MM Draft Store Procedure 1

STORE PROCEDURE FOR ORDNANCE FACTORIES
SECTION –I GENERAL
Organization of the Factory

1. Each Factory is divided into a number of departments (Sections)
representing:
(i) Production Departments (Sections or Shops)
(ii) Service Departments and
(iii) Administrative Departments.
Each production section is engaged in producing one or more similar

products requiring the use of similar production facilities (machines etc.). The
service departments are those connected with the generation and distribution
of electric power, steam and Water services, stores (receipt group, stock group
and issue group) and maintenance of plant machinery and buildings. The
administrative departments are those connected with the general
administration of the factory, planning labour bureau and labour welfare etc.
Planning for the Manufacture Programme

2. The three services (Army, Navy and Air Force) & MHA place their demand
on DGOF (OFB) for supply of various factory-manufactured stores. Based on
these demands OFB plans production programme for concerned Factories and
issues Extracts (production order) on each Factory. Based on the Extracts
received from OFB, each Factory manufacturing the main product plans its
production programme and initiates provisioning action for procurement of
materials either from trade or from sister Factories. The consignor Factory also
places IFD on feeder Factories for supply of components, castings, forgings etc.
These IFDs constitute authority for the feeder Factories to make provisions of
material for planning and production of components.
Thus, the manufacturing programme in each Factory is determined by (a)
the Extracts placed by the DGOF on the Factory and (b) Inter Factory Demands
from other Factories.
The Planning Department of the Factory releases Warrants (Production
Orders) in batches to the Shop (Sections) to undertake the manufacture
according to yearly production plan. The labour authorization is made through
Manufacturing Warrant and the material authorization is made through Material
Warrant.
______________________________________________________________________________________________________________________
OFB-KOLKATA Version 1.0 2
Material Control Procedure Covers
1. (i) Provisioning, purchasing and receipts of stores.

(ii) Storage and issue.
(iii) Usage.
(iv) Physical verification.
(v) Inventory Control.
(vi) Disposal of Scrap.
(vii) Proper accounting of the material.
2. (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.
(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 Junior Works Manager/NT(Store), Incharge Stock, erstwhile Store

Holder (Stock) issue materials on receipt of requisitions (Demand Notes)
after verifying the quantity etc. provided in the Warrants.
(d) The physical verification of stock is carried out continuously

throughout the year by Stock verifiers directly responsible to HOD of the
Unit.
(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

1. (i) Materials on "Stores:" charge.
(ii) Materials on "Production" charge.
(iii) Stock pile items.
(iv) Inventory items.
2. Material on "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, electricity and water for

manufacturing purposes. .
3. 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
factories, or recovered from the break-up of unserviceable articles borne
either on the factory stock or deposit stock
(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,
4. These items are accounted for in the Priced Store Ledger maintained by
the Accounts Officers and the Bin Cards maintained by the Junior Works
Manager of Store Stock.
5. Materials falling under "Production'' are those which are manufactured in the
factories for issues to formation like arsenals, depots, other factories, private
bodies and firms etc. or which are utilized for further assembles etc. without
being taken on Store Ledger charge.
6. 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.
7. Inventory Stores are items of expensive and quasi-permanent nature
such as Office Furniture, miscellaneous equipment, 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 HOS 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 HOS. 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 and any loss of
inventory stores dealt with as in the case of regular stock items.
______________________________________________________________________________________________________________________
8. Officers not below the rank of Junior Works Manager are authorised to deal
with "Receipts" (from outside sources) and "Issues of Stores" whether to
"Shops" or "Outside the Factory". It should be ensured that the same individual
is not authorised to be deal with "Receipts" and "Issues" of Stores.
Use of Numerical Code Numbers

For convenience in the preparation of various accounting documents and
to facilitate mechanical accounting on Electronic Data Processing Machines a
system of numerical codes is adopted in the cost accounting system, as
explained below.
(i) Numbering of Ledger Folio for Stores
A code number consisting of 10-digit code indicates each material
held on stock charge. This Code number is based on DGOF Codification
Manual which has been evolved to replace Old Vocab System. On all the
accounting documents for materials these code numbers are quoted for
easy processing of various information pertaining to the material.
Where finalization of nomenclature, identification, specification etc
is immediately not possible, a Code number under 99 series may be
allotted as a temporary measure. This code will finally be reviewed half
yearly by the MCO of the Factory and on allotment of regular code the
information is updated on system as well as all concerned section. In case
Factory is unable to allot codification Number then the same may be
forwarded to MM Division of OFB.
This codification of material is done to help in

A. Centralized material planning
B. Rationalize and Standardization of various materials
C. Effective communication between factories while circulating Mutual Aid
Scheme List
D. The Ten Digit Code structure is as under:
XX XXX XX XXX
Major Code Minor Code Shape Size
a) Major Code (2 Digits)

All the raw materials are covered under Major Code within
the numbers from 01 to 39, Tools from 40 to 59 and components
from 60 to 79. In all the allotted numbers, normally few numbers
______________________________________________________________________________________________________________________
have been left blank / unused to accommodate future item and to

provide flexibility to deal with later plans. Some of the few Major
Codes are
Code Description / Class of Material
01 - Unclassified, free cutting, deep drawing, Carbon
steels, Spring Steels
02 - Tool Steel(Carbon), High Speed Steel,
Manganese, Molybdenum Steel
03 – Nickle Steel, Nickle Chromium Stainless Steel,
Heat Resisting Steel, Nickle-Chromium
Molybdenum Steel, Chromium Molybdenum Steel
04 - Case Hardening Steel, Case Hardening Alloy
Steel, Cast iron Steel, Ferro Alloys, Ferrous Scrap
05 - Blank
06 - Light (Aluminium, Magnesium) Alloy
07 - Brass Items
08 - Copper Items
09 - Blanks
10 - Chemicals, Paints, Fuels,
Laboratory Equipment etc.
13 - Abrasives, Grinding Wheels, Oil Stones etc.
14 - Paper, Boards, Container
15 - Electrical Items
17 - Iron Mongery, Electrodes,
Welding Rods etc.
18 - Pipe & Pipe Fittings
19 - Building Materials, Refractories,
Crucibles, heat insulators etc.
20 - Mechanical Spares, Bearings, Belts,
Chain and ropes
Code Description / Class of Material
21 - Textile, Harness, Saddlery,
Leather, Rubber Items etc.
22 - Timber Items
______________________________________________________________________________________________________________________
23 - Fire Fighting Equipments

24 - Miscellaneous Items
25 - Electronic Items
40 - Hand Tools
41 - Machine Tools
42 - Specific Type of Tools
43 - Gauges & Measuring Instruments
60-69 - Ammunition & its Components
70-79 - Weapons & its Components
b) Minor Code (3 Digits)

The minor classification is based on the basis of their
chemical composition. A three-digit number represents the new
IOF Schedule number which covers the present range of
manufacture of steels and has already replaced the MSF
Schedules. Steels to other specification like ISS, BSS, DIN will be
allotted a sub-number if the specification differs significantly from
the corresponding steel in the new IOF Schedule.
Ample provision is made for addition of new specifications as
a result of standardization, if certain specifications are dropped,
then the material under this code number is either transferred to
the nearest equivalent specification or allowed to waste out. Such
a system, it is felt, would be suitable to cater to the needs of the
Ordnance Factories at present. A similar system is followed for
non-ferrous alloys.
c) Shape (2 Digits)
The sixth and seventh digits will be a number which will
indicate among other things the shape, the type of manufacture
as in the case of forgings / castings when the item has no
standard shape and will also be used to sub-divide the standard
shapes to take into account different metallurgical conditions or
surface treatment. With this system, it will be possible to
differentiate between the forgings / castings and the rest of the
items.
______________________________________________________________________________________________________________________
d) Size (3 Digits)
An attempt has been made to indicate the size in the last
three digits of the code. It will, however, not be possible to
indicate sizes in all cases as for example, in channels or angles.
The principles governing the allotment of numbers are given in
Appendix 'B' of DGOF Codification Manual. It will be seen that
while for rounds and squares, the size can be indicated in these
three digits of the code; for other shapes, the item code No., is
given serially after listing the item according to size.
Example :
(6th , 7th Digit) (8th, 9th, 10th Digit)
1. Round 1" 00 025
2. Round 3/4" 01 019
(annealed)
Chemical items including paints example (Major Code-10) :
The code structure for chemicals with minor code “1” as follows :
XX X XX XX XXX
Major Code Minor Code Classification Specification Color Code
e.g. : Paint Glossy Synthetic Enamel finishing white is represented by code :
10 1 27 21 002
Chemicals Paints Classification on Specification Color Code
Synthetic Enamel Glossy White
The code structure for chemicals with minor code '3' is as follows :
XX X XX XXX X X
Major Minor Alpha Serial Minor Specification
Code Code Block Variation
e.g. : Oil linseed boiled to specification IND/SL 2620 is represented by
10 3 58 270 0 4
Chemical Oil Alpha Serial No. Minor Variation Specification
Block NIL in this case “IND/SL 2620”
______________________________________________________________________________________________________________________
ELECTRICAL STORES INCLUDING CABLES &WIRES

(Major code—15)
The codification structure is different for the different electrical items like bulbs,
wires , holders, fittings cables etc. The code structure for cables is as under :-
XX X X XX X XXX
Major Main Voltage Insulation No. of Core in Area of
Code Group material Cores Cables each core
e.g. : Cable, PVC insulated and unsheathed, copper conductor, voltage 1100 V,
5 Core with area of each core015 mm is represented by
15 3 3 01 5 015
Electrical Cable Belonging to Copper 1 No. of Area of each core
Item Voltage Group PVC core = 5 = 015 sq.mm
& unsheathed insulated
MECHANICAL SPARES
(MAJOR CODE—20)
This covers all mechanical spares like ball and roller bearings, beltings, chains,
ropes, steel wires etc.
The structure for belts, chains, ropes etc. is as under
XX XX X XXXXX
Major Code Sub Code Description Whether Covers all types, sizes
belt, Chain, rope etc. and other details
e.g.: GRIPIT Nylon Endless Flat Belt, size

1425 IC X 30 mm width, 1.5 mm thickness is represented by
20 52 1 0 71 78
Mechanical Bolt, Chain, Belt Endless Nylon Serial No.
Spares rope etc.
______________________________________________________________________________________________________________________
(ii) Numbering of Work Orders

Each item of out turn work done in the Factory is given a
distinctive Work Order number consisting of 9 digits. The code is divided
into 3 parts. The first two digits are used to indicate classification of
work by Indenters. Thus, if work is being performed for the Army Code,
90 is used in the first two digits. If the work is for another Factory, Code
70 is used. The next 5 digits stand for the description of the item.
The last two digits are used to indicate sections. These outturn Work
Orders are allotted by each Factory separately and compiled in a book
called "Syllabus of Work Order Part-II".
The Work Orders (01 and 02 series) relating to Indirect
Expenditure also consists of 9 digits. These Work Orders which are
common to all Factories have been mentioned in the Syllabus of Work
Orders. The first two digits denote the work order serial viz.'01' for
'Fixed' and '02' for `Variable' overhead. The next five digits denote the
main Work Order. `0' in the third digit of the main work order denotes
`debit' and '1' for ‘credit’. The first digit of the main number which
is`0'(zero) may be employed in consultation with Planning Section,
Works Office Section, Local Accounts Office and PCA (Fys), Main Office,
Kolkata for conveying any meaningful information for control purpose.
The last two digits of the Work Orders will be used to indicate the
section for which the expenditure is incurred.
The Work Orders relating to other item of work / series, which are
also common to all Factories consist of 9 digits and have been compiled
in the book called "Syllabus of Work Order Part I ". e. g.
Classification of Work Series of Work Orders

Process Materials 03
Capital Services 04
Repair & Conversion 05
Misc. Series (Cost of Packing etc.) 06
Conversion of Timber 08
______________________________________________________________________________________________________________________
Components manufactured for further utilization in the same factory
1. In some factories materials manufactured for stock are retained on

production charge on Priced Production Ledger(PPL), Work Order Serial
“41” will be operated for manufacture of such components and
component stock voucher will be prepared for posting into PPL.
2. These components will be drawn for utilization 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.
3. These Demand Notes are accounted 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.
4. Accounts Office maintains the Priced Production Ledger. These items are
subject to stock verification in the normal manner. Bin Card balances for
these items are reconciled with ledger balances. The reconciled balance is
noted by Accounts Office in the relevant Stock Taking Sheets.
5. This procedure will not apply to :

(i) articles manufactured for stock for utilization against indirect
work Orders
(ii) manufacture of Plant and Tools.
Working of Store
1. The working of Store Section is divided under three main categories viz.
(a) Stores Receipt Group,
(b) Store Stock Group and
(c) Store Issue Group.
In relation to Accounting, the working falling under the above three

categories is further classified as Regular and Nominal. For the purpose of
Accounting, Regular Materials are analyzed into
(a) Direct Material,
(b) Indirect Material
(c) Stock Pile
Indirect Materials into Nominal and Omnibus material (One time only).
Indirect Material consisting of Nominal Items and Omnibus Items, together
booked into the overhead expenditure, while the Direct Material incurred in the
manufacture of each product is booked into Direct Material Cost of finished
stores.
______________________________________________________________________________________________________________________
Section II - Accounting for Materials
Working Stocks
Working Stock of Stores in Ordnance Factories is broadly categorized into
two groups viz. (i) Direct Material i.e., Materials / Components Packages etc.
used in the Products manufactured in Ordnance Factories and (ii) Indirect
Material i.e. General-Purpose Stores and Maintenance Stores.
Direct and Indirect Materials

5. For, the purpose of ascertaining the cost of various articles produced in
the Factory, materials utilized in production are classified as direct materials
and indirect materials. Material which are part of material estimate forms part
of the finished product is defined as direct material. Materials drawn for general
shop use; maintenance and repair services etc. are treated as indirect material
and charged as part of the overhead charges.
Direct Materials of small value, which are not critical from the production
point of view and the total value of which does not exceed the maximum of half
percent of the value of total are treated as Indirect Material. Items of indirect
material which are only incidental to production and materials required for
common operations like sealing, varnishing binding, soldering, glancing are also
treated as 'Indirect Materials'.
Stores Accounting Documents

All the transactions of stores are required to take place through Stores
Accounting Documents only to monitor control of them. Stores item are
categorized as under:
a) Regular
b) Nominal
1. All the transactions of receipt and issue which are not made
through regular "Store Accounting Documents " are called nominal
transactions documents.
2. The transactions of above nature are not routed through the store
ledger cum provision sheet and price ledger maintained by
accounts. Hence this leads to distortion in the ground condition vis-
a-vis the position shown on ledgers.
The nominal transactions are settled by preparing regular vouchers

and cancelling the nominal vouchers.
______________________________________________________________________________________________________________________
Primary Store Accounting Documents

The following are called primary Store Accounting Documents:
Documents Forms
Demand Note IAFO-1926
Return Note IAFO-1927
Examination Order IAF(DG) I-7
Material Inward Receipt, Inspection Report, Ledger IAF(Fac) 151
Posting Voucher (MI Slip)
Bin Card OFK-1
Receipt, Issue and Expense Voucher IAFZ-2096
Discrepancy Report IAFZ 3000
Discrepancy (Deficiency Voucher and Loss IAF(Fac) 144
Statement Store Ledger cum provision sheet
______________________________________________________________________________________________________________________
SECTION – MISCELLANEOUS
SUB SECTION – I Stock Pile Items
a) Definition – Stockpile is an emergency reserve of imported and

difficult to procure indigenous stores clearly identified as such, held for
the purpose of enhancing the responsiveness of production units to
unexpected demand surges and stock out situations.
b) Sanctioning Authority – The final authority for sanctioning Stock-

pile of material to be built up in any Factory rests with the Ministry of
Defence, New Delhi. Once the quantity has been approved, any
addition and alteration thereto will also require Government approval.
c) Conditions – Any material to be held in Stock-pile should fulfil both

the following conditions, viz.
(i) be non-perishable,
(ii) be of imported origin not normally obtainable in India; or
indigenous, but difficult to obtain quickly in India.
(Authority : D.G.O.F. No. 2000/VII/OF11-B(C), dt. 2-2-52.)
d) Basis of calculation – The Stock-pile will be calculated on the basis

of instructions issued by O.F. Board from time to time.
Once an item is identified for stockpiling and its quantity

determined, the competent authority shall be approached for
sanctioning the stockpile creation. Maximum permissible Stockpile for
imported and difficult-to-procure indigenous stores is for 6 months and
3 months respectively, unless otherwise higher levels have been
specifically authorised. The monthly requirement of stockpile items
shall be determined with reference to the maximum achievable
production capacity in the factory for the related end-product as
evidenced by past performance.
e) Build up –
(i) Normally Stock-pile will be made up of purchase from trade, for
which funds are allotted each year.
[Authority : D.G.O.F. No. 3154/Vol.II/O.F.11-B/BSP, dt 28-12-51.]
(ii) Stock-pile will also be built up by transfer of stores form

surpluses in normal working stock, subject to the following
conditions: -
______________________________________________________________________________________________________________________
(1) No item of stores below Rs. 5,000.00 in value will be

considered for the purpose.
[D.G.O.F. NO. 154/III/SP/S, dt. 21-8-52.]
(2) Each, Factory should first offer its excess holdings over 20
months’ requirements of all items of stores to all other
Factories through Mutual Aid Scheme (MAS) and ascertain
whether any other Factory has any requirements of such
stores; if there are any, these should be met through I.F.Ds.
The quantity, if any, still held excess after meeting other
Factories normal requirements, may be considered for
transfer to Stock-pile, with the prior approval of O.F. Board
(3) Non-ferrous Virgin metals and Ferro-alloys are outside the

scope of the instructions contained in (ii) above.
(4) Normally transfer from Working Stock to Stock-pile should

not be less than 6 months’ requirements for imported stores
and 3 months for difficult to obtain indigenous stores. Only in
special eases should items falling short of these limits be
considered for Stock-pile holdings.
[Authority : D.G.O.F. Letter NO. 154/III/SP/S, dated 30-6-52 and

sub-para. (iii) of D.G.O.F. letter No. 3603/MA/7/SP/C., dated 14-7-55.]
(5) While proposing transfer of materials from Working Stock-

pile the permissible limit will be in accordance with the
instructions regarding the basis of calculation (see para.
4535).
[Authority : D.G.O.F. NO. 3154/VOL.II/O.F.11-B/BSP., dt. 4-2-52.]
f) Provision of Funds – Funds for Stock-pile purchase will be provided

under “Major Head 86 – Defence Capital Outlay”.
[Authority : D.G.O.F. NO. 3154/Acctg/O.F. 11-B(C) DT. 13-8-51]
g) Condition of Stocks –
i) In order to ensure that the Stock-pile items do not deteriorate due
to long storage, it will be essential that the holding Factories should
adequately turn over such items from time to time.
[Authority : D.G.O.F. NO. 2000/VII/O.F.-(C), DT. 2-2-52.]
ii) Senior General Manager / General Manager / HOD of the Unit /

