such stores may be built up separately from working
stock in order to sleet the demands of future production ill case of failure of
normal supplies.
515. All expenditure for stockpiling will be meet from Major No. 130 A (b) (i)/
(ii) 5 Ordnance/Clothing Factories-Defence Capital Outlay. Although these items
are purchased from Capital Head, they differs from Capital Assets proper as they
are store item, intended for future, production. Accordingly, the following
accounting procedure is to be followed in respect of these items.
(i) The factory, will maintain a separate Bin Card for each of these items. A
separate store ledger known as Capita Store Ledger should be maintained by
Ledger Group of Accounts Office. This ledger, like the Priced Store Ledger,
will also be located in the Provision Section in order to afford facilities of
quick reference to the Management. A separate series of vouchers under "R"
series will be operated upon in each and every transaction.
(ii) No Stock-Pile items should be used by factories without prior approval

of the OFB/DGOF As and when reserve material are required to be used in
production, they are to be first transferred to stock ledger and then issued on
demand notes as usual. The transfer of materials from and to the reserve
stock and working stock should be made only on transfer voucher (IAFZ-
2096). The turn over of reserve items, if and when ordered from time to
time by the OFB/DGOF should likewise be made on transfer voucher.
(iii) The value of purchase of stock-pile items should be reconciled with the
figures of cash compilation through a Linking Register to be opened for the
purpose. Losses and Discrepancies of stock-pile items will be regularised as
in the case of regular capital items.
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(iv) Separate Manual Schedule for "R" series receipt and issue vouchers will
be maintained as in the case of "B" and "M" Series. As Stock Pile items are
different from Capital Assets no Depreciation should be charged on these
items.
(v) The Capital Store Ledger serves the purpose of both Block Register and
Priced Store Ledger. But no priced store Account need be prepared monthly.
Any information regarding the position of these items should, however, be
furnished to management as and when required.
(vi) A subsidiary account to capital assets account viz. "Capital Assets

Account-Stock Pile" should be maintained in the Principal Ledger to
account for these stock pile items.
Register, Reports and Returns
516. List of Registers to be maintained together with the fly leaf instructions and
of reports and returns to be rendered by the Material Section is given in Annexure
"A" & "B" respectively to, this Chapter.
517.
to BLANK
525.
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ANNEXURE-"A"
(Referred to in Para 516)
LIST OF REGISTERS MAINTAINED IN THE MATERIAL SECTION AND

THEIR FLY LEAF INSTRUCTIONS
--------------------------------------------------------------------------------------------------------------------
SI. Name of Register Para No.
--------------------------------------------------------------------------------------------------------------------
*1. Bill Audit Register
*2. Supply Order Register (Commitment Register)
*3. Register showing statistics in regard to tenders other than
the lowest accepted by the Administrative Authorities.
*4. Register on Working oil Contracts.
*5. Register of Payments to Local Purchase Contractors
(Income Tax Register).
*6. Objection Book on Local Purchase Bills
*7. Objection Register
8. Register for linking payments and for watching the consignee's Incorporated in
receipt in respect of payments of 100 % final, 100 per cent Paras
advance, 90 per cent advance and 10 per cent
balance made by Pay and Accounts Officers to Contractors as
well as for executing 496
Outstanding Assets and Liabilities for a year. 497
9. Register of Invoices. -
10. Register of linking of local/foreign purchases. 384
11. Register of Central and Foreign Purchases for watching progress of
old demands 354
12. Register for noting down the provisional pricing of vouchers. 423
13. Register of Review of primary documents. 413
14. Register of Schedules of Demand and Return Notes. 412
15. Registers of Schedules of "S" Series Receipt and Issue Vouchers. 411
16. Register of Unorthodox Balances. 427
17. Stock taking Progress Register. 470
18. Register of Inability Sheets. 350
19. Register of 10 percent checking of demand and return notes
in material warrants. 453
20. Register of Danger/Ordering Level. 416 (viii)
---------------------------------------------------------------------------------------------------
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* For Fly Leaf Instruction, see O. M. Part II, Volume II, Chapters on Stores (Contract) and
Stores (Audit) Sections.
Serial No. 10
FLY LEAF INSTRUCTIONS FOR THE MAINTENANCE OF REGISTER FOR LINKING OF

LOCAL/FOREIGN PURCHASES
[Authority-Para 384 (ii) Chapter VI, Section I, O.M. Part V1.)
Object:- To ensure that for all payments made or debits received for the purchase of stores,
the stores have actually been received and brought on charge in the Priced Store Ledger and
amounts adjusted in the Price Store Accounts.
The Register will be maintained in the following proforma:

--------------------------------------------------------------------------------------------------------------------
Serial Supply Order Invoice/ Nomenclature of Store Amount Bill No/Disburse
No. D.D. Schedule No. ment Vr. No. and
and date date
-------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Receipt Vr. No. and Value Difference Number and date of Adjustment
Date Voucher
-------------------------------------------------------------------------------------------------------------------
(6) (7) (8) (9)
-------------------------------------------------------------------------------------------------------------------
2. Separate parts will be maintained for local and foreign purchase.

3. The register will be submitted to the Accounts Officer on the 25th of each month.
Serial No. 11
FLY LEAF INSTRUCTIONS FOR THE MAINTENANCE OF REGISTER FOR WATCHING

PROGRESS OF OUTSTANDING DEMANDS IN RESPECT OF CENTRAL/FOREIGN
PURCHASES
[Authority-Para 354, Chapter VI, Section I, OM Part Vl.]
Object: - To watch the commitment and expenditure and progress towards the clearance of
outstanding demands for Central/Foreign Purchases.
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The Register will be in maintained in the following proforma:
--------------------------------------------------------------------------------------------------------------------
Serial No.and date of Estimated cost of Progressive OFB's Indent A.T.No. and date
No, demand sheet demand total commit- No. and date
ment carrying
--------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Value as per Difference plus or Voucher No. Value Progressive Remarks
A.T. minus between and date total payments
Cots. 3 and 7 as per compiled
actual for each
month .,
-------------------------------------------------------------------------------------------------------------------
(7) (8) (9) (10) (11) (12)
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
2. The Register will be submitted to the Accounts Officer on the 15th of each month.
Serial No. 12
FLY LEAF INSTRUCTIONS FOR THE, MAINTENANCE OF REGISTER FOR THE PROVI-
SIONAL PRICING OF VOUCHERS
[Authority-Para 423, 409 (A) Chapter VI, Section 1, OM Part VI.]
Object:- To record all provisional pricing of vouchers and watch their final adjustments.

-------------------------------------------------------------------------------------------------------------------
Serial No. Voucher No. and date Quantity Provisional date Estimated
Value
-------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
-------------------------------------------------------------------------------------------------------------------
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-------------------------------------------------------------------------------------------------------------------
Actual Value Difference Number and date of Remarks
adjustment voucher
-------------------------------------------------------------------------------------------------------------------
(6) (7) (8) (9)
-------------------------------------------------------------------------------------------------------------------
2. If the difference (vide column 7) is charged to the store indirect charges of the factory
as per 409-A of the O.M. Part VI, the number and date of the memo under which the
C.C. of A (Fys)'s approval is obtained, should be noted in Column 9.
3. The register will be submitted to the Accounts Officer on the 10th of each month.
Serial No. 13
FLY LEAF INSTRUCTIONS FOR THE MAINTENANCE OF REGISTER FOR REVIEW OF

PRIMARY DOCUMENTS
[Authority-Para 413 , Chapter VI, Section I, O.M. Pa t VI.]
Object- To record the items selected for review and the result of review.

--------------------------------------------------------------------------------------------------------------------
Serial Date Number and Result of the Initials of the Remarks
No. date of the review AAO/SO (A)
documents conducting the
selected for review
review
--------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6)
--------------------------------------------------------------------------------------------------------------------
2. The Register will be submitted to the Accounts Officer immediately after completion
of the monthly Review of the documents selected by him.
Serial No.14
FLY LEAF INSTRUCTIONS FOR THE MAINTENANCE OF REGISTER OF SCHEDULES

OF DEMAND AND RETURN NOTES.
[Authority-Para 412, Chapter VI, Section I, OM Part VI.]
Object- To watch the continuity of Demand and Return Notes and ensure that all
demand and return notes prepared by the Factory are received in the Accounts
Office and that they are all accounted for in the Priced Store-Cum-Provision
Ledgers and Priced Store Accounts.
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--------------------------------------------------------------------------------------------------------------------
Serial No. of Demand/ Date Batch Number in which included for
Return Note ledger posting
--------------------------------------------------------------------------------------------------------------------
(1) (2) (3)
--------------------------------------------------------------------------------------------------------------------
2. Separate pages will be opened for Demand and Return Notes.
Serial No. 15
FLY LEAF INSTRUCTIONS FOR THE MAINTENANCE OF REGISTER OF SCHEDULES

OF "S" SERIES RECEIPT AND ISSUE VOUCHERS
[Authority:- Para 411, Chapter VI, Section I, O.M. Part Vt.]
Object:- To watch the continuity of receipt and issue vouchers and to ensure that. all
vouchers prepared by the, Factory Management are received in the Accounts Office and
that they are all accounted for in the Priced Store-Cum-Provision Ledgers and Priced
Store Accounts.