Factories have the authority of ordering turn-over of any item at any
time held in Stock-pile.
[Authority : D.G.O.F. NO. 3154/Actg./SP(C), DT. 26-2-54.]
h)
______________________________________________________________________________________________________________________
iii) A half-yearly certificate to the effect that all items held in Stock-pile
are in good condition and have been subject to care and preservation
treatment, as necessary will be submitted to O.F. Board, MM Division,
Kolkata.
iv) Wherever any item is transferred from normal stock to Stock-pile, a

certificate to the effect that the quantity transferred from normal stock
is in good condition will also be submitted to O.F. Board, MM Division.
i) Process of Accounting –
a) A separate store ledger known for as Capital Store Ledger will be
maintained by the Local Accounts Officers, to account for all Stock-pile
items. For this purpose, a separate series of vouchers under ‘R’ Series
will be operated upon every transaction.
b) Transfer of material between Stock-pile and Working Stock will be

made only on transfer vouchers.
c) As and when Stock-pile materials are required to be used in

production, they will be first transferred to stock ledger and then
issued on Demand Notes.
d) The turn-over of Stock-pile items for the purpose explained above

will also be made on transfer vouchers.
[Authority : D.G.O.F. NO. 3154/Acctg./O.F.11 –B(C), DT. 13-8-51.]
[DGOF NO. 508/SP/S, dt. 30-12-52.]
e) The balances of the items in the Capital Store Ledger will be shown
in the Accounts as capital “Stock-pile Stores”. The question of charging
depreciation to this capital will not arise.
[Authority : C.D.A.(Fys.) No. S/120. DT. 29-8-53.]
f) The following procedure should be adopted for compilation of Stock

Pile transactions.
i) Code Head for Creation of Stock Pile Item : 01/925/31
ii) Code Head for withdrawal of Stock Pile Item : 01/925/32
iii) Code Head for Transfer from Stock Pile to Working stock :
01/806/02
g). Although these items are purchased from Capital Head, they differ
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 Capital 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 turnover of reserve items,
if and when ordered from time to time by the OF Board, MM
Division 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 regularized
as in the case of regular capital items,
(iv) Separate 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.
j) Regularisation of discrepancies –
a) Discrepancies in Stock-pile items will be treated in the same way as
for capital items.
[Authority : C.D.A. (Fys.) No. S/120(SP), DT. 18-10-51.]
b) The value of the losses, if any, will be booked to W.O. 01/00060/00
and kept out of production.
[Authority : C.D.A.(Fys.) No. PR/06-VII, dt. 6-4-53.]
k) Store-keeping charges – A percentage which the value of Stock-pile

items on hand bears to the total of value of stock on hand (including
Stock-pile items) should be worked out. By applying this percentage to
______________________________________________________________________________________________________________________
the total store keeping charges incurred, the expenditure in respect of

stock-pile items will be arrived at. The amount so arrived at, will be
book to W.O. 02/00145/00 and kept out of production accounts.
[Authority : C.D.A. (Fys.) no. FR/67/III, dt. 22-1-54.]
l) Transfer from Stock pile to normal stock or vice versa–

a) No quantity of any item held in reserve (Stock pile) should be
transferred to normal stock, even on replacement basis, without the
prior approval from O.F. Board, Kolkata, MM Division
[Authority : D.G.O.F. NO. 3154/ACCTG./O.F.11-B(C), DT. 13-8-51.]
b) If, however, working stock becomes depleted and fresh supplies are
not forthcoming, thereby hampering production, stock-pile materials to
the extent required may be taken into use under intimation to O.F.
Board, Kolkata, MM Division for regularization by ex-post-facto
sanction.
[Authority : D.G.O.F. No. 3154/Vol.II/O.F. 11-B/BSP DT. 4-2-52.]
c) Whenever O.F. Board, Kolkata, MM Division is required to accord

sanction for permanent transfer of any materials from stock-pile to
Normal Stock or vice versa, such requests should be accompanied by a
certificate stating whether the said transfer involves any financial
adjustment; if so, the book-value of the quantity proposed to be
transferred should be indicated.
[Authority : D.G.O.F. No. 509/SP/S, Dt. 17-10-57.]
m) Replenishment of stock pile, transferred to working stock on

replenishment basis – A register will be maintained containing the
following particulars and should be made available to the Accounts
Officer for audit, in the same way as the Loan Register: - 1) Stock L.F.
NO., ii) nomenclature of the store, iii) Accounting unit, iv) Quantity
transferred from stock–pile v) Authority under which the transfer has
been made, vi) Number and date of the transfer voucher, vii) Expected
date when the Replenishment will be made, viii) Number and date of
the T.V. returning the materials to stock pile, ix) Remarks.
[Authority : D.G.O.F. NO. 501/SP/S., DT. 6-6-55.]
n) Review of Stock Pile Item : Each item of Stockpile shall be reviewed

annually or as soon as it comes to notice that:
(i) Indigenous production of imported items has developed or
manufacturing capacity expanded adequately.
(ii) Supply position of indigenous items has improved.
(iii) Production of the relevant store has been discontinued
(iv) Obsolescence/ phasing out/ reduction in demand of end-
products
(v) Change in specifications/ substitution.
______________________________________________________________________________________________________________________
o) Centralised Database of Stock Pile Items : A database of stockpile

items shall be maintained by each of the holding Factories and a
centralised database of all Stockpile items shall be maintained at
Ordnance Factory Board MM Division. MM Division, in co-ordination
with the concerned factories, shall carry out continuous review of
Stockpile items.
______________________________________________________________________________________________________________________
Sub Section – II
LOAN TRANSACTIONS BETWEEN SISTER FACTORIES
1. MCO section will raise an Authority to issue material in PPC System

against anticipation of IFD. To raise such authority an approval from the
Controlling officer is to be obtained.
2. Authority letter (suitable format is to be design) shall cover Consignee

name, Item Code, Item Nomenclature, Quantity to be issued, Consignee
representative name & Truck No if available etc.
3. On printing Authority letter copies to be forwarded to Store Issue and

Store Stock for early issue.
4. Issue office will issue the material based on Authority letter.
5. Issue office shall maintain an account of stores which were issued on loan
in anticipation of IFD.
6. Security office also carries out counter check on the above transaction
with the help of "outstanding" gate passes pending for regularization.
7. The concerned consignees are periodically approached by MCO section to

forward IFD/Indent for regularisation.
8. On receiving of IFD it has to be updated in system by MCO section and an

intimation to be forwarded to Store & Accounts Office for regularization
______________________________________________________________________________________________________________________
Sub Section – III
LOSS AND ITS REGULARISATION
The loss of the stores may take place in the following manners:
a. Transit loss
b. Loss in storage- this may be due to following reasons
i) Mishandling, improper storage etc. Loss statement is
required.
ii) Deterioration within shelf life. Loss statement is required.
iii) Deterioration after expiry of shelf life. No loss statement is
required.
iv) Accidents, fire, floods etc.
c. Loss due to theft, fraud or neglect
LOSS
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 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 discrepancy, the Discrepancy Voucher should be entered in the Objection
Register and watched. If on final settlement a loss settlement is necessary, the
loss statement portion IAF (Fac) 144 will be completed and written off or
sanctioned for the net loss.
All cases of losses shall be reported and investigated in accordance with

the procedure laid down in the administrative regulations and instructions of
the respective services and the results of investigation shall be communicated
to the competent financial authority through the usual channels for further
action as laid down in clauses
(a) and
(b) below:
(i)If the investigation shows that the loss is not due to theft, fraud
or gross neglect, it shall be written off by the competent financial
authority after obtaining audit reports from the financial adviser
concerned.
(ii) If it is decided that the loss is due to theft, fraud or gross
neglect, the competent financial authority shall in consultation with
his financial adviser, take action according to the circumstances of
the case, with the object of making recovery of the amount lost to
the extent possible from the guilty persons and also from the
______________________________________________________________________________________________________________________
supervising officers if laxity of supervision has facilitated the theft,

fraud or gross neglect.
The competent financial authority will be determined with reference
to the gross loss. The net value of the loss in a loss statement to be
actually written off by the competent financial authority will be
arrived at after deducting recovery, if any, made from the
Individual(s) concerned whether such recovery Is in the nature of a
penal deduction or otherwise. All losses should be reported to OF
Board, Kolkata, MM Division who will arrange for the assembly of a
Court/Board of Enquiry to investigate the loss.
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 remedial measures suggested are satisfactory.
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 the Register.
Deficiencies and Damages in Transit
The full quantity as vouchered is brought on charge and a discrepancy

voucher in Form IAF (Fac)-144 is to be made out for the quantity less received.
Claim is preferred against Railways for the discrepant item as detailed below:
Cost of stores as per invoice rate/S.O. Rate/AT Rate, etc. plus 5%

Departmental charges plus cost of Special Packing if any plus Freight Charges
as 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.
Loss in Transit in respect of foreign supplies are 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 of actual issue.
______________________________________________________________________________________________________________________
(c) Articles taken on charge in unopened packages as per marking

on the packages, and found deficient by the consignee at the time
of actual issue.
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.
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 on the packages. The receipt vouchers for the stores
will be prepared as per marking on the packages and the vouchers will be
priced by the Accounts Officer for quantities as 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.
However, regularization of all the above mentioned losses is to be watched and
monitored.
The amount of gross loss posted in the ledger will also be 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 01/00007/00 and 01/00030/00 as
the case may be through Allocation Sheets. 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 PSA.
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 the year in which they materialize. The net loss
written off by the Competent Authority will be included in the appropriation
Account for the year in which the sanctions are accorded.
Loss on Sale of Stores
No loss Statement is necessary for the difference between the book value
and sale value of surplus, obsolete and waste stores, if all the procedures for
disposal action have been followed scrupulously.
Losses due to change in Condition of Stores
Sentencing of the serviceable stores as repairable or unserviceable should

be done by the authorized inspector on examination order.
______________________________________________________________________________________________________________________
Serviceable stores sentenced as repairable
The stores should be drawn on Demand Notes at their full ledger value
against work order 01/00043/00 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 01/00043/00. A formal loss statement is, therefore, to be obtained,
The loss statement should, however, be sanctioned by the CFA and

included in the Appropriation Accounts.
Stores on stock charge, found unserviceable
The factory will prepare “D” statement on IAFZ-2096 based on BOE

Report and send them together with the 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 management may be asked to fix a rate, failing which 1/10 of the ledger
rate for stores found unserviceable should be adopted as a last recourse. The
difference between the ledger value and scrap value will be written off on loss
statement as in other cases.
When repairable stores are drawn from stock against work order
01/00043/00 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
Board of Enquiry is necessary for

(a) losses which require the sanction from the competent authority
(b) loss 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.
Holding of Board 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 the 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.
______________________________________________________________________________________________________________________
Regularization of losses- In all the above cases, the procedure followed for
regularization, recovery of losses is shown in the following table given below.
Sl. Category of Loss Method of regularization

No.
1. Transit loss – 1.Prepare discrepancy report
partial and full 2.Recover from railways / transport agency by
preferring claims
3.Recover from contractor if claim disallowed by
transport agency
4.Send discrepancy report to consigner to accept
responsibility of loss
5.Write off the loss, not accepted by transport
agency / consigner by preparing DD Voucher,
Loss statement and CIV
2. Loss in storage, Prepare CIV to regularize. Loss statement not
not due to theft, required.
fraud or neglect
i.e.
(a) leakage,
evaporation
etc,
(b) deterioration
after expiry of
shelf life
(c) force majeure
clause (accident,
fire , flood etc)
3. Loss in storage Recover from the individual found responsible.
due to theft Prepare DD Vr , loss statement and CIV , if loss is
fraud or neglect not recovered.
(a)mishandling,
improper storage
etc.,
(b) deterioration
within shelf life
______________________________________________________________________________________________________________________
Sub Section - IV
Calibration of Measuring Instrument
Ministry of Law and Justice vide Extraordinary The Gazette of India Part-
II, Section-1 published on 14th January 2010 for general information on The
Legal Metrology Act 2009.
Chapter II, Act 4 specify, every unit of weight or measure shall be in
accordance with the Metric System based on the International system of units.
Chapter IV, Act 24 specifies “Every person having any weight or measure
in his possession, custody or control in circumstances indicating that such
weight or measure is being, or is intended or is likely to be, used by him in any
transaction or for protection, shall, before putting such weight or measure into
such use, have such weight or measure verified at such place and during such
hours as the Controller may, by general or special order, specify in this behalf,
on payment of such fees as may be prescribed.
Further, the verification is to be done through the Government approved
Test Centre notified by the Central Government or the State Government on
payment of applicable fee as prescribed. The Test Centre shall engage persons
and collect fee on terms and conditions for the verification of weights and
measures as prescribed.
Chapter V, Act 25 specify the use of non-standard weight or measures
shall be punished with fine which may extend to twenty-five thousand rupees
and for the second or subsequent offence, with imprisonment for a term which
may extend to six months and also with fine.
Chapter V, Act 26 specify the alteration of weight and measure with a
view to deceiving any person, shall be punished with fine which may extend to
fifty thousand rupees and for the second and subsequent offence with
imprisonment for a term which shall not be less than six months but which may
extend to one year or with fine or with both.
All the measuring devices for receiving or issuing of stores from the
factory are to be calibrated within the due date. Verification of measuring
devices are to be done through the Government approved Test Centre notified
by the Central Government or the State Government.
______________________________________________________________________________________________________________________
Sub Section – V
Transportation
The price of OFB Products for supply to Armed Forces is ex-factory and
the transportation cost is not included in the issue price. Generally,
Transportation cost for supply to Armed Forces are being booked to concern
Revenue Head of OFB i.e. 808/05 and 808/06 for transportation by rail and
road respectively. Compilation of these transportation charges to OFB Budget
head adds to the overhead expenditure of OFB. Transportation charges for
supply of OFB products to Armed Forces to be debited to the respective
transportation code head of services as given below :
Indenter Transportation by RAIL against Transportation by Road

MC Notes etc.
ARMY 251/02 255/02
NAVY 626/18 626/19 or 626/26
AIR FORCE 731/02 735/02
R&D 855/02 855/02
DGQA 383/02 383/02
Rastriya Rifles 535/02 535/02
NCC 542/02 542/02
Authority : 1) OFB L/No.040/P&P/Synergy Conf dated 30-06-2014

2) OFB L/No. 001/Policy/F/B/Vol-VIII dated24/10/2016
______________________________________________________________________________________________________________________
Sub Section – VI
Availing and Utilization of Input Tax Credit
It has been decided that Ordnance Factories should avail and utilize the
facilities of Input Tax Credit (ITC) available under GST Rules.
The ITC system are based on self-assessment with provisions for

scrutiny, audit etc. by the Department. Factory management will be responsible
for preparing the Returns and maintaining the records in connection with
availment / utilization of ITC. However, it will be the responsibility of LAO to
provide requisite support to the Management on as and when necessary basis.
Primarily, LAO will be responsible for the following:-
a) ITC is availed on the basis of proper duty paying documents. While

admitting bills for purchases of Stores, Capital Goods and Services from a
registered ‘Dealer’, LAO shall always insist that the claim should be
supported by valid ‘Duty paying documents/Tax invoices’.
b) Availing /utilization of ITC pre-suppose the possibility of a departmental

scrutiny and audit which may be ordered at a later date. Thus, it will be
incumbent on the Factory Management (Store/Tax Group) to preserve the
original copies of ‘Tax Invoices’, in the chronological order. These
documents may be preserved for a period of ten (10) years or till
completion of Audit Cycle by the Taxation Authority.
c) During the preparation of Returns or in a connection with maintenance of

records, LAO will provide details of Tax paid / reimbursed during the
previous month. In all such cases, LAO will provide details list to the
factory management.
______________________________________________________________________________________________________________________
Sub Section – VII
Adoption of Moving Average Rate

for pricing of documents
The following categories of issues are priced at moving average ledger
rates:
(i) All issues to shops on Demand Notes.
(ii) Issues to other factories on ‘S’ series Issue Vouchers.
(iii) Issues on payment to Air Force, Navy, Research and Development

Organization. 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 stores is debitable to work / projects.
(v) Issues to other Branches of Defence Department.
(vi) Issues to Capital
(vii) Losses – D. D. Vouchers.
(viii) Issues on payment from stock in other cases should be priced on

the following basis :-
(i) Moving Average Ledger Rate plus,
(ii) Departmental Charges of 5% plus,
(iii) An additional charge of 5% on the inclusive rate of (i) and (ii).
When adjustment Receipt Vouchers are made out for the difference
between the correct value as per paid vouchers / priced copies of vouchers, etc.
and the value provisionally taken into account, adjustment of the Moving
Average Ledger Rates and adjustment to issues subsequent to receipt vouchers
concerned will be made.
Note : Outstanding Assets/ Liabilities on account of under/ excess pricing of

receipt vouchers which could not be adjusted in the same financial year may be
cleared by operation of capital Outlay as directed vide PCA(Fys) letter no.
S/III/4105/XIX Dated 4/25-9-95.
______________________________________________________________________________________________________________________
The Moving Average 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 Priced Vocabulary of

Ordnance Stores (P. V.O.S.) rates are not available].
In such cases, freight charges are not added as the ledger rate is
inclusive of these charges. Rating, pricing and batching of Demand/Return
Notes and Issue Vouchers is done by the Material Ledger Section.
______________________________________________________________________________________________________________________
Sub Section – VIII
Unorthodox Balances – Review of

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
These balances arise in the ledger as:-

(i) Stores documents are not promptly priced and posted
chronologically as per Bin Page Line Number (BPLN) in the ledgers.
(ii) Moving average Ledger Rates are not worked out after every
receipt transaction.
(iii) adjustment to receipt vouchers have been carried out without
giving counter adjustment to subsequent issues documents
(demand note, return note and Issue vouchers).
(iv) Prompt action is not taken to obtain the wanting receipt
documents.
Note: Carrying out skeleton list check and BPLN check will eliminate
the possibility of Unorthodox balances.
An Unorthodox Balances Register as given below should be maintained

wherein all the 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 a certificate to the effect
furnished to the Stores Section of P C of A (Fys) through the monthly Progress
Report (Proforma B). As the Bin balances is reflected on the reverse of each
document, reconciliation of the quantity should be carried out by referring to
the Bin Cards by Local Accounts Office.
______________________________________________________________________________________________________________________
Sub Section – IX
Reconciliation of Bin Card and Ledger Balances

The reconciliation of Bin card and ledger balance is a continuous exercise
and is to be carried out at the time of posting of each primary store documents
in the PSL with reference to the Bin card balance shown on the reverse of the
primary document. Also, at the time of forwarding monthly PSL to the factory
Management the BPLN for all the item code transacted during the month is to
be furnished to the concerned section of the factory for acceptance of the BPLN
quantity.
On completion of PSA & PSL by LAO, they will forward soft copy of data
pertaining to Item Code, Bin Balance, Unit rate, Total Value and Bin Page Line
No to the Factory Management (ITC Section). ITC Section shall develop suitable
program to upload those data in their system month wise. ITC will develop a
program wherein month wise mismatch records will be generated. Store section
and LAO will work each month to reconcile those cases as per procedure.
______________________________________________________________________________________________________________________
Sub Section – X
Accounting of Containers and Packages

All containers and packages either received free or on payment will be
accounted for separately in the same MIS for main stores.
Containers and packages for which value has been charged separately by
the supplier will be priced and taken on ledger charge.
Containers / Packages which are received free i.e. are not charged
separately, will not however be priced separately.
Containers received free but expected to be of some value will be
sentenced by Works Inspection Section as “Miscellaneous Receipts”.
These should be priced at Ledger Rates / Last auction rate / Assessed
Rates as applicable. If they are of insignificant value which are not charged
separately i.e. supplied free along with the stores e.g. small tin 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.
Accounting of special Packing Cases /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 both old and new machines.
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 regularized 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 dispatched
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 of transfer of stores between factories and if any change

in condition takes place in transit, and found on receipt will be regularized as
loss in transit. If the empty packing cases are dispatched first after they have
been made / purchased they shall be vouchered by the consignor factory as
serviceable. If at the consignee factories these are sentenced as non-
repairable/scrap due to the change in condition, the store will be regularized
under a Loss Statement.
Package Accounting
In certain cases, 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 utilization in production. The work should be so 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)
_______________________________________________________________
The Factory Management will also furnish a Certificate to the Accounts

Officer in the Proforma given below indicating the position of receipt of the
consignment and verification of contents.
Statement showing 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 Shortages/Damma- Date of Comrnunication Remarks
Of contents ges detected, if any of shortages/ damages
to M/s
_______________________________________________________________
(6) (7) (8) (9)
_______________________________________________________________
“Certified that the entries shown above have been verified and found correct."
______________________________________________________________________________________________________________________
Sub Section – XI
Store Accounting Procedure

Normal procedure of accounting i.e. preparation of receipt vouchers,
Issue Vouchers. Demand Notes is followed except that the Unit of accounting is
packages.
(1) Packages comprising of one set of subject stores is accounted for

separately and is posted in the Ledger folio for the 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 are drawn by
different manufacturing sections of the Factory. The transfer will be
effected by adjustment vouchers to be accounted for in the Priced store
Accounts as adjustment under “Issues” and “Receipts” (PSA code –80 and
27). The drawl 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 posted 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
indicate 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. The 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 the first folio and then transferred to second folio.
(8) The management maintains two registers in addition.

(i) Package Accounting Register (PAR)
(ii) Broken Seal Register (BSR)
______________________________________________________________________________________________________________________
PAR records details of receipt of all packages. BSR records details of

packages seals of which are broken. Transfer to BSR from PAR is made through
transfer voucher. Reconciliation of total CKD packs with balances of PAR and
BSR will only be verified by audit.
A deficient packages is transferred from PAR to BSR 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 BSR by Nominal Transfer Voucher. There is no
necessity for the section to give another Demand Note as the
original Demand Note is for the all pack including deficient items.
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 will 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 in 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. Vouchers. Recoveries from the carrying companies will be watched
in the normal manner.
(ii) The normal procedures for allocation of Rly. Freight, Customs Duty
etc. will be followed as usual in this case.
______________________________________________________________________________________________________________________
Sub Section – XII
Medical Stores
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 01/00020/00. No priced Store Ledgers or Priced Accounts will
be maintained for these stores by the Accounts Office.
The factories will maintain quantitative ledger for medical stores and this
ledger will be audited to the extent of 33 1/3 per cent with reference to copies
of receipt and issue vouchers received by the Internal Audit Cell 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;
(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.
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 Local Accounts Office.
______________________________________________________________________________________________________________________
Sub Section –XIII
Deposit Stock
Stores which are the property of other branches of the Armed Forces
(DOS, Air Force, and Navy) sent to Ordnance Factories for repair, conversion,
utilization or break up and ultimate disposal are called Deposit Stock. Such
stocks will be stored physically separate from stocks which are the property of
the factory. The factory will maintain an unpriced ledger for them and no
corresponding 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 of local
audit.
Note 1 – Components rendered surplus by cancellation of service demands

may also be placed in Deposit Stock.
Note 2 – Plan size stores as distinct from over size which can be utilized 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

No repair to stores of deposit stock should be carried out until a definite
need for repair becomes known. The actual cost of all repairs is chargeable to
the owner (DOS, 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 and specific concurrence of the owner is not
required. In case where a factory has an urgent need of any item, the transfer
may be carried out and the ex post-facto sanction of the OFB be 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

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.
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 PC of A(Fys) from time to time should be
followed.
______________________________________________________________________________________________________________________
Sub Section –XIV
ADJUSTMENT VOUCHER
The Adjustment Voucher are raised by the Local Accounts Office to
correct the value of provisionally priced Receipt Vouchers, to correct the wrong
codification of RVs in respect of PSA Code and the wrong quantity mentioned
for a particular Receipt Voucher.
a) The Receipt Vouchers are priced with reference to Accepted Tender

Rate (Supply Order Rate), Priced Vocabulary Rate in r/o IFD item
issued by OFB and also mutually agreed rates for lesser value IFD
items, Cost of Production in case of receipt from the production of own
factory. After pricing the vouchers these are accounted for in PSA.
b) Receipt Vouchers are priced provisionally in case of conditional

incidence of custom duties or other taxes and duties and also in cases
where complete cost of items is not available in Pricing source
documents as mentioned above However on receipt of the complete
information/documents, the RVs are re-priced correctly after making
an Adjustment Voucher. The adjustment vouchers are classified as
Plus Receipt Adjustment (KOD 21) where the actual value is more than
the provisional value and Minus Receipt Adjustment (KOD 29) where
the actual value is less than the provisional value.
c) Further, PSA Adjustment and QTY. Adjustment are required when

the vouchers have been wrongly codified and quantified. For this, the
adjustment vouchers are also generated. Such cases are happened on
rare occasion.
d) It should be ensured that all Adjustment Vouchers duly approved

are accounted for both in the Priced Store Account and the Priced
Store Ledger.
______________________________________________________________________________________________________________________
Sub Section –XV
Nominal Vouchers
Stores will be accounted for by nominal series of vouchers for very limited
and essential purposes. Broadly the 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.
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.
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.
______________________________________________________________________________________________________________________
Sub Section –XVI
Primary Stores documents and their

transmission to the Accounts Office
Each factory is generating various documents pertaining to Store

Accounting and forwarding to Local Accounts Office for processing of Priced
Store Accounts (PSA) and Priced Store Ledger (PSL) which are as under :
1) Demand Note
2) Return Note
3) Receipt Voucher
4) Issue Voucher
5) Certified Receipt Voucher
6) Certified Issue Voucher
7) Skeleton Report for above Vouchers
Besides above documents each factory is generating various Material

Warrant, Labour Warrant, Red Demand Note, Red Return Note, Inspection
Note, Piece Work Card, Warrant Closure Report pertaining to Production
accounting and forwarding Local Accounts Office for their Costing Package.
However, consequent upon implementation of PPC Package at each Unit

Factory level the above documents are forwarded in soft copies and also
Original copies as per the trend. Except for the pricing of Issue Vouchers (very
meagre quantity) relating to Defence Department none are being utilized by the
Local Accounts Office except some reconciliation cases.
Since the Factories are forwarding the soft copies to the branch Local
Accounts Office on regular basis for their accounting, above all documents may
be discontinued for transmission.
Accordingly, the minimum required copy of each documents may be

worked out separately and printed. With this discontinuation huge stationery
cost (Paper, Consumables etc.) will be saved besides man hours in processing,
endorsing, forwarding and linking.
______________________________________________________________________________________________________________________
Sub Section –XVII
Review of Stock Holdings

MCO Section of each Unit Factory has to submit to Local Accounts Office
the quantitative or Folio wise data of the stores every month 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 Scrap Stores
(iv) Obsolete Stores
(v) Blocked Inventory
(vi) Reserve Stock
(vii) Stock Pile
Note : There are certain items which are declared as “Blocked Inventory” by the
factory management. These items comprise of the raw material piled up in the
Stock charge due to cancellation of orders/extract from the indenters/OFB.
The correct classification is the responsibility of the factory. Reports received

from Accounts Offices will be consolidated at the PR Section of PCA(Fys) and
rendered to OFB.
Based on above report, Local Accounts Office furnishes the value of the
stores under the above categories periodically to the Operating & Finance
Division of OFB with copy to the P C of A (Fys). This enables the authorities to
find out whether the stock balances are at appropriate levels.
______________________________________________________________________________________________________________________
Receipts
Introduction – These instructions relate to the receipt of stores and materials

from various sources. These instructions are in amplification, and not in
supersession, of the instructions contained in Factory Accounting rules and
other basic regularizations on the subject.
Without exception whatsoever, all receipts handled by the Receipt Branch

will be entered in accordance with the following instructions without delay on a
Material Inward Slip (MIS) and whether or not the materials are to come to
Stock, Stock Pile or Deposit Ledger charge.
In addition, this will also be entered upon a MIS for all materials which,
although not handled in the first place on their arrival in the Factory by the
receipts Branch, are to come to stock or deposit ledger charge, there is no
exception for miscellaneous receipts, such as machinery, medical stores,
contingent stores, onward forwarded material or stores sent into a Factory on
loan if in fact such materials are handled by the receipts Branch.
Raw materials are obtained by the factories by one of the following

means:
(a) Purchase from overseas countries i.e. Foreign Countries.
(b) Central Purchase in India through a central authority.
(c) Local purchase by the HOD of Factories.
(d) Supplies from other factories.
(e) Supplies from departments other than Defence.
(f) Supplies from other branches of Defence Departments.
Besides these, the 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 on store charge for Subsequent issue
to manufacture of outside parties.
(ii) Receipt from 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.
______________________________________________________________________________________________________________________
Sub-section I
Material Inward Gate Pass
(a) Forms – Standard format is to be designed for Material Inward Gate Pass
(MIGP) with the information viz. MIGP No, MIGP Date with time of generation,
Supply Order No, Supply Order Date, Existing Delivery Period, Item Code,
Nomenclature, Accounting Unit, Quantity, Nature of Supply (by Vehicle/hand/
courier), Vehicle No, Name of Firm’s Personnel /Authorized Representative.
(b) MIGP is to be generated at the Main Gate by the Staff of Security Office
through Online PPC Package. The MIGP document shall be generated in the
Online System with due validating Firm’s Cash Memo/Challans along with Tax
Invoice where Supply Order details are available in the system (for regular
items). While raising MIGP the following information should be captured in the
system viz. Supply Order No, Supply Order Date, Existing Delivery Period, Item
Code, Nomenclature, Accounting Unit, Quantity, Nature of Supply (by
Vehicle/hand/courier)
(c) On completion of data entry, MIGP Program should generate MIGP No. The
MIGP No will be system generated and should prefix year in (YY format) before
putting serial No. Program should start with Serial No 1, trailing blank space
with 0 at the beginning of fiscal year and to increment with 1 (One). Date will
be entry Date only. System should not accept any previous or future date.
(d) During raising of MIGP if system doesn’t allow to raise due to expiry of
Delivery Period, the concerned Staff/Group In-charge for MIGP shall intimate to
concerned Procurement Group/User Section for amendment of Delivery Period.
If IGP preparation is required, the same may be generated after due approval
from competent authority in writing.
(e) After generation of MIGP, the print copy of MIGP is to be signed by an

officer not below the rank of Chargeman of Security Gate. Then the incoming
materials along with the raised MIGP Copy and Firm’s documents are to be
forwarded to Store Receipt Bond / Store Receipt Group for accounting.
(f) MIGP is also to be raised for irregular items (where Supply Order details are
not available on the system) viz. Machinery, Medical Stores, Contingent Stores,
Samples, Deposit Stock, onward forwarded material or stores received on loan.
(g) MIGP / suitable document is to be raised by the factory for the items which
has been received through Courier or by Postal department on the basis of
documents received along with consignment.
(h) On completion of day work a summary report (consisting of MIGP No, MIGP
Date, Firm Name, SO NO, SO Date, Item Nomenclature, Quantity, order by
MIGP Date, MIGP No) is to be taken from the PPC system for retention / filing
purpose to replace IGP Register.
______________________________________________________________________________________________________________________
Sub-section II
Material Inward Slip
(a) Forms – Standard format is to be designed as per format No IAF(Fac)151

for Material Inward Slip (MIS) with the information viz. MIS NO, MIS Date,
Firm’s Name & Address, Supply Order No, Supply Order Date, Firm’s Challan
No, Challan Date, Item Code, Item Nomenclature, Accounting Unit & it’s
Description, Quantity, Unit Rate, MIGP No, MIGP Date.
(b) On receipt of MIGP, Staff from Receipt Bond shall check the Store packing
physically to ensure that there is no damage. If the materials have been
received in wagon / Container, check for the seal. If it is found broken
immediately communication is to be initiated with the firm for open delivery.
(c) On receipt of material and after checking of packages, if found acceptable

i.e. without any damages Store Receipt Bond has to arrange for counting /
measuring and retain the material at their custody and provide
acknowledgment to the firm representative. Store Receipt Bond Staff shall put
proper Tag depicting S.O. No., Firm’s Name, Item Nomenclature, Quantity
supplied etc. on the material. The Receipt Bond Staff shall prepare a Checking
report / Summary for this consignment and forward the document for raising of
Material Inward Slip (MIS). In case any shortages / excess material is found, it
is to be recorded in the Discrepancy Register.
(d) On checking of receipted material an Acknowledgement is to be provided to

the representative of Consignor. The receipt is to be done by an officer not
below the rank of Chargeman.
(e) On receipt of Checking Report / Summary, MIS shall be generated by the

Receipt group preferably on the date of receipt or within 24 hours of receipt of
material. MIS is to be generated in Online PPC Package, by calling respective
MIGP Nos and Item Code and inserting the receipt and found quantity.
(f) On completion of data entry, MIS Program should generate MIS No

automatically. The MIS No will be system generated and should prefix year in
(YY format) before putting serial No. Program should start with Serial No 1,
trailing blank space with 0 at the beginning of fiscal year and to increment with
1 (One). Date will be entry Date only. System should not accept any previous
or future date.
(g) After raising of MIS, print is to be taken (four Copies, One for Office group
and three to be forwarded to Quality Control Group for inspection). The MIS is
______________________________________________________________________________________________________________________
to be signed by an Officer not below the rank of Junior Works Manager (JWM)
of Store Section. The Office Copy of MIS along with all documents including Tax
Invoice are to be forwarded to Store Receipt Office for filling into respective SO
register / File for future correspondence.
(h) In case of material collected by Factory representative against any Supply

Orders / IFD any discrepancy arising during receipt of stores at Consignee end,
should be settled with an inquiry as per procedure in vogue.
(i) Receipt Group may retain the incoming store especially bulky / heavy
consignment in respective godown of Store Stock / User nominated area
depending upon local requirements to reduce man hours in handling of the
store.
(j) In respect of IFD transactions, the following accounting procedure should

be strictly followed :
(j.i) On receipt of IFD stores at consignee end against the Awaiting

Production Issue Voucher (“P” Voucher) for production issues and Awaiting
Store Issue Voucher (“S” Voucher) for Store issues, it is mandatory on the
Consignee factory to prepare Inward Gate Pass immediately on receipt and
simultaneously prepare MIS.
(j.ii) The consignee factory shall upload the copies of IGP and MIS on OFB-
Comnet portal.
(j.iii) The material has to be inspected and taken on stock charge within 45
days from the date of receipt of material at the factory gate (IGP Date).
Under no circumstances, MI Slips should be kept pending till the actual
utilization of stores. Consignor Factory will Issue GST TAX Invoice against
the already dispatched IFD Stores on receipt of Receipt Voucher from the
Consignee Factory or, on 45thday of IGP Date of Consignee, whichever is
earlier.
(j.iv) The consignee factory shall upload the copies of Rt. Voucher on OFB-
Comnet portal.
(j.v) If the Consignee does not communicate the requisite RV within 45

days of the IGP (of their end), the LAO of the Consignor will be permitted
to book the issue in the CCO2 based on the copy of the IGP from the
Consignee and simultaneously consignor factory will issue GST Tax Invoice
against the already dispatched IFD Stores.
(j.vi) In case of discrepancy (in quantity & quality), representative of

Consignor and Consignee Factory should jointly inspect the material and
make a joint report.
______________________________________________________________________________________________________________________
(j.vii) On receiving of IFD Store from the Consignor, if found defective by

the Joint Inspection Committee, the same should be retained in Store
physically by labelling it “DEFECTIVE” till issuance of the same to the
Consignor through Defective Issue Voucher (D-IV).
(j.viii) The Consignee should take on-charge the defective material through
Defective Receipt Voucher (D-RV) and simultaneously issue to the
Consignor Factory under Defective Issue Voucher (D-IV).
(j.ix) A Register for keeping the movements of “D-RV & D-IV” and physical
balance of the Defective Items to be maintained.
(j.x) The above transaction will be Nominal only. The documents i.e. D-RV
and D-IV must clearly mention the minutes number and date which is
prepared by the Joint Inspection Committee.
(j.xi) The rejected material if repairable should be returned to Consignor