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Serial No. of Date Value Batch Number in which Remarks
the voucher included for ledger posting
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(1} (2) (3) (4) (5)
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2. Separate Registers will be opened for Receipt and Issue Vouchers.

Serial No. 16
FLY LEAF INSTRUCTIONS FOR THE MAINTENANCE OF REGISTERS OF

UNORTHODOX BALANCES.
[Authority-Para 427, Chapter VI, Section I, O.M. Part VI.]
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RTC KOLKATA 232

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Object- To watch adjustment of Unorthodox Balances.

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Serial Ledger Folio Balance Reasons Voucher No. and Initials of
Number date under which Auditor
Quantity value adjusted
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-
(1) (2) (3) (4) (5) (6) (7)
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Serial No. 18
FLY LEAF INSTRUCTIONS FOR THE MAINTENANCE OF REGISTERS OF INABILITY

SHEETS
[Authority--Para 350 Chapter VI, Section I, O.M. Part VI.]
Object- To record the number of items of Store Holder's Inability Sheets

received with the Supply Orders and demands and checked by the Accounts Officer.

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Date on which Inability Inability Sheet No. and date Corresponding supply order
Sheet was received in the No. and date as shown in Accounts
Office the Commitment and
Supply Order Register
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(1) (2) (3)
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Whether value of Whether or not the Initials of Auditor Remarks stores is
Rs. 1 sheet was selected
lakh or more for audit
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(4) (5) (6) (7)
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RTC KOLKATA 233

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2. The sheets to be checked will be selected by the Section Officer (A)/A.A.O. of
Material Section of the Accounts Office.
3. The Register will be submitted to the Accounts Officer in the first week of each
month.
Serial No. 19
FLY LEAF INSTRUCTIONS FOR THE MAINTENANCE OF REGISTER OF 10 PER CENT

CHECKING OF DEMAND AND RETURN NOTES IN MATERIAL WARRANTS.
[Authority-Para 453, Chapter VI, Section I, O.M. Part VI.]
Object- To record the result of test check of the selected demand and return notes
and to ensure that these notes are correctly posted in the material warrant and that the
material and quantity shown therein are authorised.

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Serial Month Total No. of De- Name of the Serial No. of De-
Number mand arid Return SO(A)/AAO con- mand and Return
Notes as in Material ducting the check Note checked
Abstract and found correct
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(1) (2) (3) (4) (5)
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Discrepancies noticed during the check Initials of the SO(A)/AAO Action taken (full
details of serial No., date and value conducting the check to settle the of
Demand Note/Return Note affected discrepancies.
should also be shown)
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(6) (7) (8)
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2. Columns 1 to 3 of the Register will be posted on receipt of Material Abstracts. Column

4 will be posted after selection by the Accounts Officer. Columns 5,6 and 7 will be filled
in by the SO(A)/AAO after the checking and column 8 will be, completed when final
action is taken.
3. The Register will be submitted tb the A.O. on the last day of each month.
Serial No. 20
FLY LEAF INSTRUCTIONS FOR THE MAINTENANCE OF REGISTER OF DANGER/

ORDERING LEVEL.
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RTC KOLKATA 234

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[Authority- Para 416 (VIII), Chapter VI, Section I, OM Part VI].
Object- To notify to the management the cases where the stock position hascome down to
such a level as to call for immediate provisioning action.

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Serial Ledger Folio Danger/Ordering Quantity on Initials of Remarks
Number Level date Factory Staff
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(1) (2) (3) (4) (5) (6)
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2. Separate Registers will be maintained for Danger and Ordering Level

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RTC KOLKATA 235

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ANNEXURE "B"
(Referred to in Para 516)
LIST OF IMPORTANT REPORTS AND RETURNS DUE FROM MATERIAL SECTION

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Sl. Name of the Reports and Returns To whom due Due date to reach the
No. destination
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Fortnightly
1. Fortnightly Report on Expenditure on L.P. C.C. of A (Fys) 20th of the month
"S" Section and 5th of the
following month.
2. Report regarding Outstanding dues on account -do- Fortnightly.

of stores issued and services rendered to Civil
Deptts./State Govts. /Public Sector Undertakings.
Monthly
1. Monthly Expenditure report CCA (Fys) l0th of the following

"S" Section month.
2. Store documents Report -do- l0th of the following
month.
3. Progress Report monthly (Proforma `B') -do- l0th of the following
month.
4. Report on Analytical value of stores -do- l0th of the
following month.
5. Report on clearance of Assets & Liabilities -do- 5th of the following
month.
6. Report on linking of CP vouchers transactions -do- Within a fortnight of
receipt of CCO-2.
7. Outstanding amount of advance payments on -do- l0th of the following
account of purchase of steel month.
8. Priced Store Account CCA (Fya) By middle of the

"AA" Section month following
-----------------
Costing Sec.
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Quarterly
1. Air lifting of stores in respect of Ordnance & CCA (Fys) 15th of the month
Clothing Factories. Store Sec. following each
quarter.
2. Report on cases where receipt vouchers/certifi- -do- 1st day of every
cases not received within 3 months of 100 quarter.
advance payments without consignee's receipt
note. For the supplies made against contract
placed by DGS&D, New Delhi and payment
of 2% bills without consignee's report.
3. Export carrying report of Ordnance Fys. CCA (Fys.) 15th of the month
Store Section following each
quarter.
4. Disposal of Surplus etc. stores under orders of -do- 10th of the month
the Director General, Supplies & Disposal. Following the quarter.
5. Return of Income Tax prepared from the Regis- Asstt. Director of 10th ofthe month
ter of payments to local purchase contractors. Inspection (Income following
Tax) the quarter.
Half Yearly
1. Trade Purchases resorted to consequent on C.C. of A (Fys) April to 15thDec.

Short/Non-supply of I.F.D. items "PR" Sec. September
October to 15th June
March
Annually
1. Export Earning Report of Ord. Factories CC of A (Fys) 15th September

"S" Section. each year.
2. Statement of Contracts given to other than the -do- 16th April

lowest tenders. each year.
3. Consolidated Statement of Losses of stores CC of A (Fys) On or before

sanctioned during the year for inclusion in the "FA" Section. the date pres-
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Appropriation Accounts with Annexure detailing cribed.
heavy losses.
4. Consolidated Store Account with subsidiary CC of A (Fys) On or before

statement and Balance Sheets (LP, CP, FP etc.). "AA" Sec/Costing the date pres-
Section cribed for the year.
5. Certificate
(a) of reconciliation of stores ledger balances CC of A (Fys) On or before the
with Bin card balances. "AA" Section. date prescribed for
the year
(b) of reconciliation of consolidated stores

ledger figures with the consolidated store accounts figures.
(c) regarding reconciliation between financial

and cost accounts in respect of stores purchased.
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Note- There are certain other reports and returns which concern more than one Section.
Material Section should complete its portion in time to enable the rendition of the
reports by the prescribed date.
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CHAPTER-VII
OVERHEADS ACCOUNTING INCLUIANG TOOL ACCOUNTING
Para
Definition of Overheads 526

Classification of Overheads 527
War Insurance charges 531
Items kept out of production 534
Departmentalization of Overheads 535
Cost Centres 536
Budget Committees 541
Procedure for accounting variable Overhead 556
Power Cost Statements 558
(a) Steam Cost Statements 561
(b) Gas Cost Statements 562
Control of Variable Expenditure 575(A)
Fixed Charges 576
Fixation of Leviable percentage of fixed charges 579
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CHAPTER VII
OVERHEADS ACCOUNTING INCLUDING TOOL ACCOUNTING
Definition of Overheads
526. Overheads charges constitute a class of cost, which cannot be directly

charged to, the product. Thus, apart from direct costs like 'labour' and 'Material'
which cal' be easily" determined through the system of labour bookings , Return
and Demand-Notes or transfer vouchers etc.,there are other costs which have to be
necessarily incurred 'generally for the production. Such charges may be in the
form of services rendered by other sections i.e. service sections like power, steam,
gas, stores etc. or may be incurred in the section its, If on account of general
shop labour, supply of oil, lubricants, cotton waste, sundry shop stores,
miscellaneous equipments etc. To arrive, at the 'true cost of production, it is,
therefore essential that a proper system of accounting of such charges and
distribution thereof to the manufacturing orders is adopted.
Classification of Overheads
527. The Overheads incurred in the Ordnance Factory are broadly classified into
'variable' and 'Fixed' according to the nature of the expenses and are treated as
class of costs '36' and '39' respectively.
528. Variable overheads are expenses which generally vary in sympathy with the
load on the factories i.e. they increase or decrease with every increase or decrease
in load though not in direct proportion. Fixed overheads are items of expenditure
which by their very nature do not depend on the volume of manufacture (load), but
generally remain constant irrespective of the load involved.
529. The variable overhead expenses of any shop comprise of items of

expenditure which relate to repairs, maintenance, running and depreciation of
machinery, general shop labour, various allowances and incentives paid to
industrial employees supply and maintenance of service such as power, steam, gas
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etc. pay and allowances of supervisors and godown keepers, charges in connection
with care, custody and handling of stores, etc. All such expenses are booked
against '02' series of work order.
530. The fixed overhead expenses comprise of items of expenditure relating to