Factory immediately through Defective Issue Voucher (D-IV) along with
Delivery Challan (without charging GST).
(j.xii) The Consignor should undertake the repair under rectification /

repair work orders (indirect series work order).
(j.xiii) After rectification of the rejected store, same should be returned to

the consignee under Nominal Issue Voucher along with Delivery Challan
(without charging GST).
(j.xiv) On receipt of rectified / repaired store, Consignee factory will follow

the same process for inspection and simultaneously preparation of Receipt
Voucher within the time frame.
(j.xv) If found acceptable after inspection, then the rectified material will
be taken on stock charge against the Awaited Issue Voucher which has
been raised by the Consignor Factory at the beginning.
(j.xvi) The above procedure (i.e. j.vi to j.xi) should be completed within 60
days. If defect has not been reported within 45 days of generation of IGP,
it will be assumed by the Consignor Factory that material has been
accepted and any subsequent rejection will have to be regularized by the
Consignee Factory only.
(j.xvii) The irreparable / defective stores may first be taken on stock by

the consignee through Defective Receipt Voucher (D-RV). These Stores will
be sent back to the Consignor on Defective Issue Voucher (D-IV) in place
of Nominal Voucher (as in case of repairable stores). The associated loss is
to be regularized by the consignor as Production Loss.
______________________________________________________________________________________________________________________
(j.xviii) Consignor Factory will forward 03 copies of Awaiting Issue Voucher

to their LAO. Out of the 03 Awaiting Issue Voucher, their LAO will return 01
copy immediately after pricing. On receipt of above, the Consignor Factory
will forward 03 copies of Awaiting Issue Voucher (including the priced copy
received from their LAO) to Consignee factory along with the material.
Consignee Factory after taking the material in Stock Charge will forward
the Priced Issue Voucher (received from Consignor) along with their
Receipt Voucher to the Consignee’s LAO.
(j.xix) Consignee LAO will ascertain from Factory management whether the
store / item received or there are any irreparable / repairable items, on
receiving one copy of the Awaiting Issue Voucher from Consignor’s LAO. If
it is there, then the RV will be prepared on net receipt. [Discrepant
quantity to be dealt with as follows: a) goods returned are to be sent back
on delivery challan; b) if goods are not sent back a separate Tax Invoice to
be generated by seller for Scrap]. A copy of the same will be forwarded to
the Consignor’s LAO for preparing the Punching Media and accounting in
the CCO2 (Non-Financial Punching Media) and simultaneously linking the
Awaiting Issue Vouchers (by converting the Awaiting Issue Vouchers to
Regular Issue Vouchers by retaining the same number) with the Receipt
Voucher prepared by the Consignee Factory. Consignor will generate Tax
Invoice simultaneously for charging GST to Consignee and make payment
as required as well as book the Tax amount in CCO2.
(k)On completion of day work a summary report (consisting of MIS No, MIS
Date, Firm Name, SO NO, SO Date, Item Nomenclature, Quantity, order by MIS
Date, MIS No) is to be taken from the PPC system for retention / filing purpose
to replace MIS Register.
______________________________________________________________________________________________________________________
Sub-section III
DISCREPANCIES DURING RECEIPT
Action where discrepancies of stores are noticed by consignee. –

(a) The preparation and distribution of consignee’s receipts for stores
must not be delayed. If there are any discrepancies such as some
stores damaged, or deficient, or excess, Store Receipt Group will make
an endorsement in the Firm’s Documents immediately before giving
acknowledgment.
(b) The items which were received in packaged condition or for some
small items where accounting may take some time, discrepancy if any
noticed is to be raised within 30 days from the date of receipt of the
store.
(c) In case of discrepancies Consignee will raise a Deficiency / Discrepancy
Voucher (DD Voucher) duly signed by a Group “A” Officer, in Triplicate
(3 Copies, One for Store Receipt Office, one copy for retention at Store
Receipt Bond and one to be forwarded to the Consignor through Speed
Post with acknowledgement).
(d) When discrepancy arises for other than Sister Factories, DD Voucher is
to be raised in Part- “I” only. For Sister Factories, Part- “I” and Part-
“II” (Loss Statement) both are to be generated.
TRANSIT DISCREPANCIES
1. Settlement of railway claims – falls under transit discrepancies. On

visual inspection of packaging if there is a doubt regarding discrepancy
in quantity or quality of material dispatched against RR, open delivery is
to be taken and the claim is preferred on the railways for the loss
occurred in transit.
2. Normally Railway Authorities disallow certain portion of the claim like
taxes, packing charges etc.
3. Similar procedures are followed when goods are received by road
transport.
4. Timely action in this area saves losses to the Government and helps in
speedy clearance of MI Slips, posting of documents and settlement of
outstanding assets.
REGULARISATION OF LOSSES
Any type of losses in the material held in Store may be regularized as

mentioned under heading Regularization of Losses mentioned in General
Section.
______________________________________________________________________________________________________________________
Sub-section IV
Receipt of Stores and Accounting there of
(i) All the items of stores received in the Factory are inspected and a
Material Inward Slip (M I Slip) is prepared in each case which serves the
purpose of an inspection certificate-cum-receipt voucher for the stores
received. The Junior Works Manager of Store Section Erstwhile Store Holder, on
receipt of the Stores supported by the M I Slip duly endorsed with the
inspection certificate, allots a Receipt Voucher Number to the M I Slip and
endorses a certificate of the receipt of the stores on the M I Slip.
(ii) Two sets of accounting records are maintained for stores viz., Bin Cards and
Priced Store Ledgers. The Junior Works Manager of Store Section Erstwhile
Store Holder maintains a Bin Card for each item of store wherein every receipt
and issue is entered and after each transaction, the balance is shown. Thus a
continuous quantitative account is maintained by the Factory for all materials.
The material code number allotted to each item is entered in the Bin Card.
A Priced Store Ledger is maintained by the Local Accounts Office in which
all receipts and issues showing quantity and value are posted for each item of
store in a separate folio and the balance shown after each transaction.
Pricing of Receipt Vouchers

Receipts are priced at the actual cost of purchase plus all incidental charges
incurred up to the point of receipt of the stores at the Factory. Thus, in the case
of imported stores, sea freight, customs duty and port handling charges and
inland freight charges, are all added to the purchase price to arrive at the cost
of stores in pricing the receipt vouchers.
In case of local purchase, Receipt Vouchers are to be priced by LAOs with
reference to rates quoted under Supply Order excluding Taxes.
Components supplied by other Factories or

received from own Factory manufacture
(i) Components and other manufactured materials supplied by other Factories

against Inter Factory Demands are accounted for as materials in the Store
Ledgers by the receiving Factory. The Receipt Vouchers are priced at the actual
cost of manufacture as intimated by the Accounts Officer of the supplying
Factory.
______________________________________________________________________________________________________________________
(ii) Components, Packing Boxes, manufactured in the Factory are also

transferred to stock and accounted for as receipts in the store ledgers. Such
receipts are priced at the actual cost of manufacture.
NOTE: If at the time of pricing the Receipt Vouchers, the actual charges are
not available, the vouchers are priced at provisional rates and adjustments for
the difference between the provisional value and the actual value of the
vouchers are carried out through adjustment Voucher when the actual are
known.
(iii) Scraps arising in production and surplus materials, if any, are returned by
shops to stores on Return Notes. These are accounted for as, receipts in the
Store Ledger and priced at the latest ledger rates for the items.
Accounting of Items consumed during Test
During inspection of raw material / component by the Quality Control

group against M I Slip, some quantity is being consumed in testing operation.
The M I Slip while accepting is being done for all the accepted quantity.
However, while taking on charge during posting of Receipt Voucher physical
quantity differs with the actual quantity. This difference quantity is to be
regularized through raising an Expense Voucher. The procedure are as follows:
a) Quality Control Group while accepting the M I Slip in Online PPC System
will enter the quantity expended in test and will also endorse manually in
the MIS Copy.
b) System will generate an Expense Voucher automatically during
generation of Receipt Voucher.
c) Store Receipt Bond personnel will endorse Expense Voucher No. on the
Receipt Voucher and make arrangement for printing.
d) Store Receipt Bond personnel will forward Receipt Voucher along with
Expense Voucher to Store Stock for posting in Bin Card and in Online PPC
System.
e) The expense voucher is priced with the Supply Rate and the value is
taken in PSA Code “074” as overhead.
______________________________________________________________________________________________________________________
SUB Section-V
Receipt Voucher
(a) Forms – Standard format is to be designed as per format No IAF(Fac)151

for Receipt Voucher with the information viz. MIS NO, MIS Date, Firm’s Name &
Address, Supply Order No, Supply Order Date, Item Code, Item Nomenclature,
Accounting Unit, Quantity received, Quantity Accepted, Quantity Rejected if
any, Unit Rate, Accepted quantity Value, MIGP No, MIGP Date, Receipt Voucher
No, Receipt Voucher Date.
(b) On receipt of accepted MIS from Quality Control, Staff from Receipt Bond
shall check the accepted quantity on the MIS and shall prepare Receipt Voucher
immediately in online PPC System not later than 1 day. Store Receipt Group
after generation of Receipt Voucher will forward to Store Stock for taking into
stock charge.
(c) The Receipt Voucher is to be generated on receipt of accepted MIS and
Factory may avail input tax credit at the earliest.
(d) The Receipt Voucher No. will be system generated and should prefix year in
(YY format) before putting serial No. Program should start with Serial No 1,
trailing blank space with 0 at the beginning of fiscal year and to increment with
1 (One). Date will be entry Date only. System should not accept any previous
or future date.
(e) The Receipt Voucher should be generated with the following series :
1. Deposit Stock : “D” Series

2. Machine Vouchers : “M” Series
3. Medicine Accounting : “Med” Series
4. Nominal Items : “N” Series
5. Stock Piles : “R” Series
6. Stock Series : “S” Series
(f) On receiving the Receipt Voucher, Store Stock group (concerned

Storekeeper), will make arrangements to collect Store from Receipt Bond and
retain in respective godown/bin. Before posting the Receipt Voucher, the item
should be stacked properly and Identification Tag should be placed against each
consignment depicting MIS No.& Date, Receipt Voucher No.& Date, Firm Name,
Item Nomenclature, Consignment Quantity. On completion of collection, posting
of Receipt Voucher is to be done in respective Bin Card as well as in the On line
PPC System.
______________________________________________________________________________________________________________________
(g) While posting of Receipt Voucher in Bin Card following information is to be

noted Receipt Voucher No., Receipt Voucher Date, MIS No., MIS Date,
Consignor Name, accepted quantity, Date of posting, Cumulative quantity.
(h) After posting of Receipt Voucher, the same is to be signed by an officer not
below the rank of Junior Works Manager of Store Section certifying brought on
charge. The signed copy of Receipt Voucher is to be forwarded to Procurement
group directly to reduce time to enable to release payment of the firm.
(i) On closing of the month a skeleton list / report is to be generated by the
Store Receipt Bond wherein all the Receipt Voucher generated during the
previous month from starting no to the last no with order by Receipt Voucher
Date, Receipt Voucher No. The list so generated is to be addressed to Local
Accounts Office and a copy is to be forwarded to Information Technology
Centre. If any Blank Nos / Cancelled Receipt Vouchers are there, the same to
be specified so that the Monthly accounting can be done accurately.
______________________________________________________________________________________________________________________
Sub Section – VI
Rejection Items
During course of Inspection of incoming materials on MIS many of the

items partly or whole becomes unserviceable on the inspection parameters.
These items during sentencing becomes rejected and returned to Store receipt
bond along with the accepted materials.
Store receipt Bond while processing of such MIS segregate rejected items
document and forward to receipt office for its accounting. Against these
rejected items MIS, Rejection advice letters are being generated for intimation
to the Consignor and are lying at the consignee’s premises at the risk and cost
of the consignor.
Consignee will also call upon Consignor either to remove the stores or to
give instructions as to their disposal within 14 days, and in the case of
dangerous, hazardous, infected and perishable stores within 48 hours, failing
which the consignee will either return the stores to the consignor on freight to
pay basis or otherwise dispose of them at the consignor’s risk and cost.
The Rejection advice letter is formal intimation letter to the Consignor,
intimating the status of the supplied item against their dispatch documents
pertains to Supply Orders. The Rejection Advice is generated in four copies
(One copy each to Consignor, Purchase Group, Quality Control & Office Copy).
Rejection Advice letter for Consignor is to be forwarded through Speed
Post/Registered Post/email/FAX/Vendor App.
The letter contains information like Supply Order details, Item Code, Item
Description, Accounting Unit, Quantity supplied, Rejection quantity, rejection
reasons, Date by which rejected materials is to be lifted, etc. The rejection
items are segregated separately and retained in a separate area to avoid
mixing with the other accepted material.
Consignor to remove rejected material from the premises of Consignee
within 30 days of Issue of Rejection Advice. If the Consignor on receipt of
Rejection Advice does not remove the consignment within 30 (Thirty) days,
Consignee shall recover a charge for the storage space at @ 1% of the cost of
material un-cleared / un-lifted per week or part thereof, with maximum ceiling
of 10 % of value of the items.
Ground Rent to be calculated from the date of expiry of the period of
removal of the rejected item i.e. 30 days from the date of issue of rejection
advice. No ground rent shall be charged from Central / State Government /
Central PSU.
______________________________________________________________________________________________________________________
If Consignor fails to pay the applicable ground rent within the prescribed
period, factory is entitled to recover the ground rent due and all incidental
expenses from the EMD/PSD.
Senior General Manager / General Manager of the Unit can waive ground
rent upto Rs. 10,000/- per case subject to recording in clear terms and in
consultation with Finance.
After lapse of 10 weeks, if Consignor fails to remove the rejected store,

the goods may be confiscated and disposed of as per disposal procedure in
vogue after sending a notice and giving 30 working day time to the firm.
The Receipt group will initiate proposal stating the details of the rejection
advice for approval from the HOD. Based on the approval, an examination order
shall be generated for gradation of the item and is to be taken on the scrap
item code through Certified Receipt Voucher (CRV). The Value of the item will
be the Moving Average Rate of scrap item concerned. In any case, if the item is
new, price is to be fixed by constituting committee which should include a rep
from LAO.
______________________________________________________________________________________________________________________
Sub Section-VII
Onward Forwarding of Material
In order to utilize the transportation in optimum economy, the stores are

dispatched / forwarded from one unit to other through connecting unit / nearby
unit.
On dispatching of such stores, the Consignor will intimate the dispatch
details through email/FAX to Consignee Unit including the Transport details with
a request to arrange for collection from the forwarded unit.
The Consignor will also intimate the dispatch details to the forwarded unit
stating details of items, which have to be issued to respective Unit.
On receiving of store (meant for other unit) the receiving unit, shall
intimate the concerned unit the receipt detail and request to make arrangement
for collection of store or else sent the consignment with intimation to both the
unit.
After receiving of forwarded material, the Consignee should acknowledge
the details to Consignor as well as to the unit from where it has been received.
______________________________________________________________________________________________________________________
Sub Section-VIII
Procedure for Un-loading of Gases from Tanker
Following procedures shall be maintained for unloading of Gases:

1. All the procedures are to be done in presence of Security Staff /
Durwan, Maintenance, User section and Store Receipt
representatives.
2. Checking of Tanker’s Seal / Lock, earthing & Fire Extinguisher
before entering into the factory
3. Call Fire Brigade to follow up the Tanker for controlling of fire in
emergency if any.
4. Taking weight of loaded Tanker in Platform Scale / Electronic
Weighing Scale
5. Move the Tanker at unloading point for decanting the quantity
supplied.
6. Maintenance representative / Pump attendant shall connect the
Hose Pipe, earthing with Tanker and Storage Tank and open the
valve for unloading of Liquid Gases from Tanker till the Tanker
meters shows “0” position.
7. After confirming the Tanker fully unload in Storage Tank,
Maintenance representative / Pump attendant disconnect the Hose
pipe, earthing from Tanker & Storage Tank.
8. Then Tanker is to be moved to Open space for removing the Gas
vapours in atmosphere available if any in tanker. Tanker is to be
released from factory after making full empty. Fire Brigade vehicle
should always follow up the tanker till release from the Gate.
9. After releasing of Gas Vapours from the Tanker, weight is to be
taken for confirming actual weight of Gas supplied by the Firm.
10. Obtaining signature from the Driver of the Tanker, Security Durwan
/ representative, Store Receipt representative on the receipt
Invoice, acknowledgement for receipt of material is to be provided
to the Driver of the Tanker.
11. Security Durwan / representative shall make arrangement for
taking out of the Tanker from the Gate.
______________________________________________________________________________________________________________________
Sub Section-IX
Procedure for Un-loading of Petroleum Products from Tanker
Following procedures shall be maintained for unloading of Petroleum

Products (LDO/HSD/Petrol/Kerosin) :
1. The Oil is brought by Oil Company in their Tanker to the unit of

supply with proper sealing.
2. Tanker Driver will report to the Gate of the Unit with Invoice
provided by Oil Company.
3. The Gate Incharge (Security Group) will arrange for preparation of
IGP based on Invoice and will intimate Store Receipt & Stock Group
about reporting.
4. All the procedures are to be done in presence of Security Staff /
Durwan, Maintenance, Quality Control section and Store Receipt
representatives.
5. Store representative will check for Tanker’s Seal and Lock of
discharge Valves, earthing & Fire Extinguisher before entering into
the factory.
6. Call Fire Brigade to follow up the Tanker for controlling of fire in
emergency if any.
7. Taking weight of loaded Tanker in Platform Scale / Electronic
Weighing Scale for cross verification.
8. On checking of Seal and Lock the Top domes are opened.
9. If any damage is noticed in seal & locks, the same is noted in all the
copies of Invoice and is being intimated to Oil Company.
10. Allowing the Tanker to become stable. On becoming stable, samples
are to be taken for Inspection of the materials as per Quality
Control section requirements.
11. On getting acceptability of samples, measurement with the
calibrated deep-stick is taken in each chamber. While taking deep it
is to be ensured that the rod is dipped straight (perpendicularly) in
each chambers.
12. After obtaining measurement, calculation is to be done for receipted
quantity and if found short is to be reported to the Oil Company
about discrepancy.
13. The Tanker is taken to the unloading point for decanting the
quantity supplied.
14. Maintenance representative / Pump attendant shall connect the
Hose Pipe, earthing with Tanker and Storage Tank and open the
valve for unloading of Petroleum Products from Tanker till the
Tanker is totally emptied.
______________________________________________________________________________________________________________________
15. After emptying all the chambers, oil stop flowing from the discharge
valves, then discharge valves of all the chambers are closed and
the oil tanker is driven away minimum 100 meters back and forth.
The tanker is again stationed at unloading platform and discharge
valves are opened once again for collection of residual oil in bucket.
16. Once the oil stops flowing, again the store representative ensures
that the oil tanker is emptied completely by climbing up the Tanker
and dipping the rod once again and ensures that no oil is left in the
tank.
17. After confirming the Tanker fully unloaded in Storage Tank,
Maintenance representative / Pump attendant shall disconnect the
Hose pipe, earthing from Tanker & Storage Tank. Tanker is to be
released from factory after making full empty. Fire Brigade vehicle
should always follow up the tanker till release from the Gate.
18. After unloading of petroleum products from the Tanker, weight is to
be taken for cross checking the quantity supplied by the Firm with
the actual quantity receipted at Store Section.
19. Obtaining signature from the Driver of the Tanker, Security Durwan
/ representative, Store Receipt representative on the receipt
Invoice, acknowledgement for receipt of material is to be provided
to the Driver of the Tanker.
20. Security Durwan / representative shall make arrangement for
taking out of the Tanker from the Gate.
[ Authority :IOC Standing Instruction No.242/S/POL/2K dated 15-5-2000]
______________________________________________________________________________________________________________________
Sub Section - X
Store In Transit
(Incoming)
As per latest guidelines vide OFB Letter No 14/4/IFD/POLICY/MM/STORES

dated 30-10-2017 and 02-07-2018 pertaining to IFD Transaction, there should
not be any SIT after April’2018. If any SIT exists, w.e.f 01/04/2018 the same
should be addressed as per guidelines mentioned above. For old SIT cases, it
should be cleared on priority to avoid possible wearing out.
______________________________________________________________________________________________________________________
Sub Section-XI
Regularization of Short Receipt