the pay and allowances of staff and officers of the factory other than those treated
as Variable, cost of various training schemes, repairs and maintenance of
buildings, roads, railway sidings and electrical installations, depreciation of
buildings and assets other than machinery, social overheads such as estate dispen-
sary, conservancy, road lighting, factory school, Labour Welfare Fund, Central
Administration of both factory and Accounts, pay and allowances of Accounts
Office etc. The expenses pertaining to fixed overheads are booked to '01' series of
work order.
War Insurance Charges
531. The Ordnance Factories are normally designed, equipped and staffed in
such a way so as to enable them to rapidly expand in war time to produce an
output enormously greater than normally required. War requirement/or installed
capacity is generally computed as the maximum capacity of the plant on the basis
of two shifts of 10 hours each per day for 25 days per month in the case of batch
operation plants and three shifts of 8 hours each per day for 22 days per month in
respect of continuous process plants. This is the peak load of a factory. The normal
capacity of a factory is based on the Datum load, Datum load is 45% /40% each of
the items of production at peak load for general Engineering factories/process
factories. Thus under the normal circumstances the fixed overheads incurred will
be for the war requirement whereas the capacity utilize will not.
532. Before the commencement of the accounting year therefore, the surplus of all
the elements of fixed overheads which are being maintained at war requirement
and which are over and above what will be required for the year's production
programme should be identified with reference to the installed capacity and the
cost of these assessed separately. When the actual load is poor, say 60 per cent of
full single shift load, although the fixed charges were expected to remain the same,
only 60 per cent would be recovered. The cost of balance 40% should be treated as
war Insurance charges and deducted from the estimated fixed overhead charge's of
the factory for the year.
533. Both fixed and Variable charges are charged to jobs as a percentage on Direct
labour for each production section.
Item kept out of production

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RTC KOLKATA 241

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534. In addition to the above cost of surplus capacity, there exist certain other
items of fixed overheads which do not, in any way, contribute to the production
and must therefore be kept out of the production cost of the factory. A list such
items is indicated at para 578. The balance of fixed charges after deducting the
above items will form overheads chargeable to the Year's production as a
percentage of the estimated direct labour charges.
Departmentalization of over-head-cost centre concept
535. The first step in the accounting and allocation of overheads is their
departmentalization. The overhead expenses (whether variable or fixed) pertaining
to each shop or cost centre are collected together, so that the overhead charges for
a shop or centre may be charged to the particular shop or cost Centre.
Cost Centre
536. With the increase in the number of production lines, diversification of

products, addition of versatile and automatic machines having disparate cost
requirements and widely differing skills for supervision operation and
maintenance the original concept that all product make equal demands on the total
facilities in a shop may not be valid in many cases at present. The levy of overhead
charges at a uniform percentage of Direct Labour on all products manufactured in
a shop may no longer be viewed as rational.
537. Criteria for deciding on cost centre are:
(i) Diversity or dissimilarities of items manufactured involving various use

of labour equipment) supervision etc. which calls for differential application
on overheads.
(ii) Identification of functional responsibility for the purpose of

management and cost control.
(iii) Since proliferation of cost centres will lead to increase in the cost
costing, the number of cost centre should be such as to provide optimum
control, commensurate with the cost and Management Accounting efforts.
(iv) As frequent changes in the number of cost centres is not desirable, the
changes should not normally be made more frequently than once in a year.
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RTC KOLKATA 242

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538. Accordingly a 'cost centre' is a distinct clearly defined and well-knit unit of
endeavour, for which the direct cost and indirect expenses are capable of being
determined by measurement or objective assessment. It may be a location or a
group of work points/equipments which is treated as functional unit for "cost
ascertainment", by identifying the overheads with it and for 'cost control' in
consonance with the responsibility area defined by delegation of power.
539. With a view to collecting together these types of expenditure, it has been laid
down that the last two digits or '01' and '02' series of work order numbers should
be used to indicate the shop or manufacturing centre for which the expenditure is
incurred.
540. The shop or centre in a factory may be 'productive' 'service' (non-productive)

or both. The total variable overhead expenditure for the factory plus such
proportion of the fixed expenditure as is chargeable to the output, has to be
charged to the out-turn of the factory. To this end, and with a view to obtain correct
allocation of costs, the overhead expenditure pertaining to any productive
shop/cost centre in any cost period is to be charged to the production of that shop
during the period. It is at the same time necessary that the overhead expenditure
for the same period pertaining to the service sections should also be charged into
the cost of out turn. For this purpose, the overhead expenses of the 'Service
Sections' are allocated to the "Production Sections" in proportion to the service
rendered by the former to the latter (or any other suitable basis) and added to the
overhead expenses of the latter in accordance with the instructions issued by the
Chief Controller of Accounts (Factories) from time to time.
'Budget Committees' and estimation of percentages for levy of 'Variable' and

'fixed' charges.
541. The Variable and Fixed charges are levied as a percentage of direct labour.
These percentages vary from shop to shop. The percentages to be levied are to be
pre-determined base on the assessment of direct labour, variable charges, fixed
charges for the different shops/cost centres of the factory.
542. Before the commencement of the financial year, the anticipated expenditure
for the ensuing financial year against the various indirect work orders under '02'
series should be worked out, based on the past actuals, taking into consideration
the anticipated changes on account of production programme for the ensuing year.
Similarly a realistic estimate of the production of principal items expected from
various production shop/cost centres should be drawn up on the basis of orders
exististing as well as other known factors. The anticipated output from the
different sections should preferably be drawn on the monthly basis. Having
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worked the anticipated output for different sections, steps should be taken to find
out the direct labour requirement for each quarter of different sections/ cost centres
from standard estimates. Manufacture warrants S.W.O.Ds etc. The direct labour so
arrived at will be used as reference point for working out variable/fixed
overhead percentages.
543. A suitable percentages should be added for Ad-hoc orders based on past
performance of 'shop/ cost centre and anticipated feeding of such orders, to the
section during the quarter. A suitable adjustment should be made for factory such
as unexpected hold up, delay in procurement of materials etc. The entire fore cost
should be on realistic basis taking into account the capacity of these sections,
process involved and other similar factors having a bearing on the output of the
factory/section/cost centre. To the direct labour arrived at, suitable percentage
should be added for taking into account the latest actual percentages and possible
future trends.
544. Improvement in the system is possible by keeping:
(i) Item-wise production programme up to date.
(ii) Linking between the budgets for O.T. Hours and the present production
programme, so that the overtime programme can be divided with reference
to past practice and other considerations based on the following formula.
The formula for assessment of man-hours required for Production
(i) Estimated man-hours for the production of Principal Items of

manufacture during the year as per standard Estimates (Taking into account
the effect of N.R.Rs).
(ii) Add estimated man-hours required for non Principal Items by applying
ratio, which the direct labour content of the principal items bear to that of
non-principal item.
(iii) Add estimated man-hours employed on increase semi-manufacture.
(iv) (To be assessed by some suitable manner) Less 1/5th of the total of (i)
and (ii) above to cater for 25% incentive included in Piece Work rates.
(v) Total man-hour for Direct -Labour. Total of (i), (ii) and (iii) minus (iv),
where necessary.
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RTC KOLKATA 244

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(vi) Add estimated man-hours required for indirect labour to be assessed

either on the basis of the ratio of number of men on indirect labour as
furnished against item 1 (b) and 1(a) of the Financial Activities Report/or on
the basis of rates of Basic Direct Labour minus the Piece Work Profit to
Basic Indirect Labour.
(vii) Add 15 per cent of the total of (v) and (vi) to cater for estimated
absenteeism.
(viii) Total man-hours required for Direct and Indirect-Labour (v) + (VI) + (vii).
545. As regard variable overheads the anticipated expenditure against various

work orders should be worked out based on past actuals and taking into
consideration likely charges that may take place on account of increase or decrease
in load in various sections. The framing of the budget would largely depend upon
load and should be adjusted according to the anticipated output. The expenditure
in respect of `Holiday Pay', `Leave with pay' to Industrial Employees is of
seasonal nature. In order to get a realistic estimated expenditure of variable
charges for a year, it will be estimated for each quarter separately and then
aggregated for the year as a whole. The expenditure against work orders such as
Power, 'fuels consumables', 'depreciation' etc. should be assessed on a more
realistic basis since these are related to the output. The variable charges will first
be estimated for each quarter of the year separately, and then aggregated for the
year as a whole. As a result the budget figures for each quarter will be available
against which the actuals can be compared an analyzed
.
546. After the variable overhead charges of each section has been estimated, the
percentage adopted for distributing the charges of one service section to other
service/production sections should be reviewed so that under the conditions
anticipated to prevail in the coming quarter the percentage would form a fair basis
for distribution. The fixation of these percentages for distribution of `service'
department charges depends on factors like nature of 'service department
expenses', nature of the services rendered, nature of the production departments
and degree or extent of the service received by each production section. Due to
efflux of time and with the change in the nature and extent of service required to
be rendered to Production Departments, with the advancement of technology in
the methods of production, the percentage of distribution of service section
charges to production section should confirm with the changed circumstances.
Otherwise the same would result in disproportionate charging of 'Service section'
expenditure to 'Production Sections' leading to unrealistic fixation of overhead
percentages and vitiation of the cost of production n the factory. To the extent
possible, the allocation of Service Section charges to 'Production Section' should
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RTC KOLKATA 245

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be made as a single distribution i.e. the 'Service Section Charges' of 'Gate Office'
may be distributed to 'Production Sections' direct on the basis of Industrial
Employees instead of distributing the charges first to other service section like
'Maintenance Sections' and then re-distributing these charges. This is adopted as
method of simplification.
547. The 'Service Sections' are arranged on the left hand side and the 'Production
Section' on the right hand side. The 'Service Section' that should be placed first is
the one which generally receives the least service of all rendered to it by other
department the next department to the right being the next in order according to
the service rendered to it and so on to the direct manufacturing department at the
extreme right. The criterion is that the total benefits rendered by the department
should be greater than the sum of he benefits received from the right. This arrange-
ments and the percentage of distribution of expenses by direct allocation to
'Production Section' as well as by the "Step Ladder Method" require good
judgment on the part of the person who lay out sheet. The percentage of
distribution is based partially on facts and partially on estimates. Computation may
be simplified and the number of entries reduced by distributing as one amount the
cost of a number of departments of alike general nature, for example, Welfare
expenses, and medical expenses may be distributed direct to sections as one
amount.
548. Similarly step should be taken to assess the consumption of Direct Material
shop/Cost centre wise as the distribution of the 'expenses of the tore Sections' is to
be done on the basis of direct materials. After the direct labour, indirect charges
and percentage for distribution of service sections are suitably worked out for
various sections/cost centres percentage of variable overheads for different
shop/cost centre should be arrived at.
549. The 'Central Budget Committee' comprising of the General Manager as

'Chairman', Local Accounts Officer and a selected AWM/WM. as Member reviews
the entire data. While assessing of all factors involved in the fixation of variable
overhead percentage e.g. anticipated direct labour, anticipated direct material,
anticipated variable charges, anticipated changes in load is the responsibility of the
factory, the Accounts Office should closely associate themselves with the work
and render all the assistance required. The Accounts Office will work out the
percentages of variable overheads for different Sections. Section Budget
Committees will be closely associate with the work, Section Budget Committee
comprises of:
Divisional officer of particular

Shop/Cost Centre - Chairman
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RTC KOLKATA 246

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Head of particular section

Representative of the local - Members
Accounts Office
It is necessary that the G.M. should himself preside over the Central Budget
Committee so that not only his knowledge of the entire operation brings to bear
the right balance between the various parts of the budget estimate but also his
authority secures adequate commitment at all level. The representative from the
Accounts Office should beat a level not lower than the Accounts Officer. Section
Officers should not be deputed as member of the Central Budget Committee.
550. The necessity for the utmost care in the fixation flat rates for the variable
charges should be borne in mind. This is one of the most important phases in Cost
Accounting and the individuals entrusted with the task should get a clear idea of
the production programme for the quarter, a complete understanding of the
peculiarities of each manufacturing shop or centre and an accurate idea of the rate
of fluctuation of variable expenditure in each shop or centre with the variation in
load. A close and actual study of the statistics available from year to year as well
as those available up to the latest month is absolutely necessary. The exercise of
collecting the various data should be initiated sufficiently in advance of the
commencement of the financial year so that the leviable percentages of variable
charges are available by the beginning of the new financial year.
551. In order to obtain a proper functioning of the committee, it will be necessary

to maintain .suitable records of the expenditure incurred on '01' and '02' series of
work orders in every shop. Although the information may be partly obtainable
from Accounts Office, it may not be possible to collect full information from these
because the Accounts Office may not have received from the shops towards the
close of particular month. The Budget committees will therefore, devise a suitable
method of collecting the required data in the sections which may be supplemented
by information available in the Accounts Office for forecasting the expenditure,
for the ensuing financial year based on past actuals.
552. Apart from production and Service (Non-Productive) section, there are semi-
productive sections in Ordnance Factories which are mainly engaged in
maintenance work either mechanical, electrical or building.
553. The productive work done by these sections will be mainly capital services
and/or payment services. As these items of work are also subject to a fixed
programme, sufficient data should be available to the Central Budget Committee
to fix the 'Direct Labour' in a realistic manner.
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554. The total variable charges of the 'Sections' will be determined in the normal
manner. The amount pertaining to the productive portion will be segregated on the
basis of the formula A x B/C where 'A' will be the total variable charges of the
section as arrived at from the Step Ladder, 'B' the Direct Labour and 'C' the Direct
Labour plus the variable indirect labour of the semi-productive section concerned
(i.e. the amount of labour compliable/compiled to '02' series work orders).
555. The above guidelines are intended to be of general applicability with a view
to ensure uniformity in procedure. However, if in any particular quarter, the
application of the above mentioned formula is expected to result in abnormally
high or low percentage of variable overheads, a reasonable alternative method may
be adopted by the Central Budget Committee. Suitable remarks should be made on
the statements.
Procedure for Accounting Variable Overhead Expenses
556. The accounting of Variable Overhead Expenses involves:
(i) The collection of actual variable expenditure for each shop or cost centre
monthly for each costing period.
(ii) The charging to each job executed during the period i.e. a month, its
proportion of variable overhead charges by levying the appropriate percen-
tages fixed by the Central Budget Committee on Direct Labour.
The actual variable overhead expenditure is i compiled in IAF (Fac)-102.
Note - After collection of actual variable charges the amount thereof

chargeable to production i.e. the leviable amount should be determined. For this
purpose the following items of expenditure are kept out of production i.e.
excluded.
Work
Description
Order
02/00010/00 Payment of retrenchment compensation to surplus worker undo

Industrial Disputes Act
02/00023/00 Miscellaneous store adjustment including, losses (beyond control)

stores scrapped due to obsolescence and changes in process of
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manufacture etc. loss due to revaluation of stocks. Auctioneer's
commission loss on sale of stores and loss of stores in transit
should be booked under this work order with suitable control code.
Care and custody of surplus stock, emergency reserve, stock, pile
items, care and custody of stores and plant during the period
between its declaration for disposal and removal after disposal and
preparation and removal of old, redundant machine for sale Care
and custody of stores and plant during the period between its
declaration for disposal are removal after disposal should also be
booked under this work order as also preparation and removal for
old redundant machine for sale Control codes 1,2,3,4,5 may be
used in the first place of the main work order for surplus stock,
emergency stores, stock pile items, stores declared for disposal and
preparation and removal of old redundant machine for sale.
Miscellaneous credit adjustments including profit on sale of store
(Recovery of loss in transit and Profit on sale of stores).
02/00126/00 Maintenance, repair, removal and re-erection, minor additions and

modification to machinery including foundation, belting, oiling etc.
Removal and re-erection of telephones mains and repair to

02100041/00 furnaces. (To be kept out of production Expenditure for special and
heavy repair of furnace where the benefit would last for two years
or more maybe treated as Deferred Revenue Expenditure being
charged to W.O. 02/00041/00 and kept out of production. The
proportionate amount chargeable to a particular year's production
wouldbe booked to work order 02/00041/00 under class of cost
`43'-expenses through allocation sheets.
557. Some items of variable charges are accounted for in the work orders under
the '02' series through primary documents. The total expenditure booked under '02'
series (whether the expenditure is booked initially in the primary cost accounting
records or in the primary financial records) should represent the total of the
variable charges for the factory concerned. So far as the expenditure initially
booked in the cost accounting records through material and labour abstracts is
concerned, these will be charged to these work orders directly through these
documents and no other documents will be prepared. The necessity for some
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media through which expenditure or receipt can be booked to '02' series work
order, will arise only in respect of items which do not pass through primary cost
accounting records, but which are compiled direct in the financial account e.g. Pay
and Allowances of Supervisors, Godown-keepers etc. Similar treatment should be
accorded to the cost transaction which originates outside the basic primary cost
documents and financial accounts e.g. 02/00042/00-R.R. Fund equivalent to
depreciation of Machinery under capital grant. These items should be incorporated
in the cost Accounts through the medium of allocation sheets in the prescribed
proforma, in accordance with the principles outlined below:
(i) Pay and Allowances of all categories of staff chargeable to work orders under
'02' series.
The Accounts Office should maintain a register for this purpose. Soon after the
close of the month the office copies of bills, contingent bills and traveling
allowance bills for the previous month should be obtained from factory office. The
Pay and Allowances should be compiled under the categories 'Supervisors',
'Godown Keepers' etc. Section-wise. Total of these items should be agreed with
the gross total of pay bills. Thereafter the pay and allowance of these personnel
employed in service sections like power, Steam, for which specific works orders
like, 02/00028/00, 02/00029/00 exists, should be compiled to these work orders.
The remainder of the pay and allowances should be compiled to the respective
general work orders like 02/00016/00 Godown Keeper, 02/00015/00-Supervisors
etc.
The amount, if any chargeable direct to an outturn work order should be

compiled by means of transfer vouchers.
02/00028/00, 02/00029/00, 02/00030/00, 02/00031/00, 02/00032/00-Power