Attributable to Scale Variation
There is no specific instruction on regularisation discrepancy arising out of

scale variation. However, in consultation with C of A (Fys), Kolkata, it has been
decided that the following procedure may be adopted in such cases :
1) On receipt of the materials at the consignee end, the Consignee will
immediately take the weighment in their scale and record it. Their
scale may be kept calibrated at a regular interval.
2) If the difference is observed very minor i.e. within 1% of the Issue
Voucher Quantity, Sr. General Manager / General Manager / HOD of
the Unit can raise Discrepancy Voucher and can regularize the
discrepancy in consultation with Local Accounts Office without referring
to Consignor.
3) If the variation in weighment is more than 1 % of the Issue Voucher
quantity & if the variation is considered due to weighing scale /
weighing method variation, the discrepancy must be referred to the
Consignor asking for replacement. On the basis of reply received from
the consignor end, Sr. General Manager / General Manager / HOD of
the Unit will raise Discrepancy Voucher to regularize the loss due to
scale variation in consultation with Local Accounts Office. The
regularisation of the discrepancy will be done as per Stores Accounting
procedure.
[Authority : OFB, Kolkata, MM Division

Letter No. 46/OFAJ/SP dated 31-07-1987]
Calibration of measuring Instrument held under Store Receipt Bond may

be executed as per procedure mentioned under heading Calibration of
Measuring instrument mentioned in General Section.
______________________________________________________________________________________________________________________
Stock
Introduction – These instructions relate to the issue and receipt of stores and
materials from various sources. These instructions are in amplification, and not
in supersession, of the instructions contained in Factory Accounting rules and
Without exception whatsoever, all issue and receipt handled by the Stock
Group for regular item will be entered in Bin Card maintained by the respective
Storekeeper and supervised by Group In charge / Store HOS.
The principal objective of the stock group is to provide service

economically while maintaining the store. The most important consideration
here is to maintain the value of stores in stock at the lowest practicable level at
all times, in order to economize in the use of working capital and to minimize
the costs of storage.
Other matters for which the stores function is normally responsible are
listed below:-
1. Identification : All the Stores received are to be properly Stacked
and identification Tag is to be placed mentioning the Item Code,
Nomenclature of the Store, quantity, MIS / RV No & Date,
Consignor details etc. for each lot separately.
2. Care of Stores: The main objectives to care Stores are as follows:
a) To maintain the serviceability of the items during storage so that
there is no hold up in production at the time of actual
requirement.
b) To avoid loss to the state due to deterioration in condition of the
item.
c) To enhance the Shelf life by proper storage.
d) To avoid corrosion, deterioration, evaporation etc. due to
environmental conditions
e) To ensure the principle of “First-In-First-Out(FIFO)” and rotation
of Stores.
f) Inter service stores preservation organisation now converted to
Defence material & Stores Research and Development
Establishment with Headquarters at Kanpur formed by the
Government is responsible for safe guarding defence stores from
damage of biological and non-biological agents.
g) The above Establishment issues recommendations regarding
methods of preservation of stores to avoid any deterioration to
stores or in transit. Standard recommendations are published
through ISSP (Indian Standard Store Preservation) Technical
Bulletins and literature is circulated to all the Factories.
______________________________________________________________________________________________________________________
3. Receipts : All the stores received are to be accepted and retained

at Store Stock in respective Godown subject to availability of valid
documents like Receipt Voucher, Return Note, Certified Receipt
Voucher etc.
4. Storage : The Stores received are to be well stacked and retained

in respective Godown / area as per the unit requirement. The
consignments are to be kept separately against each lot.
a) Storage Accommodation :- Storage accommodation should be
closely related to drainage and dunnage. This should consist of
well-ventilated permanent sheds with pukka level flooring, free
from cracks, pervious floor. Storage area should be adequate
enough to retain material without any detoriation.
While planning and creating storage space, the following
factors are to be taken into account :
a. Types of items required by the Unit
b. Quantity of each item expected to stored
c. Types of items which can be stored in open
d. Types of item which needs covered accommodation
e. To arrange for bins in the covered accommodation
f. Layout of godown and storage space to minimize
transportation with respect to loading & unloading
point
g. Items needing special storage arrangements like
explosives inflammable items, gases, acids, textile
items, paper items rubber items, various chemicals &
perishable items, POL items etc.
For the above mentioned items a special care is taken in

the layout & design of storage space so as to store them safety
without causing any danger to the Factory / Unit. Some of the
above details are given below :
a) Explosives : Magazine based on category of explosive
b) Inflammable Items : Away from normal items
c) Gases : i) Toxic : Away from normal storage
ii) Inflammable : Away from normal storage
d) Petrol : Underground Tanks
e) Diesel : Underground Tanks
f) Spirit : Underground Tanks
g) Acid : Acid Proof Tanks
h) Rubber Items : Protection from direct light and heat.
Ventilation covered accommodation/
Coated with chalk powder.
i) Paper : Humidity controlled atmosphere
______________________________________________________________________________________________________________________
j) Textiles : Do with insects’ rodent protection

k) Packages of Steel : Covered accommodation protection
From moisture
l) Chemicals : a) storage of various according to
the nature of chemical
b) Costly items
c) Affinity with other chemicals
b) Dunnage :
 Dunnage should be made to provide a firm and stable
base for the stores.
 Prevent moisture from the ground / floor reaching the
stores.
 Allow proper ventilation beneath the stock and facilitate
ventilation also in the stock.
 Provide proper cleaning and thereby clearing potential
or actual center of infestation.
 Prevention of Termites / white ants from attacking
stores)
 Periodical inspection
c) Store Hygiene
 Cleanliness
 Segregation of infested Stores
 Disinfection of godowns
5. Preservation : The stores retained are to be checked regularly for

maintaining its serviceability and to avoid any detoriation from any
hazard (Physical, Climatic and Biological). The details procedure for
preservation are mentioned in subsequent heading.
6. Materials handling : All the material are to be properly handled to

avoid any damage during transit as well as during retention at
Store Stock. While handling proper safety is to be maintained as
per requirement of ISO procedures in vogue.
7. Issue : All the stores issued are to be done from Store Stock from
respective Godown subject to availability of valid documents like
Issue Voucher, Demand Note etc.
8. Maintaining Records : Store Stock will maintain records of

documents in chronological numbers month wise separately against
each type of document and shall maintain register.
9. Stock Accounting : Store Stock shall keep accounting of all Store

while making posting of all receipts and issues. Stock will also make
______________________________________________________________________________________________________________________
arrangement for identifying stores which are underutilized by

preparing slow moving and non-moving items list.
10. Stock Control : Though the Control of Stores lies upon Material
Control Office of each factory, Store Stock has to assist in providing
various information on physical stock availability.
Store Inventory are being monitored through following

procedures :
a) ABC (Always Better Control) : It is a Tool to control raw material

and work in progress inventory on annual value of consumption.
ABC analysis is based on the concept of selective inventory

management. It underlines the important principle of “Vital few
– trivial many”. Statistics show that just a handful of items
account for the bulk of the annual expenditure on materials.
These few items, therefore, hold the key to an effective
inventory management and hence they may be classified as ‘A’
category materials. ‘B’ and ‘C’ category items are much more
numerous but their value is less significant. ABC analysis thus
attempts to identify all the items into three categories based on
their annual usage in value terms.
1. ‘A’ category items are higher value items in terms of annual

usage. While such items account for about less than 10% of
the total number of items, but they account for about 70% of
the total value of consumption.
2. ‘B’ category items are medium value items in terms of annual

3. ‘C’ category items are higher value items in terms of annual

4. ‘A’ category items should be closely monitored to see that:

(a) The requirement is correctly worked out based on the
Production Programme, estimates, stock and dues.
(b) Maximum economy is achieved by ensuring sufficient

competition during procurement.
______________________________________________________________________________________________________________________
(c) Supply is staggered to ensure minimum cash outflow

while at the same time ensuring adequate stock.
(d) Assets and Liabilities against ‘A’ category items should be

carefully monitored and timely action taken to link and clear
the outstanding items.
The above percentage of Value and item are general

principle. However, the percentage and items may be set
according to the requirement of monitoring at Unit level.
b) HML (High, Medium, Low) : It is a Tool to control cost of purchase

on the unit price of a material.
c) XYZ (Value of items of Storage) : It is a Tool to review inventories

at Storage and their use at scheduled intervals. It is monitored
on value of items in storage.
d) VED (Vital, Essential, Desirable) : It is a Tool to determine the

stocking level of spare parts depending upon criticality of the
component. It is operative for Maintenance components.
e) FSN (Fast, Slow, Non Moving) : It is a Tool to control obsolescent

item. With this tool the consumption pattern of components is
derived.
f) SDE (Scare, Difficult, Easy) : It is a Tool to control Lead time

analysis and purchasing strategies. This tool is utilized to identify
items where Problem faced in procurement.
g) GOLF (Government, Ordinary, Local, Foreign) : It is a Tool to

identify Procurement strategies. This tool is required to identify
the source for supply of material.
h) SOS (Seasonal, Off Seasonal) : It is a Tool to control nature of

supply. This tool is utilize to identify the items where
Procurement/holding is required for seasonal items, agricultural
products
11. Stock Taking
There is no exception for miscellaneous issues & receipts of stores

from Stock. Each item of Store Stock is to be receipted & issued with a
valid document generated through online PPC Package. Various valid
documents entertained by Store Stock are:
______________________________________________________________________________________________________________________
a) Receipt
1) Receipt Voucher: Receipt Voucher (RV) is generated against the

accepted quantity of MIS to take into Stock Charge. On receiving,
the item is to be collected from the Receipt Bond and is to be stored
in the respective Godown of Store Stock. Then RV is to be posted in
the Bin Card as well as in the Online PPC System. After Posting the
document is to be signed by the concerned Storekeeper and Stock
In-charge. The signed RV (two Copies) is to be forwarded to the
Procurement Group for linking with the bills for payment purpose,
One copy to Receipt Office & One copy to Stock record group for
documentation.
2) Return Note: Return Note (R/N) is generated from a section to

deposit/return the surplus / not required material into Stock
charge. The R/N is generated against the accepted quantity of
Examination Order duly certified by Quality Control Section. On
receiving of R/N, the item is to be received and stored in the
respective Godown of Store Stock duly verifying the quantity. Then
R/N is to be posted in the Bin Card as well as in the Online PPC
System. After Posting the document is to be signed by the
concerned Storekeeper and Stock In-charge. The signed R/N (One
copy) is to be forwarded to concern section for linking with
Warrants, two copies to LAO for accounting and copy to Stock
record group for documentation.
3) Certified Receipt Voucher: Certified Receipt Voucher (CRV) is

generated by Store Section to account for the unaccounted
material. The CRV is generated against the available, accepted
quantity of Examination Order duly certified by Quality Control
Section. On receiving of CRV by Store Stock group, the item is to
be received and stored in the respective Godown of Store Stock
duly verifying the quantity. Then CRV is to be posted in the Bin
Card as well as in the Online PPC System. After Posting the
document is to be signed by the concerned Storekeeper and Stock
In-charge. The signed CRV, two copies is to be forwarded to LAO
for accounting and a copy to Stock record group for documentation.
b) Issue
1) Issue Voucher: Issue Voucher (IV) for Stock Item is generated

against the accepted quantity of Examination Order(EO) to issue
stores from Stock Charge. On receiving of IV, the item is to be
issued from the concerned Godown of Store Stock to the
representative of the Consignee or Transporter representative.
Then IV is to be posted in the Bin Card as well as in the Online PPC
______________________________________________________________________________________________________________________
System. After Posting the document is to be signed by the

concerned Storekeeper and Stock In-charge. The signed IV (two
Copies) is to be forwarded to the Accounts Office linking with the
Orders, One copy to Issue Office & One copy to Stock record group
for documentation.
IV is also prepared for issue of manufacturing items against

Inspection Note, firms property returning of, issue of rejection
store, issue of raw material against conversion orders, issue of
nominal items etc. These vouchers are not accounted in Store
Stock.
2) Demand Note: Demand Note (D/N) is generated from a section

against the authorised quantity of Material warrant to draw material
from Stock charge. On receiving of D/N, the item is to be issued
from the respective Godown of Store Stock. Then D/N is to be
posted in the Bin Card as well as in the Online PPC System. After
Posting the document is to be signed by the concerned Storekeeper
and Stock In-charge. The signed D/N (One copy) is to be forwarded
to concern section for linking with Warrants, two copies to LAO for
accounting and a copy to Stock record group for documentation.
3) Certified Issue Voucher: Certified Issue Voucher (CIV) is

generated by Store Section to issue unorthodox items towards
regularization. On receiving of CIV by Store Stock group, the item is
to be issued (for accounting purpose) from the respective Godown
of Store Stock. Then CIV is to be posted in the Bin Card as well as
in the Online PPC System. After Posting the document is to be
signed by the concerned Storekeeper and Stock In-charge. The
signed CIV, two copies is to be forwarded to LAO for accounting and
a copy to Stock record group for documentation.
c) Besides above documents, Transfer Voucher may be required to

generate by Store section for transferring the balance of one item code
to another item code subject to the approval from the Sr. General
Manager / General Manager / HOD of the Unit due to various reason
for systematic accounting of store. Such vouchers are to be posted in
both the Bin Card to complete the accounting as per the approval.
12. Miscellaneous activities of Stock
Following are also the activity of Store Stock to assist Material Control
Office for effective Material Management Activity of a Unit. These are the
Management Information System to minimize inventory and to keep inventory
at optimum level.
______________________________________________________________________________________________________________________
a. Preparation of List of Items for declaration of DEAD FOLIO:
Store Stock should generate a report from PPC System where

the Item is lying NIL for three years or more. The report is to be
generated in the month of April on each financial year. The report
should be verified from Bin Card and if found correct to be forwarded
to Material Control Office (MCO) for declaring them DEAD.
MCO on receiving such copies may verify once again for any
anticipated requirement and if satisfied declared the list as DEAD
FOLIO LIST. MCO shall address the same to LAO with copies to Store
and ITC for implementation.
ITC on receipt of such copies may verify the same and check the
material value for being zero. If any item value is found greater than
zero, the same may be reconciled with LAO. On completion of the
reconciliation, the DEAD FOLIO LIST shall be transferred from stock
item master of PPC System to any other transaction files as backup.
On future requirement if arises, the same may be restored to the stock
item master with due approval from the Controlling Officer of Material
Management Group / Cost Center.
b. Preparation of List of Items whose Shelf Life is going to expire

Store Stock should generate a monthly report from PPC System
where the Items are going to expire within next three months. The
report should be verified with the item present in the Godown of Store
Stock. If found correct, the list is to be forwarded to Material Control
Office (MCO) for utilizing on priority.
In case the items shelf life is not tracked, a suitable system to be
designed in PPC System to capture expiry date while accepting the
MIS. The perishable items already available in Store stock whose shelf
life is not available in PPC System may be inserted on priority for
monitoring.
c)Preparation of List of Items for Disposal

Store Stock should generate a half yearly report from PPC
System for Surplus Items. The report should be verified from Bin Card
and if found correct to be forwarded to Disposal Group for initiation of
Disposal action.
______________________________________________________________________________________________________________________
d) Preparation of List of Items for Slow Moving
Store Stock should generate a report for Slow Moving from PPC
System where the Item is not drawn / issued from stock in last one
year but was drawn within three years from the date of last receipt.
The report is to be generated in the month of April on each financial
year. The report should be verified from Bin Card and if found correct
to be forwarded to Material Control Office (MCO) for optimum
utilization at unit level or for consideration for disposal action.
e) Preparation of List of Items for Non Moving
Store Stock should generate a report for Non Moving from PPC
System where the Item is not drawn / issued from stock in last three
year and above from the date of last receipt. The report is to be
generated in the month of April on each financial year. The report
should be verified from Bin Card and if found correct to be forwarded
to Material Control Office (MCO) for optimum utilization at unit level or
for consideration for disposal action.
f) Reconciliation of Bin Card with PPC & LAO Database
Reconciliation of ground balance with the Bin Card and then Bin
Card with the PPC database. On completion of reconciliation with PPC
database the same is to be done with LAO database.
I] During reconciliation of ground balance with the Bin Card if

discrepancy is noted the same is to be regularized as under:
a) For excess availability of item in Store Stock (ground balance)
the same is to be taken on charge through CRV.
b) For shortage if found any is to be regularized through DD
Voucher along with Loss Statement as per procedure.
II] During reconciliation of Bin Card with PPC System in terms of
quantity, if discrepancy is noted the same is to be regularized as
under:
a) Transaction history for each item is to be generated from the
PPC System.
b) All the transaction so generated are tallied with the Bin Card and
the mismatch records are identified.
c) The mismatch records are verified with the hard copy available
at Store Stock and if found valid the same is to be recorded as
per the case requirement.
______________________________________________________________________________________________________________________
III] During reconciliation of PPC System with LAO System in terms of

quantity and value, if discrepancy is noted the same is to be
regularized as under:
a) Transaction history for the item of both the system is to be
generated with quantity and value
b) The so generated data are to verified in system through a
program and the mismatch records are to be identified
c) The mismatch records data are to be reconciled and corrected
accordingly.
g) Cleaning of Storage Tanks

Cleaning of storage Tanks for Motor Spirit (MS) alias Petrol, High
Speed Diesel (HSD) alias Diesel, Light Diesel Oil (LDO), Furnace Oil,
Kerosene held under Store Stock is to be executed once in every 5
years as per industry standard. The cleaning of Storage Tank is to be
done along with the pipe lines and distribution set.
h) Calibration of Measuring Instrument
Calibration of measuring Instrument held under Store Stock may

Measuring instrument as mentioned in General Section.
i) Preservation
Stores and equipment are made from materials possessing certain
specific qualities or characteristics necessary for the proper
functioning of the items. With the passage of time the capacity of the
material to fulfill the requirement decreases as a result of which the
store or equipment made from it becomes progressively less capable
of performing the function it was manufactured to perform. This
reduction in capability is called detoriation.
These are broadly classified as under :
Physical
i) Drops (shocks) : Glass bottles may shatter which may occur
during handling, loading or unloading.
ii) Impacts (Bumps) : Sudden stopping or starting of high
speed vehicle may cause horizontal impacts or bumps, which may
result in damage to delicate parts of instruments, denting of cans,
breaking of glassware and similar other fragile items.
______________________________________________________________________________________________________________________
iii) Vibration : Packages in MT, aeroplane, ship or railway

wagons suffer from sustained vibration during transit. This can
develop severe damage to contents e.g. the filaments of electric
bulbs may break, joints of container themselves may become
weakened.
iv) Compression : During storage or transport packages are
stacked as high as possible to utilize the maximum possible vertical
storage space. Packages in the lower layers are subjected to
compression under the load of the superimposed packages.
Climatic
i) Very high and very low temperatures and fluctuations in
temperature
ii) Changes in atmospheric pressure
iii) Moistures, gases and vapours
iv) Dust, grit etc.
v) Light
Biological i.e. due to living agencies

i) Rodents (rats & mice)
ii) Insects
iii) Fungi and Bacteria
Preservation methods of Common Items

I. Steel Items : This type of items are to be stored in covered
accommodation to prevent against rain and water. Application of
mineral Oil / Grease / Oil C-600 on the surface of Steel items.
II. Rubber Goods : This type of items are to be stored in
covered accommodation and has to protected from heat and
light. Follow the FIFO procedure. French Chalk is to be sprinkled
over the items.
III. Fuel : Use of proper bunks and washers to avoid
leakage and evaporation. Follow the FIFO procedure. Fuels
containers are to be stacked properly (vertically). Containers
used should be dry and rust free. Rough handling of containers
is to be avoided, to evade from leakage. Fire protection devices
to be kept nearby.
IV. Paint : Same as for fuel. Paints are to be utilized within
the Shelf life. Paint drums are to be rolled periodically
(fortnightly) to avoid sedimentation. Rearranging of stacking of
drums in a periodic manner.
______________________________________________________________________________________________________________________
V. Petroleum : Same as for fuel. Proper underground storage

tank is to be used. While storing over ground, the tank is to be
store over sand. Do not allow smoking or lighting of fire. No
inflammable material to be stored nearby.
VI. Plywood and plywood items : Various chemical preservatives
are used for preservation. Mainly spraying of solution of Copper
Naphthenate in Water. Spraying of Chromated Copper Arsenate /
Borate preservatives etc.
VII. Wooden Shelves & handles of Timber Items : Various
chemical preservatives are used for preservation. Mainly
spraying of mixture of linseed oil with water at 20˚C as envelop
treat timber on yearly basis.
VIII. Wooden Blocks Structural Timber Ballies/Sleepers etc. :
Soak in 50 % mixture of creosote oil and used oil at about 20˚C
for 15 to 20 minutes.
IX. Drugs : To retain in cool & dry places as per directive.
Drugs to be protected from Sun light and rain. FIFO is to be
maintained for issue. Drugs to be used within its Shelf life
(expiry date) other wise to be destroyed. If the drugs are
poisonous or to be used on restriction, to keep them in Lock and
Key.
X. Woolen Items : Soak in a Solution of 1 gm of martins in one
Liters of Water OR, Soak in 5 % solution of DDT in petrol or
white spirit.
XI. Brushes with animal bristle : To be pack with naphthalene
powder.
XII. Cotton Items, Jute twin etc. : Expose to heat of Sun for 8 to
10 hours.
XIII. Silk, Nylon etc. : Expose to heat of Sun for 8 to 10 hours
after Monsoon or use hot air disinfector for 45 to 60 minutes.
XIV. Leather Items : Leather needs to be stored in well-
ventilated areas that are not too dry, at a uniform temperature
of 15 - 20 ° C and a relative humidity between 50 - 70%. Higher
temperatures should be avoided, lower temperatures up to 10 °
C are not a problem. But fluctuating temperatures and constant
changes in humidity should be avoided as far as possible as this
promotes aging of the leather. Leather is usually stored in
shelves, on racks or left hanging. Protective coating of Dubbin is
used.
XV. Soles of Shoe, Chappals etc. : Use protective coating of Soap
Yellow. Do not use Dubbin for this purpose. Follow the FIFO
procedure
XVI. Cement : Cement are to be stored in covered
accommodation to prevent from damp and solidification with
______________________________________________________________________________________________________________________
contact from rain and water. Cements are to stacked over

dunnage. Follow the FIFO procedure
XVII. Tyre : This type of items are to be stored in covered
accommodation preferably in Air Conditioned environment and
has to protected from heat and light. Follow the FIFO procedure.
Tyres are to be stored vertically rather than stacking horizontally
to reduce stress and tyre distortion. Tyres are to be placed on a
piece of clean wood and not directly on the ground. Tyres are to
store away from things like electric motors, furnaces, switches,
and sump pumps to avoid sources of ozone.
XVIII. Chemical Items : This type of items are to be stored in covered
accommodation and has to protected from heat and light. Follow
the FIFO procedure. Chemicals are to be stored over wooden
platform.
XIX. Acids : Acids are to be stored in covered accommodation on
sand bed. Accommodation should have adequate ventilation with
exhaust fan. During Summer season sprinkling of water is to be
done over the containers. Follow the FIFO procedure
XX. Tools & Bearings : To prevent the entry of dust and dirt by
keeping the Tools & Bearings and their environment as clean as
possible. Store Tools & Bearings flat, in a vibration-free, dry area
with a cool, steady temperature. Tools & Bearings are to be
retained in their original unopened packages until immediately
prior to mounting to prevent the ingress of contaminants and
corrosion.
13.MATERIAL HANDLING EQUIPMENT
Store storage system are to be automotive to identify & retrieve items in
minimum time. The material handling equipments are generally divided into the
following main classes:
(a) Automated Storage and Retrieval Systems
(b) Mobile Shelving Systems
(c) Cantilever Racking System
(d) Mezzanine Floors
(e) Drum Handling System
(f) Horizontal fixed path type.
 Belt Conveyors.
 Wire Gauge conveyors.
 Gravity roller conveyors.
 Slant conveyors.
 Apron Conveyors.
 Powered Roller Conveyors.
 Drag Chain Conveyors.
______________________________________________________________________________________________________________________
 Trolley conveyors moving or channel track or Rail track.

 Vibrating conveyors.
 Closed channel Conveyors.
i) Screw Conveyors.
ii) Pneumatic tube conveyors.
(g) Vertical Movement type.

 Package lift elevator.
 Bucket elevator.
 Derricks and Booms.
 Hoists.
 Revolving cranes.
 Mobile cranes.
 Fork lifts.
 Spiral chutes.
(h) Fixed area type.

 Revolving jib cranes.
 Derricks.
 Travelling NBridge Cranes.
 Gantry Cranes.
(i) Overhead movement type.

 Mono rail Conveyors.
 Cable ways.
 Overhead Chain Conveyors.
 Overhead Cranes.
(e) Flexible path (or non fixed path.) type.

 Two Wheelhand trucks.
 Three Wheelhand trucks.
 Powered fixed Platform trucks.
 Industrial tractors.
 Fork lift trucks.
 Side Leading trucks.
 Straddle trucks.
 Dumper trucks.
Requirement of Handling Equipment & Manpower

Requirement of equipment and manpower is to be calculated based
on material handling plan under different condition. Adequate provision
must be made for maximum worst condition and severe conditions or
peak hour conditions.
______________________________________________________________________________________________________________________
DISPOSAL
SUB SECTION-I
Objective
Disposal is an effective function of material management to obtain

following purpose:
a) to clear the blocked up capital and obtain as much revenue as possible
for more useful purposes
b) to vacate the valuable storage space occupied by these items so that
the same can be utilized for the storage of other items.
c) to bring them in the area of utilization from the area of non-utilization
by making them available to other organizations/Companies who need
it.
______________________________________________________________________________________________________________________
SUB SECTION-II :
Identification of Surplus Stores
1) Factories / Units should review yearly twice all the Active / Slow Moving /
Non Moving / Blocked / Surplus Serviceable / Maintenance / Surplus /
Waste / Obsolete / Scrap / Stores and get it vetted by LAO.
2) The existing “Maintenance Stores” are to be segregated into exclusive

Machinery Spares (Insurance Spares) and General Maintenance materials
(Other than the Insurance Spares).
The General Maintenance materials are to be merged with the

working stock comprised of Active, Slow Moving and Non Moving items.
The Insurance Spares are to be kept under a separate head similar

to the existing Maintenance Stores Head. With this revised changes the
newly categorized Maintenance Stores will include the “Machinery
Spares”.
3) Planning section of each unit / Factory shall update the Indent / Extract /
IFD position in Online PPC Package regularly. If any, Short Closure /
Cancellation of such orders are there, system will flash out a report of
such items which are available in Stock as well as in pipe line. This
system generated report is to be forwarded to Material Control Office
(MCO) for judiciously watching and to take necessary action for effective
disposal action.
4) Based on the system generated Report, MCO will prepare / re-check the
list with the Net requirement of the factory considering the present
procurement action initiated including the indirect items also.
Unit MCO section should identify Surplus / Obsolete / Active / Slow

Moving and Non Moving Store and get it examined by a Technical Team /
Sub-Committee.
Further, MCO will also take decision for alternate use within the
factory for optimum / gainful utilisation of excess / surplus stores with
present and anticipated work load. On completion of verification by MCO,
the said report is to be vetted by LAO.
______________________________________________________________________________________________________________________
5) Unit HOD may constitute a High Level Technical Check Committee to

review the LAO vetted surplus Stores to evaluate their utilization/disposal
in factory or elsewhere.
The Surplus Stores not required by other Factories and priority

Indenters should be reported to the Technical Team for disposal
instructions. However, the following surplus stores should not be reported
to the Technical Team:
a) Serviceable Surplus Stores valued upto Rs. 50/ per accounting
unit and upto and Rs. 2000/- for entire stock of the item.
b) Obsolete stores
c) Unserviceable / perishable stores
d) Scrap & Waste products
e) Containers i.e. Drums, Barrels etc.
[ Authy :- M of D No. 3(7)/64/6528/D(O-II) dated 26-07-64 circulated vide DGOF
Letter No. 252/Review/SP/D dt. 9-10-64 and M of D No.
PC/385/2/SP/C/2085/D(Prod) dt. 23-2-70 circulated under DGOF No. 385/c/SP/C
dated 16-4-70 and as amended vide DGOF No. 252/Review/SP/D dated 09-11-
66]
This High Level Technical Check Committee should comprise of

AGM/Jt.GM of Planning and AGM/Jt.GM of User Section as members.
Jt.GM may be part of the committee only in absence of AGM. The
Technical Check Committee may submit its report within 15 days to Unit
HOD for subsequent discussion in SRC.
6) The “Stock Review Committee” (SRC) consisting of Unit HOD as the

Chairman and AGM of User, Planning and Material Management section
and C of F&A/JCFA as member will then take decision regarding utilisation
/ disposal of the entire list of items recommended by the Technical Check
Committee and approved by the Unit HOD (at least twice a year). The
SRC should consider the outcome of MAS also. Items for which live
(including suspended) indents are available, may not be disposed without
approval of OFB.
7) After taking all the efforts as mentioned above, MCO will declare the list
of Surplus Stores duly approved from the competent Authority as per
latest Delegation of Financial power.
8) Disposal action of the Surplus Stores may be initiated as per latest

delegation of Financial Power. If, the value of Individual Surplus Store
exceeds the delegated power of Unit HOD, such list of stores duly vetted
by LAO along with copy of report of Technical Check Committee, Unit
______________________________________________________________________________________________________________________
HOD’s approval & Minutes of SRC may be forwarded to OFB to accord

approval for disposal.
9) The said declared Surplus Stores List shall be circulated to all Sister
Concerned (Through Comnet) and Defence Services Headquarters i.e. for
Army (CICP), for Navy (ILMS) and for Air Force (IMMOLS) immediately. If
no response / reply is received within 30 days of circulation it may be
presumed that requirement does not exist.
10) When making offers to other Factories and other Defence Services a
uniform time limit for reply of 30 days from the date of issue of the lists
should be clearly stipulated in the covering Letter. Full particulars of
stores, quantity available and the book value of stores should invariably
be indicated in all offers. If no reply is received from the other Defence
Services within the stipulated time, it should be assumed that they are
not interested in the stores. NIL reports should be called from Factories to
confirm that they have no requirements for the stores offered in the list.
Stores should not be physically transferred to other Defence Indenters
against their requirements unless all other Factories addressed have
intimated their ‘NIL’ requirements or the requirements of Ordnance
Factories have been set aside. If a part of quantity of any item is required
by a Factory, the Defence Services indenter who has also demanded the
same item should be asked if the lesser quantity then available is
acceptable to him.
11) After receiving of any requirements during the notice period the
Surplus items are to be issued to the Indenter and the remaining Surplus
items left in the original MAS List is to be disposed through Metal Steel
Trading Corporation (MSTC) as per the procedure in vogue. The disposal
action shall be done by respective Tender Disposal Committee as per OFB
guidelines in vogue.
12) Surplus Defence Stores, Vehicles and other equipment required for
the bonafide use of Charitable / Welfare / Educational Institutions,
whether they are within the Defence setup or outside, may be released to
them at 1/6th of the Book Value / Ledger Rate. In the case of salvage and
scrap, these will be released at 50% of the last auction sale rate of similar
stores. Release of stores to Charitable / Welfare / Educational Institutions
should be made only after obtaining prior approval of the Ministry of
Defence and Ministry of Finance (Defence).
[Authy:- M of D O.M.No. 3(14)/1293/D(Disposal) dated 31-03-60 and
M of D O.M.No. 13(21)/69/5351/D(O-II) dated 18-8-70]
______________________________________________________________________________________________________________________
13) Surplus Security items should not be declared surplus for disposal.
Such items should be referred to OF Board, MM Division in the form of a
list which should also show their value. OF Board, MM Division will give
Disposal Orders.
Surplus Security items of wireless and signal stores may be

released to the Directorate of Coordination (Police Wireless), Ministry of
Home Affairs at the concessional rates indicated below :-
(a) At 30% of the book value, if the stores are serviceable or
repairable, and
(b) At 10% of the book value, if the stores are unserviceable.
The book value in such cases will be calculated on the basis of the
period vocabulary rates of the stores in condition now together with 5%
addition to cover departmental charges. Additional charges at 10% of
sale value for (a) and (b) above will also be charged to meet expenses
towards packing, incidental charges etc. Release of stores should be
made only after obtaining prior approval of Ministries of Defence and
Finance(Defence).
[Authy:- M of D O.M.No. 3(4)/60/2857/D(Disposals) dated 6-5-61]
14) No Loss statement is necessary for the difference between the book
value and Sale Value of Surplus, Obsolete and Waste Stores, if all the
procedures for disposal action have been followed scrupulously. (OM-VI,
Para 480)
15) In case any Surplus Stores are not sold through MSTC at the
reserved guided price with its specification and accounting unit then such
items are to be grouped to similar items with appropriate accounting unit
in Scrap category (in marketable condition) with approval from the
competent authority.
16) Serviceable Surplus Stores are to be transferred to the Scrap item

through CIV/CRV with suitable allotment of PSA Code in the accounting
package. Before doing Transfer an appropriate committee is to be
constituted for fixation of price of scrap items including one member from
Finance for taking the value in CRV.
17) In case the Department is unable to sell the item even at its Scrap
value, it may adopt any other mode of disposal including destruction of
the item in an eco-friendly manner complying Hazardous Wastes
(Management & Handling) Rules to handle in control condition vide
Ministry of Environment & Forest (Department of Environment, Forests &
______________________________________________________________________________________________________________________
Wildlife), New Delhi Notification No. 594(E) dated 28 th July 1989 and / or
latest guidelines amended from time to time.
18) User Sections / Offices of the Unit also has to monitor and pay
utmost attention on identification of unwanted, non-usable items for any
alternate use. If any, items are identified, Section should raise
Examination order for Gradation / Condemnation and send it to Quality
section for due sentencing as “Unserviceable Store” or as “Scrap”. Then
above items is to be sent to the Stores on Return Note (on Work Order
No 02/00121/00), for accounting and for taking disposal action.
______________________________________________________________________________________________________________________
SUB SECTION-III
Definition & Classification of Surplus Stores
Identification, declaration of store and disposal of Surplus & Waste is a

continuous process.
Surplus Stores
Surplus stores / equipment are those which cannot be utilized 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, scrap, obsolete, obsolescent,
unserviceable, repairable and serviceable stores and materials as enumerated
above provided the above conditions are met.
N.B. :- For the purpose of this, all stores and waste products in excess of
factories normal requirements for its provisioning period should be
taken as surplus. This definition of surplus given only for the
purpose of reviewing factories stocks and does not necessarily
mean that the quantity so arrived at, will be ultimately disposed of.
Waste Products
Waste products are residual by products of manufacturing processes
which cannot be further utilised such items as Coal dust, Coal ashes, Saw dust,
Zinc dross, Aluminium dross, Brass/H.F. splashing and furnace sweepings etc.
Scrap
The term scrap connotes process wastage, stores beyond economical
repair, unserviceable waste stores which have been utilized and have served
their purpose and have been condemned under proper authority to be of no use
except as scrap. The term scrap includes metallic scrap, both ferrous and non-
ferrous, non-metallic etc.
______________________________________________________________________________________________________________________
Obsolete
An equipment or store will be declared obsolete on any of the following
grounds: -
i) Technical inefficiency to carry out its required and intended role and
non-justification for its retention in service.
ii) Its required role has disappeared and it is of no use for any other role.
iii) It has been completely superseded by an improved equipment or
store.
Obsolescent
An equipment or store will be declared obsolescent when it is decided that
no further provision of that item will be made because –
i) the Prototype of a successor equipment has been formally accepted,
or
ii) an equipment or store which, although obsolete within the definition
as above, is required to be retained to meet tactical/technical
training or other special requirements within the service.
Unserviceable
An equipment or store, the condition of which has deteriorated to such an
extent, that it cannot be used either for the purpose for which it is intended or
for any other purpose economically.
Repairable
An equipment or store which has been rendered unsuitable for use in its
present form but can be used after economical repair.
Serviceable
An equipment or store, the condition of which is such that it can be used
for the purpose for which it is intended or for any other purpose suitable.
N.B. :- A Technical Team / Committee (as per delegation of financial

power) should inspect all items enumerated above and certify
correctness of classification.
______________________________________________________________________________________________________________________
SUB SECTION-IV
DISPOSAL OF GOODS
(i) An item may be declared surplus or obsolete or unserviceable if the same

is of no use to the Organization / Unit. The reasons for declaring the item
surplus or obsolete or unserviceable should be recorded by the competent
authority as per delegation of Financial Power.
(ii) The competent authority may, at his discretion, constitute a committee at

appropriate level to declare item(s) as surplus or obsolete or
unserviceable.
(iii) The book value, guiding price and reserved price, which will be required
while disposing of the surplus goods, should also be worked out. In case
where it is not possible to work out the book value, the original purchase
price of the goods in question may be utilized.
(iv) In case an item becomes unserviceable due to negligence, fraud or

mischief on the part of a Government servant, responsibility for the same
should be fixed.
(v) Sale of Hazardous waste/Scrap Batteries/Electronic waste etc. shall be