Electric, power steam, power hydraulic, compressed Air, refrigerated water and
Gas making. The expenditure against these work orders will be booked through
labour and material abstracts. Such expenditure directly booked to these work
orders and other items of variable expenditure relating to the respective service
sections will be included in the respective cost statement. The total cost thus
arrived at will be distributed to the various manufacturing sections and other
services through these statements. Thereafter the amount of power cost debitable
to special services, such as water supply, lighting and maintenance, defence
lighting etc. for which specific work orders exist in '02' series will be debited to
these work orders through allocation sheets, an equal amount being allocated
simultaneously by credit to work order to 02/00146/00.
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(ii) 02/00146/00-Recovery of cost of electrical energy and water etc. supplied
(cost) and power and water used for lighting, water supply etc. No adjustment will
be made in respect of the value of power consumed by manufacturing sections
through transfer vouchers or allocation sheets. The value of power etc. consumed
by each manufacturing sections, will be included in variable charges statements of
the section and also exhibited in the shop Indirect Expenditure Statement
manually.
(iii) 02/00023/00-Miscellaneous Stores Adjustments (beyond control) to be kept

out of production and 02/00024/00-Miscellaneous Stores Adjustments (within
control) Chargeable to production. The expenditure is to be debited through
allocation sheets. The figure should be reconciled with the figure shown in Store
Accounts.
Allocation sheet will be used only when, Demand/ Return Notes are not
used for clearing Unorthodox Balances.
(iv) 02/00013/00-Figures as per IOFWP Fund Schedule. To be re-adjusted on

receipt of actual intimated by the 'AA' Section of the CC of A (Fys).
(v) 02/00042/00-RR Fund equivalent to depreciation of Machinery under Capital

Grant. The cost of discarded capital assets or assets transferred to other military
formations, also hire charges, interest depreciation and maintenance charges
payable on assets hired or taken over from other departments should be allocated
to this work order through allocation sheets.
(vi) 02/00126/00-Miscellaneous Credit Adjustment including Profit on Sale of

Stores-Figures compiled in the Priced Store Accounts should be adjusted.
Recovery of losses in transit as booked in financial compilation should be
allocated.
(vii) 02/00151/00-Miscellaneous indirect services for other factories. Actuals

available in the Accounts office should be adjusted against the work order
concerned.
(viii) 02/00145/00-Recovery of cost of electrical energy and water etc, supplied

(Cash).
(ix) 02/00146/00-Recovery of cost of electrical energy and water etc. supplied

(Cost) and power and water used for lighting, water supply etc. Figures compiled
in the relevant schedule of the Manufacturing Account statement B, will be
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adjusted against the work order concerned. Allocation sheets should be prepared
separately for 'Cash and Cost'.
(x) 02/00127/00-Other Miscellaneous Receipts the actuals as far as known to the

Accounts Office should be adjusted through allocation sheets.
(xi) 02/00106/00-Relief to be taken of D.A., H.R.A. and C.C.A. allocated at

constant percentage to both direct and indirect work orders as a part of labour
charges. Actual figures will be worked out and adjusted through allocation sheets.
Power Cost Statements
558. The statement is compiled, in IAFO-2469 (revised) to determine the cost of

generation and distribution of electric power and also to allocate the cost incurred
every month to the respective productive or service section concerned. Proforma
in which the statement is prepared is given at Annexure. All expenditure in
connection with the generation and distribution of electric power, excluding the
fixed charges relating thereto, is incorporated in this statement. The total cost thus
arrived at is divided by the total units of power shown as consumed for lighting
and power purposes and the rate per unit of power is determined upto four places
of decimal. Thereafter the cost of power consumed by each shop for each
section/cost centre as shown in the statement (this is determined, either by meter
reading or by any other technical calculation) is calculated and recorded in that
statement. The amounts allocated to 'Service Sections' are re-allocated to
productive section or are incorporated in the cost statement for these service
sections. The charges relating to the productive sections are included in the
variable expenditure statement for the shop concerned.
559. Electricity is purchased from State Electricity Boards who insist on a certain
minimum amount being paid irrespective of the energy consumed. The factories
have to provide for their requirement based on demand during emergency.
Judicious split up of the minimum charges has to be made so that the charge for
current consumption is not inflated. In certain cases alternating current is pur-
chased from the supply companies and converted into Direct Current e.g. Gun and
Shell Factory, Cossipore. In these cases, the power factor is an important aspect to
be watched as with a fall in the power factor, factories will have to pay more for
the Current consumed. The limit below which the power factor should not fall,
when a higher rate per unit will have to be paid by the consumer will be laid
down in the agreement with the supply companies and the Accounts Officer should
watch this aspect so that he may take up with the G.M., the cases where power
factor is below the standard.
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560. Electric power may be generated in three ways (i) Steam engines or (ii) Oil
engines or (iii) under hydro-electric schemes. In cases where steam engines are
used, the rate of evaporation of feed water per unit quantity of fuel from month to
month should be watched and compared with the standard evaporation expected of
the quantity of fuel in use. The units of power produced per unit of quantity may
also be profitably compared from month to month. The cost per unit of power
generated and distributed should also be compared from month to month and the
reasons for wide variations, if any, should be investigated. Economy in the
consumption of power in the various productive sections may also be investigated
by a comparative study of the out-turn in each shop in each month and relative
power consumption.
In cases where power is generated through oil engines the quantity of

power produced per unit quantity of oil may be compared with advantage.
Steam Cost Statement
561. The principle underlying the compilation of this statement is the same as that
explained under electric power cost statement. Here also, the quantity of feed
water evaporated per unit quantity of fuel used should be watched and compared
from month to month and with the standard rate also. The proportion in which the
total steam cost should be allocated to the various sections using it will be
indicated, in the statement by Management (this will be determined on the basis of
quantity of steam used or other technical considerations by the Management) and
the amount debitable to each will be calculated and shown therein. Just as in the
case of electric power cost, the cost of steam will be included in the shop variable
expenditure statement or taken into the step ladder or to other cost statements.
Gas Cost Statement
562. The principle of preparing this statement is also similar to that of the electrics
power cost statement. The total expenditure exclusive of the, fixed charges on
account of gas making, is charged to various work orders or sections in accordance
with the proportion fixed by the management of the factory. The amount allocated
to other sections, but which cannot be allocated direct to particular work orders
should be included in the variable expenditure statements of the section concerned.
The amount allocated direct to work orders should be debited to those work order
through transfer vouchers debiting the work order concerned under the class of
cost 'other charges' and crediting work order 02//00127/00 with a corresponding
amount. The rate of consumption of coal and coke per gallon of oil used, the
labour expenditure per gallon of oil etc., may be usefully compared from month to
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month. It will also be advantageous to compare the total gas produced every
month with corresponding out-turn in sections using gas.
563. The variable expenditure statement for various sections will be prepared from
the following documents:
(i) The sectional variable charges statement received from the concerned
Electronic Data Processing Centre.
(ii) Power Cost, Steam Cost, Gas Cost etc. statements
564. The sectional variable charges statement shows the monthly expenditure
incurred under '02' series work orders for the shop concerned, whether in the shop
itself or in other shops. The expenditure shown in these statements comprise of
labour, material and other charges for the month as well as upto the end of the
month of account i.e. current and progressive items of expenditure are shown in
two separate columns.
565. The statement is prepared from E.D.P. Machines/Details stored in tapes as

mentioned below:
(i) Summary cards punched from the sectional variable charges statement
for the previous month.
(ii) Summary cards punched from the labour abstract for the month
pertaining to '02' series of work orders.
(iii) Summary cards punched from the material abstract for the month in
respect of '02' series of work orders.
(iv) Summary cards punched from transfers vouchers abstract (and leather
abstracts for Ordnance Equipment Factory, Kanpur) for the previous month,
or original cards for the current month, when available in respect of '02'
series of work orders, cards pertaining to overhead charges levied are to be
excluded.
(v) Summary cards punched from component abstract for '02' series of work
orders for the previous months or the original card for the current month,
when available.
Proforma in which the statement is tabulated is given below:
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Code No. Factory Sectional Vari-
of able charges
Factory Statement
Section Work Class Opening Current Closing
Order of Balance Expendi- Balance
Cost ture
1 2 3 4 5 6
Description
Section Section of the Factory

Work Order Relevant number under 02 series.
Class of Cost 11.......... Labour
21.......... Material
14........ ..other Charges including Pay and
Allowance.
Columns 4, 5, 6 indicated opening expenditure, current expenditure and
Progressive Expenditure. The total for each section is indicated separately.
566. Section variable charges statement is printed in triplicate of which two copies
are sent to the respective Accounts Officers, who pass on one of the copies to the
General Manager of the Factory. Before forwarding the statement, general scrutiny
should be made to ensure that the fictitious work orders appearing in the abstracts
are properly reviewed and transfer vouchers made out. Due note of the
adjustments carried out should be made in the statements.A Register of Fictitious
work orders must be maintained to ensure that transfer vouchers are reflected in
the subsequent month's tabulation.
567. The Statement should be critically examined against the particular quarterly
budgetary position and suitable action taken on controllable items by the
shop/Cost Centre manager. The shop committee should meet once in a month for
making comparison between anticipated and actual variable expenditure incurred.
In the case of the majority of the work orders either the expenditure is beyond the
control of the local Factory Management or the expenditure is not of any
significant amount. There are a few work orders where, expenditure booked is
considerable and local control is possible. If attention is focused on these, the ob-
jective of budgetory control of overhead can be achieved. Some of the work
orders are the following:-I
02/00001/00 General Shop Labour.

02/00019/00 Tools for General- shop use.
02/00018/00 Sundry shop stores and, articles of expendible nature for
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shop use.
02/00017/00 Miscellaneous Equipment and movable shop fittings.
02/00008/00 Over time Bonus paid to IEs.
02/00153/00 Miscellaneous Scraps and surplus components.
Concurrent control is essential. Suitable registers should be opened by the

sections/cost for recording drawal of tools for general shop use, sundry shop stores
etc. and watch the actual drawal, with reference to the budget which would, be
framed on the basis of norms.
568. In addition, the Accounts Officer should personally examine the expenditure
against the following work orders in depth:
02/00001/00 General Shop Labour.

02/00041/00 Maintenance; repair etc. of machinery etc.
02/00028/00 Power Supply.
02/00021/00 Care and Custody of stock.
02/00008/00 Over time Bonus paid to IEs.
02/00017/00 Miscellaneous equipment and movable shop fittings.
02/00018/00 Sundry shop stores.
02/00019/00 Tools for general shop use,
02/00039/00 Maintenance of Motor transport.
569. While making comparison shop committee should ensure.
(i) That documentation and accounting are complete.
(ii) Abnormal variations due to various causes 1ike belated documentation

and accounting as well as wrong pricing should be analysed.
(iii) Charges for levy pay, holiday pay are assessed for the year as a whole
and apportioned between four quarters for inclusion in the budget of each
quarter. As the incidence of the expenditure will not however, be uniform
through out the year owing to seasonal and other factors, this results in
under over absorption of variable overheads under the work order for such
charges. The effect of such deliberate under/over absorption should be
shown separately for correct assessment of the position by the Central
Budget Committee.
(iv) In respect of heavy expenditure on account of repair to furnace

overhauling of process plants (W.O.-02/00041/00) the charges are spread
over more than one quarter.
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(v) Again some expenditure on account of 'loss on the scale of stores', 'stores
adjustments' (W.O. 02/ 0023/00), profit on sale of stores, surplus at stock
taking (02/000126100) are dependant upon contingencies which cannot be
accurately forecast. Due to periodical grant of additional dearness allo-
wance, difference arises between amount compiled to work order
02/00002/00 (D.A./HRA/CCA paid to IEs belonging to factories) and
02/00106/00 (Relief to be taken on D.A., HRA and CCA allocated at
constant percentage to both direct and indirect work orders as a part of
labour charge). Variations due to all such expenditure/relief should be
segregated in the analytical data supplied to the Central Budget Committee.
(vi) Scraps arising in a shop are required to be returned against relevant

outturn orders and only miscellaneous scraps which cannot be identified
with the concerned job are to be returned against variable work order
02/00153/00. Heavy booking against this work order would indicate a
tendency to accumulate the scrap on the shop floor and return the same in
bulk against the above work order. Variations on this account would require
corrective action for ensuring compliance with the procedure.
570. The variations on account of Direct Labour and Direct Material will be
analysed as under:
(i) Variation between programmed output and actual output.
(ii) Variation between the estimated and actual overtime bonus.
(iii) Whether variation in material is due to bulk drawal. Reasons for such
bulk drawal
(iv) Whether there as any delated documentation or accounting
571. A quarterly analysis of variations and action taken thereon will be indicated to
the Central Budget Committee by the Shop Committee. Normal variations
(excluding seasonal factors) against each item should range within +5% of the
budgeted provision. Reasons for variation between the budgeted actual
figures are not only to be analysed by the Central Budget Committee in detail but
the recommendation of the GM for wiping out the gap between the actual and
estimated expenditure are also to be recorded. Reports to be rendered by the AO to
OFB and Chief Controller of Accounts (Factories) and GM are:-
Annual Report : Forecast budget report

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10th April of each year
Quarterly Reports:
l5th of the second monthfollowing the quarter
573. A detailed time table for meeting of the Shop Budget Committees and the
Central Budget Committees should be drawn up and the same strictly adhered to.
Similarly schedule for quarterly review meetings should also be arranged. Any
departure from these schedules should be brought to the notice of the GM well in
advance for his acceptance and further necessary action.
574. Sufficient attention should be given at all levels of the management

including Accounts in the matter of budgeting of overheads and scrutiny of actuals
against the budget.
575. The orders provide for alteration in the percentage of levy during the year, if
sizeable fluctuations in the direct labour and/or variable charges consequent on
sudden fluctuation in production programme and or on account of unforeseen
circumstances like grant of Dearness Allowance etc. The basic principle to be
adopted would be to retain the initial recovery percentages as for as possible. An
adjustment through a supplementary levy at the end of the year will be made only
when annual under/ over absorption exceeds 5 per cent of the total overhead
charges for the year.
Control of Variable expenditure
575A. The expenditure on items of variable overheads of a Factory fluctuates from

period to period not necessarily in direct proportion to the Volume Of production
but largely so, and in sympathy with it. Methods of Control have, therefore, to be
instituted with a view to enabling the Management to judge that such expenditure
is not proceeding at a rate unwarranted by the load of the factory. For this purpose,
a comparison of the ratio of indirect labour to direct labour from month to month
will be greatly helpful in as much as the fluctuation of indirect labour will be
mainly due to the fluctuation of variable overheads (the fixed overheads remaining
more or less undisturbed). Attempts should be made to locate the particular items
of variable charges fluctuating abnormally i.e. not at per with the fluctuation of the
load. This can be done by scrutiny of the variable overhead statements of the
periods involved. Again comparison of the different elements of cost i.e. labour,
material, variable overheads and fixed overheads through suitable graph charts for
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different periods will reveal the abnormal fluctuation in any particular class of
cost not compatible with the other elements. Attempts to go deep into the primary
documents should therefore be made in order to determine the reasons for
abnormal fluctuations and to suggest to the Management tie remedial measures
thereof. In this connection instructions issued by CC of A (Fys) from time to time
should be carefully followed.
Fixed Charges
576. As in the case of 'Variable Overhead Expenses', the accounting of 'fixed

overhead expenses' also involves two phases viz. collection of the actual fixed
charges and charging them to jobs. The collection of the fixed charges is from the
various documents as detailed below and the allocation of these charges to various
sections is done on the basis indicated in subsequent paragraphs.
Estimates of elements of fixed charges
577. The total fixed charges work order wise for a year in respect of each
shop/cost centre will first be estimated based on the actual fixed charges for the
year, duly taking into account the known/foreseeable changes on account of
increase or decrease in the incidence of the fixed charges in the ensuing year. As in
the case of variable charges suitable details should be maintained in the
sections/cost centres as the, Accounts Office will have the actuals up to a certain
period only for the previous year al the time of estimating the charges.
578. From the total fixed charges work order wise deductions have to be made
for War Insurance Charges and Items to he kept out of production.
(A) War Insurance Charges
(i) The number of posts of different categories of personnel (staff and

Officers), if any held over and above the requirement for the current level of
production will be segregated.
(ii) Other charges, such as up keep and routine maintenance of those pants
and machinery installations, buildings/shops inside the factory which are
required to be utilized only in an emergency are to be similarly segregated.
While segregating the unrequited capacity in a shop/cost centre, the number
of shifts utilized/proposed should be kept in view.
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(iii) Similarly if there is excess provision in the factory estate, hospitals,
schools etc. these may also be segregated.
All the elements of fixed charges, chargeable for the extra number of posts
at (i) will be assessed. Similarly the current money value of the unrequired
capacity at (ii) and (iii) above will be worked out.
Other items to be kept out of production
Thereafter the charges required to be kept out of production under the existing
orders not covered under the above sub-para and not treated as War Insurance
Charges should be segregated.
Items of expenditure under '01' series which are required to be kept out of
production are: -
(i) W.O. No. 01/00006/00 idle item beyond control.

(ii) 01/00012/00. Training in India other than Ordnance Factories
(iii) 01/00013/00. Training of Apprentice under Act and other National Scheme
undertaken by Ordnance Factories
(iv) 01/00015/00. Loss of stock pile items
(v) 01/00119/00. Book value of machines transferred to other Military Formation
and sale Proceeds of machinery
(vi) 01/00020/00. Residential value of machine etc. sold out and book value of
machines transfer to other Military Formation.
Fixation of leviable percentage of fixed charges
579. The Direct Labour for the ensuing yea will be estimated on the basis
indicated at para 542.
580. The fixed charges comprise of certain item of expenditure which is directly
accounted for under '01' series through primary document but others are not. In
order that these latter charges may also be compiled under the relevant work
orders, certain adjustments through allocation sheet etc. are required to be made
every month. The intention is that the total figures booked under the series,
(whether the expenditure incurred is booked initially in the primary cost
Accounting Record or in the primary financial accounting records should represent
the total of the fixed charges for the factory concerned e.g. expenditure on work
order 01/00031/00 Services for OFB will be charged to this work order directly
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through thus records and no other document will be prepared The necessity for the
same media through which expenditure/or receipts can be booked to '01' series of
work orders will arise only in respect of item which do not pass through primary
Cost Accounting Records but which are initially compiled direct in the financial
accounts e.g. W.O. 01/00003/00 Pay and Allowances of Gazetted Officers and
NGOs 01/00033/00 Central Administration (Factories), 01/00034/00 Central
Administration (Accounts). Similar treatment should be accorded to the cost
transaction which originate outside the factory but are required to be included
under '01' series e.g. Stationery, stock forms and binding, through the medium of
allocation sheets in the prescribed proforma in accordance with the principle
outlined below.
Pay and Allowances of Clerical and other Staff, NGOs; Officers etc
581. (i) Procedure outlined against variable charges will be followed. The work
orders are 01/00001/ 00-01/00002/00 Peons, Orderlies and clerical etc. messenger
01 /00003/00 Gazetted Officers and NGOs, etc.
(ii) 01/00033/00 and 01/00034/00-Central Administration (Fys) and Central