disposed keeping in view the extant guidelines of Ministry of Environment
& Forest. Prospective bidders of such lots of hazardous waste should be in
possession of valid registration from Either Central Pollution Control Board
or any State Pollution Control Board, on the date of e-Auction and on the
date of lifting, as recycler / preprocessor agency with available quantity
against their credit for recycling.
______________________________________________________________________________________________________________________
SUB SECTION-V
MODE OF DISPOSAL
The mode of disposal may be determined by the Competent Authority,

keeping in view the necessity to avoid accumulation of such goods, consequent
blockage of space and also deterioration in value of goods to be disposed of.
The usual modes of disposal of Surplus are:
1. Small value Surplus such as waste paper or industrial sweepings, and so on,
up to a value of Rs. 5,000 (Rupees Five thousand) in each case may be sold
directly to the local scrap dealers on a summary quotation basis;
2. For disposal of Surplus Stores valuing more than Rs. 5,000 (Rupees Five
thousand) is to be initiated through the e-auction portal of Metal Steel
Trading Corporation (MSTC) based on agreement with Ministry of Defence
(MoD) & MSTC signed on 15 February 2019 intimated vide OFB L/No.
15/MSTC/MM/STORES dated 13/03/2019 or as per latest guidelines available
from time to time.
3. The MSTC Agreement covers disposal of all Scraps (Ferrous and Non-
Ferrous), secondary arising salvage and Surplus Stores, Condemned / Unfit
Vehicles, Vessels, Equipment, Warlike Stores and Misc. articles, Rejected /
Condemned / Obsolete Secondary arising (Ferrous and Non-Ferrous) as well
as Surplus Obsolete Stores, equipment and Misc. articles and e-waste etc.;
through MSTC’s Auction web site as offered by the Store In-charge(HOS). In
addition to the above, any other be added so as to be covered by the
agreement as may mutually agreed upon in writing. The disposal of
warlike/security stores will be carried out under the strict supervision of the
respective Armed Forces Units. In this regard the instructions issued vide
Ministry of Defence U.O. Note No. A/0705/OS_ID/540/D(O_II) dated 30-09-
83 as amended from time to time will be followed.
4. The Units are authorized to dispose of their arising without reference to the
melting factories / OFB at suitable intervals, by e-Auction in advance strictly
on weight basis after fixing a reserve price in consultation with LAO where,
any items are proposed to be sold on running contract basis, necessary
sanction of OFB should be obtained.
5. Scrap which is a security or safety risk (stamps, negotiable instruments,

money value documents, security press items) may be destroyed suitably in
an eco-friendly manner in accordance with guidelines of Central Pollution
Control Board (CPCB) or State Pollution Control Board (SPCB) in the
presence of a committee after obtaining CA’s approval. The committee
should issue a certificate of having destroyed these. Video recording may
also be done of such disposal.
______________________________________________________________________________________________________________________
6. Sale of hazardous waste items would be governed by the following

procedures in addition to guidelines/notifications issued by the CPCB /
Ministry of Environment and Forests (MoEF) from time to time:
a) Sale of old batteries/lead acid batteries will be governed by the
Batteries (Management & Handling) Rules, 2001 or as amended from
time to time;
b) Sale of other categories of hazardous waste items will be governed

by the Hazardous and Other Wastes (Management and Transboundary
Movement) Rules, 2016 or as amended from time to time;
c) Sale of e-waste shall be governed by E-Waste (Management) Rules,

2016 or as amended from time to time;
d) Bidders must submit a notarized copy of the valid registration

certificates issued by the State (or Union Territory) Pollution Control
Board (SPCB) and produce it at the time of taking delivery of the
materials, failing which their bid will be liable for rejection. In case of
lead acid batteries, used/waste oils and nonferrous metal wastes, in
addition to submitting necessary valid registration from the SPCB, the
bidder must also submit a notarized copy of the valid registration
certificate from CPCB or MoEF; and
e) In case of a sale involving inter-state movement of goods, the

buyer shall also submit an NOC from the concerned SPCB, with whom
the buyer is registered, to the seller before taking delivery, failing
which the buyer will be responsible for the consequences and the seller
shall take further decision as may be deemed fit.
______________________________________________________________________________________________________________________
SUB SECTION-VI
PREPARATION FOR DISPOSAL
Factory / Unit should decide the calendar for holding auctions / tenders
for groups of lots. Once lots for disposal is finalized, approval from the Sr.
General Manager / General Manager / HOD of the Unit is to be obtained
containing the Nos. of items, quantity, lot size, lot location, instalments, Taxes
applicable, publication date, tentative auction date, any special condition etc.
On obtaining the approval the said list is to be forwarded to MSTC

respective zonal offices for publication on the portal. The Principal shall provide
the list of materials for disposal with correct description, location, quantity,
quality, information about the hazardous nature of the items, pre bid EMD (if
any) and special remarks, if any, etc. to the MSTC. Information about e-waste /
hazardous material shall be worked out by the MSTC and be mentioned in the
catalogues post receipt of details from the Store (In-charge) / HOS. A brief
summary of this Auction Schedule is given publicity in the e-Auction portal of
MSTC, indicating how to obtain/download Auction Catalogues.
For each Auction a Catalogue is prepared containing details of Schedule of

Lots in the Auction, as well as General Terms and Contracts (GTC), Buyer
Specific Terms & Conditions (BSTC) and Special Terms and Contracts (STC).
In e-Auction, the General Conditions of Sale are available on the website

and Special Conditions of Sale of each lot is hyperlinked to the Lot Description.
After publication of Auction Catalogue, the same is to be downloaded by

the Unit and is to be checked / verified with the proposal including GTC, BSTC
and STC etc. and if any deviations are found is to be rectified in consultation
with the MSTC.
Scrap recommended for disposal should be segregated from other

materials into an identifiable lot. Valuable scrap such as non-ferrous metals
should be secured in lockable rooms.
During disposal of stores, it should be ensured that the contractors were

shown the actual lot before bidding that has to be lifted and no other lot should
be allowed to lift.
The auction area should be specifically marked in white and a board,

indicating the lot number and brief description should be assigned.
______________________________________________________________________________________________________________________
Generally, scrap is sold on “As-is-where-is” basis. The contractor should

start lifting from one end and go on clearing up to the ground level. The lots
identified have generally more quantity than the specified and the contractors
resort to pick and choose from the designated lots.
As such, the lots should not only be specified by encircling in white, even
the direction in which scrap would allowed to be lifted, should be indicated.
A sketch should be drawn indicating the location and direction as above

and a duly authorized copy of the same should be kept in the file. A copy of
authorized sketch should be given to all officials involved in monitoring the
lifting of material. Suitable CCTV coverage should be there towards vigilance.
______________________________________________________________________________________________________________________
SUB SECTION-VII
DISPOSAL PROCEDURE FOR NF SCRAP
Department of Defence Production, Ministry of Defence, Government of

India vide their Letter No 4(8)/94/D(Prod) dated 14 th June 2001 addressed to
DGOF & Chairman/OFB directed to dispose Copper and Copper based alloy
Scraps as per the following :
A) The Scrap would be utilised to the maximum extent in Ordnance
Factories including the melting factories (i.e. Metal & Steel Factory
Ishapore, OF Ambajhari, OF Ambarnath, OF Katni, OF Muradnagar) by
re-melting and conversion by taking trade assistance in respect of the
specifications as per Service requirements and
B) Only the balance scrap which can-not be re-utilised in Ordnance

Factories will be disposed of as per the guidelines given below :
i) 40 % of the Scrap available in Open Tender to be sold at the
highest tender Rate
ii) 30 % of the Scrap available in Same Tender to Small Scale
Industrial Units which are registered with NSIC/SISI/Directorate
of Industries of States Concerned in lots of 1 to 5 Ton each. A
price preference upto maximum of 10% over the highest
tendered rate would be allowed to the registered Small Scale
Industrial Units. Request received from Small Scale Industrial
Units not accompanied by valid certificates of registration from
the authorities mentioned above, would be treated at par with
other tenderers and would not be eligible for 10 % price
preference.
iii) 20 % of the Scrap available in Same Tender to bonafide
Exporting Units (other than export oriented units registered with
members of Peetal Basti Dastkar Association, Muradabad) which
utilise the scrap for manufacturing goods for exports. Such units
on presentation of valid certificate from the competent authorities
on having exported goods manufactured by utilising such scrap
would be allotted scrap upto 50 % of their actual utilisation in
export in the preceding year. A price preference of 10% over the
highest tendered rate to registered Small Scale Units engage in
manufacture of goods from scrap for export marked would be
allowed. Other Industrial units would, however, be charged the
______________________________________________________________________________________________________________________
highest tendered rate, as revealed in the open tender. For new

comers in the field of export, upto 50 % of their expected exports
in any calendar year may be taken as criterion for allotment of
scrap.
iv) A further quantity upto 10 % of the Scrap for disposal would

be reserved for Peetal Basti Dastkar Association (PBDA),
Muradabad for distribution to export oriented SSI Units that are
its members, with a price preference of 7.5% over the highest bid
received against the tender. The Association will be exempted
from participation in the tender for allocation of this quantity.
NOTE : In the event of any quantity out of allocation made under

(ii), (iii) and (iv) above, not being disposed of, the same would be
added to the quantity under (i) for disposal.
No lot is to be created in MSTC e-Auction for the
PBDA offered quantity. While finalisation of Auction in the appropriate
Tender Disposal Committee (TDC) decision is to be taken on above
mentioned clause.
______________________________________________________________________________________________________________________
SUB SECTION-VIII
DISPOSAL PROCEDURE FOR FERROUS SCRAP
A) Steel Scrap Gr “A”, “B” & “C”
Above items should first be offered to the melting factories viz. Field Gun
Factory Kanpur, Grey Iron Foundry Jabalpur, Metal & Steel Factory Ishapore,
Ordnance Factory Kanpur and Ordnance Factory Muradnagar and allow them 30
days’ time to notify their requirements, if any.
It is impressed upon the melting factories that their requirements should

be notified within this period or a NIL report be forwarded.
If above items are required by any of the factory, then the Scrap should
be issued to the concerned factory on IFD. The balance quantity after allotting
the requirement of sister factories is to be disposed of in normal manner,
strictly on weight basis with due consultation with the Local Accounts Office as
per disposal procedure in vogue through MSTC.
If the entire quantities offered are not required by the melting factories,
then the disposal action is to be initiated in normal manner, strictly on weight
basis with due consultation with the Local Accounts Office as per disposal
procedure in vogue through MSTC.
However, if the item is to be sold on running contract basis, necessary

sanction from OF Board, MM Division is to be obtained.
[ Authy :- i) DGOF Letter No. 109/SP/D dated 26-9-67

ii) M of D Letter No. 324/SP/D/Pt.I/D(Prod) dated 5-7-76
circulated under No. 212/2/XXXIII/SP/C dated 06-08-76]
______________________________________________________________________________________________________________________
B) Steel Turning & Borings, Steel Swarf,

Tin Plate Scrap and Cast Iron Boring
The factories are authorised to dispose of their arising without reference

to any melting factories at suitable intervals through MSTC after giving
sufficient time on weight basis and fixing reserve price in consultation of Local
Accounts Office.

C) Steel cutting and Corner cutting

Accounts Office.

[ Authy :- i) DGOF Letter No. 109/SP/D dated 26-9-67
And 1639/SP/D dated 6-7-68]
D) Surplus stock of old Steel Files (broken/Unserviceable)

Accounts Office.
______________________________________________________________________________________________________________________
SUB SECTION-IX
DISPOSAL PROCEDURE FOR MISCELLANEOUS ITEMS
A) COAL ASH AND CINDER ASH
Factory Unit should dispose of Coal Ash and Cinder Ash respectively in
accordance with the instructions as contained in the M of D Letters No.
6241/D(Fy) dated 21-7-50 and No. 7507/D(Fys) dated 6-8-52 forwarded under
DGOF Letter No. 3672/OF.II-B/T dated 11-8-50 and No. 106/SP/D dated 19-8-
52 respectively.
B) COAL DUST
In view of decontrol of price and distribution of coal, the accumulation of

surplus coal dust will be disposed of by the respective factory unit. The factories
are authorised to dispose of without reference to any factories/OF Board at
suitable intervals through MSTC after giving sufficient time on weight basis and
fixing reserve price in consultation of Local Accounts Office.
[ Authy :- i) Coal Controller, Kolkata Letter No. DEF/PRD/Procedure/Genl/67 dated 7-12-67
ii) Letter No. ORD/JBP-MP/68 dated 5-6-68 and
iii) DGOF Letter No. 212/XXV/SP/C dated 19-7-68]
C) COKE DUST
The factories are authorised to dispose of their accumulation of surplus

Coke Dust will be disposed of by the respective factory unit. The factories are
authorised to dispose of without reference to any factories/OF Board at suitable
intervals through MSTC after giving sufficient time on weight basis and fixing
reserve price in consultation of Local Accounts Office.
[ Authy :- i) Coal Controller, Kolkata Letter No. ORD/MSF-Ishapore/BJ/68 dated 21-2-68
and DGOF Letter No. 212/XXV/SP/C dated 8-5-68]
D) CINDER (PICKED), SAW DUST AND COAL DUST
Cinder (Picked), Saw Dust and Coal Dust may be sold to Staff of the
Factories and allied establishments including Inspectorate and Accounts staff
attached to Factories at the following rate ex-site or any updated rate by the
competent authority :
1) Cinder (Picked) : @33-1/2% of the local control rate of Soft Coke.
2) Saw Dust : @10% of the local fire wood rate.
3) Coal Dust : @66-2/3% of the local control rate of Soft Coke.
______________________________________________________________________________________________________________________
Quantity to be sold to Cash Consumers should be strictly compatible with

the requirements of that particular consumer at the discretion of Sr. General
Manager / General Manager / HOD of the Unit.
[ Authority :- M of D Letter No. 693/53/D(Fy) dated 14-11-53 forwarded to all factories under
the DGOF Letter No. 109/SP/D dated 9-12-53]
E) UNSERVICEABLE TIMBER/SCRAP WOOD
Unserviceable Timber / Scrap wood may be sold to Staff of the Factories

and allied establishments including Inspectorate and Accounts staff attached to
Factories at the rate fixed by the competent authority.
Payment issue rate will be fixed in consultation with the Local Accounts
Office and all the arising of Scrap Wood / unserviceable timber should be
disposed of ex-site. There is no objection to the disposal of the Scrap Wood /
unserviceable timber through MSTC when it is not considered economical to
dispose of the same in accordance with the foregoing.
[ Authority :- DGOF Letter No. 34/A/W dated 21-11-52]
F) SILICA FLOUR (FINE SAND)
All arising of Silica Flour (Fine Sand) recovered in Sand Blasting process
should be disposed of by Rate Running Contract.
[ Authority :- DGOF Letter No. 3603/1/XV/SP/C dated 22/26-11-58]
However, the arising of Silica Flour may be used by Civil Engineering

Department / Electrical Department for filling of Pit across the factory / Estate.
G) BATTERIES
All future arising as well as accumulated stock of unserviceable Batteries

and their scrap recovered should be disposed through MSTC to the authorised
Recycling Vendor from State/Central Pollution Control Board.
______________________________________________________________________________________________________________________
SUB SECTION-X
CONDITIONS OF DISPOSAL
The surplus Stores are to be disposed on ‘As-Is-Where-Is’ basis.

Notwithstanding anything contained in the e-auction issued on the description
and particulars of material for sale, the sale is on ‘as-is-where-is’ basis only and
the principle of caveat emptor (the buyer alone is responsible for checking the
quality and suitability of goods before a purchase is made) will apply.
As is where is means that the description/quality/quantity indicated are
approximate and the seller does not give any assurance or guarantee that the
material will strictly adhere to the advertisement or e-auction.
All items shall be taken delivery from the site by the successful bidders,
with its faults and errors in description, if any. Neither can the sale be
invalidated nor the bidder make any claim/compensation, whatsoever, on
account of any defect in description or deficiency in the quantity and quality. No
plea of misunderstanding or ignorance of conditions put forth subsequent to a
confirmation of sale shall be accepted.
______________________________________________________________________________________________________________________
SUB SECTION-XI
INSPECTION BY BIDDERS
In view of the ‘as-is-where-is’ condition, bidders are advised to quote

rates only after inspection of items at the site.
The bidder or his authorized representative may inspect the materials as
per the inspection schedule mentioned in the auction details, between 9 AM to
4 PM (excluding lunch hours) on any working day excepting Saturday, Sunday
and Holidays at the location specified against each lot with the prior permission
from the contact person, as given in the auction details.
No Bidders are allowed to inspect the material on the day of e-Auction.
The detailed description of all lots, including the list of spare parts, if any,
is available at the site.
______________________________________________________________________________________________________________________
SUB SECTION-XII
RIGHT TO REJECT ALL BIDS
The seller reserves the right to accept/reject and cancel any bid, amend
the quantity under any lot or withdraw any lot at any stage before or after
acceptance of bid/issue of acceptance letter/sale order/delivery order/deposit of
the full sale value by the bidder, without assigning any reason thereof and the
value of such material, if paid for, shall be refundable.
The seller shall not be responsible for damage/loss to bidders on account
of such withdrawal at any stage from the sale.
______________________________________________________________________________________________________________________
SUB SECTION-XIII
TAXES
As per notification No. 36/2017-Central Tax (Rate) dated 13-10-2017, the

Government Departments including units under Ministry of Defence are not
required to register with GST portal and obtain GSTN. Accordingly, for the sale
through e-auction conducted by the MSTC for the Units under Ministry of
Defence, the successful bidders shall pay the required amount of GST for the
goods purchased by them through the Reverse Charge Mechanism. The onus of
depositing the correct GST to the government shall lie on the successful bidders
and the Unit / MSTC shall not be responsible for the same. MSTC shall allow
only bidders with valid GST registration number to participate in the e-auctions
for units under Ministry of Defence.
Any statutory variations in the rate of taxes/duties are to be borne by the
purchaser. GST Rates indicated in the e-auction catalogue or Tender
advertisement are only indicative and the actual GST rates as applicable on the
date of lifting / removal of material shall be payable by the successful bidders
directly to the seller at the time of taking delivery of materials.
In order to avoid the imposition of penalty, the amount deposited by the
successful bidder towards taxes and duties will be immediately deposited with
the concerned tax authorities without waiting for the actual delivery.
______________________________________________________________________________________________________________________
SUB SECTION-XIV
PRE BID EARNEST MONEY
To weed out fake participation and Vendors turn-out on some items from
the e-Auction Process, Pre Bid Earnest Money Deposit (EMD) shall be imposed.
However, it will be the sole discretion of the Principal (Seller) to levy the
same or otherwise. The Pre Bid EMD amount per lot will be intimated by the
Principal.
The Pre-Bid EMD is to be deposited in the office of MSTC or in the office
of the Principal(seller) before the auction date so that the vendor can
participate on the item.
______________________________________________________________________________________________________________________
SUB SECTION-XV
DETERMINING RESERVE PRICE
The following authority is competent to fix reserve / guiding prices for

surplus / waste products etc. “The Sr. General Manager / General Manager /
HOD of the Unit / Factories with the concurrence of their respective Local
Accounts Office is authorized to fix the reserve / guiding price for surplus /
waste products etc.” In case of disagreement between the factory
management and the Local Accounts Office, the case should be referred to OF
Board, MM Division for decision.
[ Authy :- DGOF No. 212/XXII/2/SP/C dated 06-05-66]
In any mode of disposal, material should not be sold at rates per lot but
bids should be registered by rate per unit (number, length or weight) so that a
complete check on the quantity delivered can be exercised, at any time. A
Reserve Price Committee may be appointed by the Sr. General Manager /
General Manager / HOD of respective unit to determine the reserve price. The
reserve price committee will include a member from Finance also. Following
factors shall be considered for determination of reserved price:
1. Moving Average Rate / Ledger Rate / Book Value.