Administration (Accounts).
These amounts communicated annually by the Chief Controller of Accounts

(Factories) should be debited to this work order through the allocation sheet at the
rate of 1/12th month, subject to readjustment of revision of estimate. The total of
the amount thus charged should subsequently be reconciled with the final figure
that will be communicated by the Chief Controller of Accounts (Fys) and
necessary adjustment allocation sheet put up in the March (Final) and March
(Supplementary) Accounts.
The Annual Accounts Section of the Office of the C C of A (Fys) works out
the figures on the following basis:
Expenditure on the (OFB) Directorate including Addl. DGOF (OEF) HQrs

is classified as (a) Effective representing pay and allowances and other
miscellaneous charges and (b) Non-effective (Superannuation charges) and
Government contribution to Provident Fund. The total of (a) and (b) is then
distributed over factories on the basis of direct labour incurred by each factory and
intimated to the Accounts Officers for adjustment.
(iii) Central Administration (Accounts)
Expenditure on the C C of A (Fys), Main Office (excluding that of Railway

Section) less 12 1/2% to cover expenditure incurred on audit and accounts work of
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allied inspectorates, R&D Establishment is apportioned first between (i) accounts
and (ii) internal check 44 per cent and 56 per cent, respectively the cost of EDP
Section attached to the main office is then added with the Accounts cost. The
total of both (i) accounts and (ii) internal check is then distributed over factories
on the basis of Pay and Allowances of the Branch Accounts Offices and intimated
to Accounts officers for adjustments.
(iv) 01/00041/00-Incidental and Miscellaneous Expenses
All expenditure booked to the Incidental and Miscellaneous charges will be

booked. In addition the cost of clothing/uniforms supplied to persons (Other than
IEs) should he booked to this work order. Financial adjustment for expenditure
under labour and Material is made. Any part of the expenditure chargeable to other
direct work orders should there after be adjusted through a transfer voucher by
debiting the work order concerned and crediting this work order.
(v) 01/0007/00-Government contribution to I.O.D.P Fund
The amount should be ascertained from the Pay bills of the factories every
month and allocated to the work order through allocation sheets. The total amount
thus allocated should thereafter be reconciled with the actuals communicated by
the C.C of' A (Fys) and re-adjustment carried out through allocation sheets where
necessary.
(vi) 01/00008/00-Government contribution of I.O.F.W.P. Fund
The amount should be ascertained every month from local books and
compiled to this work order through allocation sheets. When the actual for the year
are communicated by the C.C. of A (Fys) the total amount booked to this work
order will be reconciled therewith and necessary adjustment made through
allocation sheets.
(vii). 01/00009/00-Superannuation charges should be calculated based on the

rates/percentage for various categories intimated from time to time.
The amount of superannuation charges debitable to the overheads of the factories
during a year on account or pensionable establishments employed in the factories
and in the Accounts Offices should be worked out separately and allocated
monthly.
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In respect of personnel who are contributing to I.O.F.W.P. Fund,
Government contribution, to this fund is already being included in the Production
Accounts. It is not therefore necessary to calculate superannuation charges in
respect oh such personal again.
Superannuation charges are to be calculated for temporary personnel who

are eligible for pension (i.e. IEs, N.I.Es, N.G.Os & G.Os) monthly, with reference
to the posts actually held from time to time. For this purpose, the register will be
maintained in the following proforma.
Register of Superannuation Charges
Sl categories Trade Number of Maxi Rate of Amount of

persons mum superannu superannuation charge
falling in the of ation Col.4 X Col.6
categories Scales charges
shown in
Col. 2
1 2 3 4 5 6 7
The Register will be maintained section/cost centre-wise in loose sheets and

a new sheet will be opened monthly for each section to record the superannuation
charges of the respective section.
In respect of Industrial Employees, the register for superannuation charges

will be maintained separately for each section on the lines indicated above.
Separate sheets will also he maintained monthly to record the summary of

all sections/cost Centres so that the reconciliation of the overall position of the
factory could be carried out with the monthly actual strength statement furnished
by the Management to Accounts Office.
The Register will be submitted to the Accounts Officers on 10th of each

month.
(viii) 01/10035/00-Factory, Accounts Office
The figures should be extracted from office copies of pay bills, traveling
allowance bills and contingent Bills of the Accounts Office and debited to this
work order through allocation sheets. This is subject to reconciliation and
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adjustment with the actuals compiled in the financial accounts as intimated by
Accounts Section of the Chief Controller of Accounts (Fys).
(ix) 01/00042/00- Stationery, stock forms, printing and binding to be adjusted

through allocation sheets at 1/12th of the average of past three years actual every
month. At the end of the year, the totals should be reconciled with the figures
intimated by C.C. of A (Fys) and adjusted.
(x) 01/00018/00--Maintenance of' buildings roads etc. The actuals in this respect
are available from Labour Abstract, Material Abstract, Transfer Voucher Abstract.
Allocation sheets are prepared for Pay and allowances and other allowances.
Expenditure compiled to the financial account and not finding; place in the above
documents viz. Electricity and Water charges are allocated through allocation
sheets. To ensure agreement, transfer entries are made out debiting Minor
Maintenance Bead' in the financial compilation and crediting the Head for wages
of IEs for Labour' and deduct head for other expenditure.
The industrial and office buildings provided exclusively for the Technical
Development Establishment which are situated in the factory are booked in the
book of the M.E.S. Such buildings which are partly used by factory and partly by
the Technical Development Establishment are booked in the books of the factories.
Maintenance work of all buildings, whether partly or hilly used by the Technical
Development Establishment, will be carried out from the factory budget. Full
maintenance charges for building used exclusively and pro-rata charges for
building used partly by the Technical Development Establishment will be debited
against the M.E.S. by the Accounts Officer. The credit work order is 01/00145/00.
(xi) 01/000413/00-Miscellaneous indirect services rendered by other factories and

formation--Proportionate share intimated by other Accounts Officers should be
allocated.
(xii) 01/00016/00- Maintenance of Railway siding
These charges at 1/12th of the estimated amount should be adjusted through

allocation sheet every month. At the end of the year, the total thus adjusted should
be reconciled with actuals and necessary adjustments carried out through
adjustment allocation sheets.
(xiii) 01/00022/00 and 01/00023/00-Depraciation charges on Capital Assets other

than buildings and machinery and depreciation charges of, buildings.
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RTC KOLKATA 264

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_____________________________________________________________________________________________
The actuals available from the flock Registers should be adjusted monthly
through allocation sheets.
(xiv) 01/00119/00-Book value of machines transferred to other Military

Formations and Sale proceeds of machinery-Actual figure available in the
Accounts office should be adjusted through allocation sheet against this work
order.
(xv) Credit Work Orders

01/00145/00-Miscellaneous Indirect Service for other Factories and
formations. In the case of two or more factories having common Estate the
Accounts Office of the factory incurring the expenditure apportions the charges on
suitable basis to other factories and formation. While the total expenditure is
booked to the appropriate indirect work order, credit is taken against this order.
Thus the total cost of medical establishment will be compiled to work order
01/00024/00 viz. Factory and Estate dispensary and Hospital (including Hygiene
Cell) etc. in the factory to which Medical Establishment is attached. Proportionate
cost will be compiled to W.O. No. 01/00145/00 and the amount will be intimated
to the Accounts Office of the other factory on whose behalf the expenditure is
incurred. The latter will adjust the amount in his accounts under work order No.
01/00024/00. All adjustments should be carried out through allocation sheets.
(xvi) 01/00146/00-Miscellaneous Adjustment.
01/00143/00-Miscellaneous Receipts
The actual figures as far as known to the Accounts Office should be adjusted
against the work orders concerned. The receipts should be noted in the allocation
sheets.
Basis of Allocation of charges which cannot be definitely allocated to any

particular section
582. There are certain items of fixed charges which cannot be definitely allocated
to any particular section, but which are common to the factory. The total
expenditure for each such item of the factory should be allocated to the sections on
some pre determined basis which should be approved by the G.M. of the factory.
Some items of this type are mentioned below and against each is shown, the basis
which may be adopted to allocate it to the various sections/cost centres. The list is
not exhaustive and it is also probable that local conditions may warrant the use of
an alternative basis which would give a more equitable allocation of the charges
_____________________________________________________________________________________________
RTC KOLKATA 265

_____________________________________________________________________________________________

_____________________________________________________________________________________________
even 1'or the items included therein. In such cases, the local Accounts Officer
should arrive at a suitable basis in consultation with the management.
---------------------------------------------------------------------------------------------------
Basis Work orders Description
---------------------------------------------------------------------------------------------------
(i) Number of 01/00027/00 Conservancy, road
workmen in lighting and main
each section tenance.
01/00028/00 Estate Revenue & expenditure.
01/000145/00 Miscellaneous indirect services
for other factories/ formations.
(ii) Number of 01/00144/00 Unclaimed Wages

employees lapsed
in each 01/00040/00 Accident prevention section.
01/00130/00 Rates, rents & Taxes,

recovered from occupants of factory
quarters.
(iii) On the 01/00038/00 Departmental
basis of experiments
Direct 01/00039/00 Manufacture, up
Labour in keep of samples etc.
section.
01/00029/00 Factory School.

---------------------------------------------------------------------------------------------------
(iv) In proportion to the Capital value of each type of asset in the shop.
01/00022/00 - Depreciation charges on Capital Assets other than Building and

Machinery.
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RTC KOLKATA 266

_____________________________________________________________________________________________

_____________________________________________________________________________________________
01/00023/00 - Depreciation charges on Buildings.
(v) In proportion to the Capital value of Buildings in each shop.
01/00018/00 - Maintenance of Buildings, Roads etc.
(vi) On the basis of percentages to be fixed by Management and

Accounts Office.
---------------------------------------------------------------------------------------------------
Work Order Description
No.
---------------------------------------------------------------------------------------------------
01/00006/00 - Idle time beyond control.

01/00026/00 - Labour Welfare Fund.
01/00004/00 - Police, Gate Keepers and Watchmen including Factory
Defence.
01/00005/00 - Civil Defence Measures and Fire Protection.
01/00028/00 - Estate Revenue and Expenditure.
01/00033/00 - Central Administration (Factories).
01/00041/00 - Incidental and Miscellaneous Expenses.
01/00042/00- Stationery, Stock forms, printing and binding.
---------------------------------------------------------------------------------------------------
(vii) On the basis of the salaries of staff in each section
01/00009/00 - Superannuation Charges.
(viii) On the basis of Pay of subscribers in each section.
01/00007/00 - Government Contribution to I.O.D.P. Fund.

01/00008/00 - Government contribution to I.O. F.W.P. Fund.
(ix)(a)01/00001 Clerical and other staff. Pay of

/00- clerks etc. in GM's office to be distributed on the basis of
percentage fixed by Management. Pay of clerks etc. employed
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RTC KOLKATA 267

_____________________________________________________________________________________________

_____________________________________________________________________________________________
in shop to the shop concerned others to be distributed on the
basis of `Direct' Labour.
(b) 01/00002/00- Peons, orderlies and messengers.

01/00003/00- As indicated above, Gazetted Officers and NGOs--To be
allocated' to the section in which the personnel are employed
(x) Percentage to be fixed by Accounts Officer,

01/00034/00- Central Administration (Account)
01/00035/00- Factory Accounts Office.
---------------------------------------------------------------------------------------------------
583. After the posting of the fixed charges section/cost Centre wise, a step-ladder
will be prepared for allocating the charges of services sections- to production
sections. The percentages or factors of allocation to each productive shop will be
fixed, in consultation with the Management of the factory and should represent
fairly the relations between the value of the service rendered by service section
and production activities of the factory.
584. The method of allocating Service Section charges to Production Sections is

called `Step Ladder' method because the sheet on which it is worked out resembles
the steps of a ladder when it is finished. The distribution is done in the same
manner as for variable charges.
585. The chargeable fixed charges estimated for each production shop plus
the share of service and non-production sections will form the basis for fixing
leviable percentages.
586. The percentage which the chargeable fixed charges bear to the Direct
Labour Charges will be determined separately for each production, semi
productive sections for the year as a whole,
587. The above exercise should be initiated sufficiently in advance of the

commencement of the financial year so that the leviable fixed charges are
available by the beginning of the new financial year. These percentages should
ordinarily be operated for the whole year.
Ascertainment of the actual fixed charges
588. The details are collected from the `Sectional Fixed charges statement which
is prepared by the E.D.P. Centres, soon after the preparation of labour, material
_____________________________________________________________________________________________
RTC KOLKATA 268

_____________________________________________________________________________________________

_____________________________________________________________________________________________
and transfer voucher abstracts, sectional variable charges statements and
component abstracts.
589. Sorting of expenditure booked to `01' series of work orders for the current
month (excepting overhead charges) are sorted by class of cost (only one column
which designates the Labour, material and other charges), the main number of the
work order and then the sub-numbers of the work order which denote the section
for which the expenditure is incurred. The cards are tabulated in the following
form per each shop separately as sorted out.
Sectional Fixed Charges Statement..............

Factory........................................
Month..........................
---------------------------------------------------------------------------------------------------
Section Work Class Opening Current Closing
Order of Balance Expen- Balance
Cost diture
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
The final total for all the shops is taken on a plus adder at the end of the
statement for the last shop which is agreed with the total for `01' series of work
orders less the amount of overhead charges. One copy is sent to the Accounts
Officer concerned. Quarterly statement of actual fixed charges section wise is
worked out.
590. The difference between the chargeable fixed charges and the actual levied
amount should be shown-as under/over absorbed fixed charges provided the same
does not exceed 5% of the charge able amount. If the exceeds 5%, the difference
will be charged to production by relevying the difference over all the work orders
in proportion to the value of direct labour.
591. The War Insurance Charges assessed at the beginning of the year need not
be reviewed at the end of the year.
_____________________________________________________________________________________________
RTC KOLKATA 269

_____________________________________________________________________________________________

_____________________________________________________________________________________________
592. If the shop/sections working are taken as one 8 hours shift, there will be no
surplus capacity in the factory when all the sections are working over time. Hence
there may be no War Insurance Charges.
593. Registers, Reports and Returns
List of registers to be maintained together with their fly leaf instructions and
reports and returns to be rendered are given in Annexure 'D" and È', respectively
to Chapter IX.
594 to 600. BLANK.
PROFORMA-A
Factory FORMAT
Statement of gas I.A.F.O.-2469 Hydraulic
(Revised) Electric
Power Cost
Steam and distribution
HP & L P Air
Fixed Charges.................... per unit
---------------------------------------------------------------------------------------------------
Nature of Expenditure Detail Total Qty. Code Light Power Total Cost of
Cost Rs. per No. of Energy
unit section consumed
generated
------------------------------------------------------------------------------------------------------------------------------
A-Works Cost Material Material
Computed Computed
1. Fuel Tons at
............per ton
(i) Coal
(ii) Oil
Less proceeds
of sale of ashes
----------------------
Total Fuel
2. Water
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RTC KOLKATA 270

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_____________________________________________________________________________________________
(When supply is paid for)
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THE END
Mchm032707
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RTC KOLKATA 271

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OFFICE MANUAL PART-VI (Volume-I)

ORGANISATION OF ORDNANCE FACTORY BOARD AND ALLIED

OFFICE MANUAL PART-VI (Volume-I)

1. The Management of the Ordnance Factories is vested in the Ordnance

2. Management of Ordnance Equipment Factory, Kanpur, Ordnance Parachute

3. The Head of the Ordnance Factory is the Manager. In respect of all

OFFICE MANUAL PART-VI (Volume-I)

4. The Accounts Officer is responsible for making payments, maintaining

5. The duties entrusted to the Accounts Officers are:-

(i) Payment of all claims of Industrial employees.

OFFICE MANUAL PART-VI (Volume-I)

7. The organisation charts of the Chief Controller of Accounts (Fys) and

8. Member/Finance controls the accounting, financial and audit functions of

(a) PR Section deals with Cost control and Cost ascertainment.

OFFICE MANUAL PART-VI (Volume-I)

Works Inspection: - This is the inspection carried out by factory or service

(i) For Army Stores- Director of Technical Development.

OFFICE MANUAL PART-VI (Volume-I)

Chairman, O.F. Board

OFFICE MANUAL PART-VI (Volume-I)

C of A(Fys), A.Os A.Os A.Os A.Os A.Os

OFFICE MANUAL PART-VI (Volume-I)

A.Os A.Os . A.O. A.O. A.Os

OFFICE MANUAL PART-VI (Volume-I)

C.O.F. (I) C.O.F.(II)

J.O.F.(I) J.C.F. (II)

A.F.A.(II) A.F.A. (II)

Finance/Budget Civil Trade Export Pricing Finance P.A.C.

OFFICE MANUAL PART-VI (Volume-I)

Head of Office: C of A (Fys)/Jt. C of A.(Fys)/D.C.A. (Fys)/Accounts Officer

3. Costing Section deals with maintenance of Cost Cards, Allocation of

4. General/Administration Section deals with the administration of office and

OFFICE MANUAL PART-VI (Volume-I)

OFFICE MANUAL PART-VI (Volume-I)

BASIC CONCEPTS INCLUDING EVOLUTION OF COST ACCOUNTING

Basic concept of Cost Accounting 17

Development in "Costing" in the Professional Field 19

Cost Accounting Technique 26

Reports to Head Quarters 30

OFFICE MANUAL PART-VI (Volume-I)

BASIC CONCEPTS INCLUDING EVOLUTION OF COST ACCOUNTING

17. Cost Accounting is a tool which allows cost to be trimmed by reducing to a

(i) The ascertainment of the cost of each product r manufactured.

OFFICE MANUAL PART-VI (Volume-I)

OFFICE MANUAL PART-VI (Volume-I)

(i) the evolution of "Cost and Production Management" in Ordnance Factories

Developments in "Costing" in the "Professional Fields"

(i) Making or buying a product.

OFFICE MANUAL PART-VI (Volume-I)

Constitute Prime Cost

Prime Cost+Indirect Expenses

Works Cost +Indirect Expenses

Cost of Production plus selling

Cost of Sales plus Profit =Selling Price;

Uniform costing technique is employed to facilitate inter-departmental cost

24. To appreciate the cost accounting procedure in the Ordnance Factories

OFFICE MANUAL PART-VI (Volume-I)