2. Highest bid received in the last auction if disposed earlier.
3. Present condition of the item based on physical and chemical
properties.
4. Present market price of the same or similar item.
5. If such rates are not available in the ledger, they may be
ascertained from other factories and if these are not forthcoming, then
the reserve price committee may fix a rate as a guiding price based on
budgetary quotation from at least three independent sources.
6. If no resource is available, then in consultation with LAO, 1/10th of
the ledger rate for stores found unserviceable should be adopted.
The reserve price should be recorded in advance of the date of disposal

and submitted to HOD in sealed envelope for retention in safe custody.
______________________________________________________________________________________________________________________
SUB SECTION-XVI
e-AUCTION PROCESS
On the day of e-Auction, the sealed envelope is to be opened by the

HOD/SR.GM/GM of the Unit and to endorse the Subject to Approval (STA) % of
each item and is to be handed over to the Unit Information / Nominated Officer
for updating in the MSTC Webpage 15 to 30 minutes before the e-auction
commence time.
The Information / Nominated Officer of the Unit shall update the reserve
price and the STA % of each item against the e-Auction No on the MSTC portal
on the day of auction. On completion of updation of said information, respective
office of MSTC is to be intimated to release the bidding process.
Consequent upon enhancement of delegation of financial power related to

disposal of stores of Ordnance Factories, the disposal procedure have been
reviewed vide OFB L/No. 14/4/LP/Policy/MM/Stores dated 12 th May 2008 and is
reproduced as under :
Item Authority and nature of power

i) Serviceable surplus stores valuing upto Sr.GM/GM of the factories can accept bids
Rs. 50 Lakhs per item upto 50% below the reserve / guiding price.
ii) Unserviceable Stores / Vehicles -do-
iii) Waste product / scraps Sr.GM/GM of the factories can accept bids
upto 20% below the reserve / guiding price for
Non Ferrous Scrap and 30 % for Ferrous Scrap
iv) Unserviceable stores valuing more than AGM of the factories can accept bids upto 50%
Rs. 10 lakhs and upto Rs. 25 lakhs in below the reserve / guiding price.
each case
v) Scrap / Waste product valuing more AGM of the factories can accept bids upto 20%
than Rs. 10 lakhs and upto Rs. 25 lakhs below the reserve / guiding price for Non
in each case Ferrous Scrap and 30 % for Ferrous Scrap
vi) Unserviceable stores valuing upto Rs. 10 JGM/DGM of the factories can accept bids upto
lakhs in each case. 50% below the reserve / guiding price.
vii) Scrap / waste product valuing upto Rs. JGM/DGM of the factories can accept bids 20%
10 lakhs in each case. below the reserve / guiding prices for Non
Ferrous Scrap and 30 % for Ferrous Scrap
During Bidding process, Information / Nominated Officer may watch the

bidding process for the Auction and its item. All the Bids quoted are being seen
by the Information / Nominated Officer. Only the rate per accounting Unit is
visible. Party / Vendor details are not available during the process of bidding.
The Bidding shall complete automatically at the pre-set time. If any

bidding is being done just closure to closing time, system will wait for 15
minutes and if no bids are there it will close otherwise system will automatically
______________________________________________________________________________________________________________________
continue for further 15 minutes. The system will continue till all the lots are
closed.
Once all the lots are closed for an e-Auction, System will verify the H-1
Bid with the reserved price entered by the representative / Nominated Officer of
the Unit. The status of the auction will be as under :
a) If H-1 Bid is higher than the reserve price the system will
automatically accept the lot as SOLD and a mail is generated
automatically to intimate Buyer as well as the Seller with the details
like Lot No, Item description, Quantity, rate, total value, EMD details,
Taxes and payment dates etc.
b) If H-1 Bid is less than the reserve price but within the STA %, the Lot
will become STA. Concerned Tender Disposal Committee(TDC) shall
decide to accept the lot as being Sold or otherwise. If the lot is being
accepted by the seller, then the same is to be updated in the MSTC
portal by the Information / Nominated Officer. Accordingly, a mail is
generated automatically to intimate Buyer as well as the Seller with
the details like Lot No, Item description, Quantity, rate, total value,
EMD details, Taxes and payment dates etc.
c) If H-1 Bid is less than the reserve price minus STA % then the system
will automatically accept the lot as REJECTED.
On the succeeding day of e-Auction, the Bid Sheet, Bid History of each
Lot is being downloaded and TDC brief is being generated for approval
depending upon the category of TDC as per latest OFB guidelines.
On completion of e-Auction bidding system, the Pre Bid EMD for

unsuccessful Bidders will be returned immediately either by MSTC or the Unit
who has received the payment. The Pre Bid EMD of the successful bidder shall
be converted to Earnest Money Deposit (EMD) for the said Lot.
The buyer whose bid is highest and more than the Reserve Guided Price
will be advised to deposit EMD. The buyer whose bid is under STA, and if
recommended / approved by the concerned STA Rules will be advised to
deposit EMD.
EMD @ 20% of the bid value is to be deposited within 7 days from the
date of auction or date of approval, as the case may be excluding the day of
auction or the date of approval to the MSTC.
The successful bidder has to pay the balance EMD (at 20% of bid/quoted
value or as decided by the Seller) if any, within 7 (Seven) days from the date of
auction or date of approval, as the case may be excluding the day of auction or
the date of approval to the MSTC.
______________________________________________________________________________________________________________________
On receiving of EMD and approval of TDC, Sale Release Order (SRO) is

being generated for the sold lot mentioning the item description, lot quantity,
instalment no if any, unit rate, total value, EMD Amount, Sale Value Amount,
Payment Date etc. for payment of the balance 80% material cost.
Failure to deposit the EMD would result in deactivation and forfeiture of

registration fee or forfeiture of Pre Bid EMD, if available, of the concerned
buyer. If the last date of payment falls on a holiday, then the last date of
payment of EMD shall be the next working day.
On receipt of SRO, Buyers make arrangement for depositing of payments

as per the payment mode within the stipulated period. In any case, Buyer make
belated payment Late Payment Fee is to be collected as penalty as per the
Terms & Contract of Payment.
A) Balance Sale Value (BSV)
The Balance Sale Value (BSV) or balance material cost along with taxes, if
any, shall be in the form of online payment through the Agent's e-payment
gateway and shall have to deposited by the buyer within 10 days from the date
of Sale Order / Acceptance Letter to be issued by the MSTC excluding the date
of Sale Order / Acceptance Letter. The RTGS Bank Mandate will have to be
given by the Seller / Depot once prior to the e-auction. The payment collected
by the MSTC will be forwarded with 3 working days from the date of receipt of
payment by the MSTC to the registered Bank account of the Seller/Depot.
B) Late Payment of Sale Value
In case of failure to deposit payment within stipulated time mentioned

above, a late payment penalty @ 1% of the amount of material value per week
or part thereof, for a maximum period of two weeks only, shall have to be
deposited by the buyer through online payment gateway. If the last date of
payment falls on a holiday then the last date of payment of BSV shall be the
next working day.
If payment for BSV is not made within two weeks, then the concerned
TDC should take decision for accepting the offers with penalty for the delay
period subject to there should not be any loss to the exchequer or, otherwise
may decide to forfeit the EMD and re-auction the lot with fresh arising if any.
______________________________________________________________________________________________________________________
C) DELIVERY OF SOLD MATERIAL

After receipt of full payment of a lot, Lifting Order is being issued to the
Buyer for lifting the material within 30 calendar day.
In case, Buyer is unable to lift the complete lot within the stipulated
period, Ground Rent is to be collected as penalty for unlifted quantity as per
Terms & Contract.
D) Free Delivery Time

Delivery has to be taken by the successful bidders within 30 (Thirty)
calendar days (called free delivery period) from the date of the acceptance
letter / sale order (excluding the date of issue of acceptance letter / sale order).
The delivery of material will be given only after realization of the demand draft
/ pay order.
E) Ground Rent
If the purchaser is not able to lift the material within the free delivery
period, he may request for an extension. Such extensions are generally granted
after levying a ground rent @ 2 % per day on the value of the unlifted quantity
for the delay after the date of expiry of free delivery period as stipulated in
terms and conditions of e-auction / and the same will be deposited in the
Government treasury within 48 hours or two working days of its receipt.
But, in some genuine cases, the levy of ground rent may be waived. HOD
/ Sr. General Manager / General Manager of the Unit may waive Ground Rent
upto Rs. 10,000/- in each occasion (Refer Delegation of Financial Power as
issued from time to time).
The amount realized as ground rent should be noted in the Lifting Order
by the Store In charge not below the rank of Junior Works Manager and
certified by the Stock verifier. The Store In charge will be responsible for
remitting the cash to the cashier and obtaining a receipt.
F) All Risks to the Buyer

The items shall remain, in every aspect, at the risk of the buyer from the
time of acceptance of his offer. The seller will not undertake any liability
whatsoever for the safe custody, protection or preservation after the sale has
been confirmed. Lots are put up for sale, subject to change by nature’s wear
and tear. No complaint regarding the quality or description of the materials sold
will be entertained once the bid has been accepted.
______________________________________________________________________________________________________________________
G) Terms of Delivery
No picking, choosing, sorting of goods or materials sold will be permitted.
However, welding, cutting or breaking at the cost of purchaser may be allowed
on prior approval from the competent authority for ease in transportation.
In used / waste oil, separation of oil and water, and so on, shall not be
allowed at the site. If these actions are allowed, there is possibility of leakages
& spillages which may attract observation from PCB.
If any foreign materials are found to be mixed in the lot, other than the
items included in the auction catalogue and acceptance letter/sale order, the
seller reserves the right to remove them at the time of delivery.
The buyer shall not be entitled to re-sell an item, lot or part of a lot while
the goods are still lying within the premises of the seller and any such sale or
assignment of the buyer’s right to the material sold in an auction will not be
recognized.
All documents for releasing materials will be made out in the name of the
buyer only. The material will be delivered only to the successful bidder or his
authorized representatives against the presentation of the buyer’s identity
proof.
If the successful bidder desires to authorize a representative or an agent
to accept delivery, the bidder shall produce a suitable power of attorney or
authorization letter for each lot separately, duly attested, by a notary public
authorizing his representative or agent to lift the material from the seller.
H) Default by Seller
The seller will not be, in any way, responsible for failure to deliver the
material due to causes beyond his control such as a strike, lockout, cessation of
work by labourers, shortened hours, act of God or other causes or other
contingencies whatsoever.
The buyer shall not be entitled to cancel the contract and the period of
delivery shall automatically be extended proportionately.
I) Default by Buyer
Materials sold but not removed within the specified date will become the
property of the seller and it will have the right to dispose of such goods in any
manner as he deems fit without any notice.
______________________________________________________________________________________________________________________
J) Witnessing Delivery
All materials sold shall be weighed or counted before delivery, this being
supervised by the:
i) Store In-Charge representative;
ii) HOD / Sr. General Manager / General Manager’s representative not
below the rank of Chargeman;
iii) Representative of the Security Section not below the rank of
Chargeman; and
iv) Representative of the purchaser (if he wants to be present).
Besides above, Orderly Officer detailed on that date may witness the
delivery subject to availability. However, the Orderly Officer detailed on the
date has to witness the weighment is mandatory.
K) Deliveries of Scrap
At the time of delivery of scrap material to the purchaser, the weighment
is to be done in the presence of the Store In-Charge representative, so
nominated by the Head of Office.
The Store In-Charge representative and representative of the Security
Section will sign a joint statement indicating the type of scrap, name of the
party to whom scrap is delivered and quantity as per the weighment slip.
The Store In-Charge should arrange for the deliveries to be affected
according to the agreement and terms and conditions of sale. He should take
every possible step to expedite delivery of the auctioned materials.
The Store In-Charge should count, measure or weigh each lot or part of a
lot after comparison of the description and quantity shown in the sold lot to
ensure that only such kinds and quantities of materials as have been shown in
the sold lot are being issued. Store In-Charge should sign the Gate Passes,
Issue Vouchers and Tax Invoice in token of such a check.
In giving delivery of scrap of non-ferrous items, the material should be
weighed on electronic weighing scales and the weight of each consignment
should be recorded in detail by the Store In-Charge in his Weighment book.
All deliveries should be done through Electronic Weigh Bridges. All the
Weigh Bridges should have valid certificate from Weight & Measurement
Department of the State Government.
Store In-Charge should sign the Issue Voucher after fully satisfying
himself / herself that entries made therein agrees with those in the field book.
______________________________________________________________________________________________________________________
The field book should be signed by the other representatives making delivery of
the goods in token of their having accepted the correctness thereof.
The empty and loaded trucks or carts should be weighed and particulars
of the Gate Pass issued recorded. The Gate Pass should be countersigned by
the DO/GO of Store Section.
The loading of the sold materials should be done under the supervision of
the Store In-charge and be witnessed by other representatives.
L) Variation in Available Quantity

At the time of delivery, the actual quantity may vary from the quantity
mentioned in the delivery order. In case of excess available material, the seller
reserves the right to retain material in excess of quantity in the lot at its
discretion.
The purchaser may be allowed to lift the additional quantity after making
the requisite additional payment to the seller subject to such provision exists in
the e-Auction Catalogue.
If the quantity in a lot on actual weighment or count is less than the
announced quantity, the seller will not make good the deficiency under any
circumstances.
The purchaser thereof will be entitled to obtain a refund for the
undelivered quantity at the quoted rate. No interest will be paid on the amount
of short delivered quantity.
The reasons for shortfall should be recorded by the Store In-charge and
the approval for the same should be obtained from the respective TDC. Copies
of the Issue Voucher / weighment slip will be the base for determining the
refund amount.
On mutual agreement between the purchaser and the seller (Ordnance
Factory Unit) the shortfall quantity may be issued within a stipulated time as
decided by the respective TDC.
______________________________________________________________________________________________________________________
SUB SECTION-XVIII
REFUNDS
Cases of refund may occur during the sale of Surplus / Unserviceable

stores and Waste products due to one or more of the following reasons :-
a) Short delivery of stores as per clause 6 of the third schedule
attached to the Auctioneering Agreement.
b) Legal award against the Government
c) Refund of ground rent or earnest money deposits.
Refund cases pertaining to legal awards should be referred to the OF

Board, MM Division who will decide them in consultation with the Branch
Secretariat of the Ministry of Law at Kolkata.
Refund cases on account of short delivery / sufficient quantity of material
is not available for delivery of stores or ground rent or earnest money deposit
may be decided by the Sr. General Manager / General Manager / HOD of the
Unit and shall refund all the amount received from the bidders on ~ Pro-rata ~
basis. No claim shall be entertained by any Unit for loss of profit, damage or
interest.
______________________________________________________________________________________________________________________
SUB SECTION-XIX
CONCLUSION OF DELIVERY
The seller’s responsibility ends after the consignment has been loaded
and handed over to the representative of the purchasers.
The seller will be no party to any dispute that may arise after the loading
has been completed.
______________________________________________________________________________________________________________________
SUB SECTION-XX
SERVICE CHARGES
The MSTC shall receive service charges at the rate of 1.6% plus GST on
each sale proceeds concluded. The rate shall remain firm for the entire duration
of the contract. However, the rate may be reviewed by Ministry of Defence from
time to time and is applicable.
The Service charge will be calculated on the sale value realized of
materials delivered excluding GST. Service charges will not be deducted from
such sale proceeds. Service charges payable to the MSTC shall be paid by the
Principal or his authorized officer within 21 (Twenty one) days from the date of
submission of the bills by the MSTC.
______________________________________________________________________________________________________________________
SUB SECTION-XXI
Standard operating Procedure

for Disposal of Trees/ Wooden Logs
Information about uprooted trees due to natural calamities may be given

to State Forest Authorities and the uprooted trees may be stacked in a secured
place.
The trees should be measured in terms of cubic feet and inventoried by
the Estate Officer. MRP must be accessed in consultation with State/Local
Forest Authorities and LAO.
Trees which are to be cut down or to be partially chopped for minor work,
may be cut/trimmed on receipt of approval of Unit HoD and NOC from the State
Local Forest Authorities as per guidelines in vogue.
The trees should be measured in terms of cubic feet and should be
inventoried and kept in a secured place by the Estate
Officer and then MRP must be accessed in consultation with State/Local Forest
Authorities and LAO.
These Trees Wooden logs should be disposed of by utilizing the service of
approved auctioneer of OFB through e-Auction process.
For disposal of trees /wooden logs where total value is less than or equal
to Rs. 50,000/-, HoD/HoD Representative is authorized to carry out spot
auction by sending auction notice to the local contractors, State/Local Forest
authorities, etc. at least 10 days before the proposed date of auction.
Unserviceable Timber/Scrap Wood will be disposed off as per Para 22 of
OFB Circular 212/2/MM DTD 15-06-1981. SOP have been framed in Line with
MoD Letter dated 25.07.2017.
[Authority : OFB L/No.14/04/POLICY/DISPOSAL OF WOOD/MM/STORES dated

20/11/2018]
______________________________________________________________________________________________________________________
SUB SECTION-XXII
PRESERVATION OF DOCUMENTS
Issue Vouchers, Gate Passes and Sale Release Orders connected

with the disposal of surplus stores and Waste products should be
preserved in Original for a period of five years after completion of audit.
[ Authority :- M of D U.O. No. 63(55)/D(O&D) dated 04-09-52]
On completion of lifting for all the items of an Auction, all the

documents are to be digitized and preserve in suitable storage media for
future reference if any. Before disposal of old documents, it should be
invariably checked for digitizing.
______________________________________________________________________________________________________________________
Issue
Introduction – These instructions relate to the issue of stores and materials

from various sources. These instructions are in amplification, and not in
supersession, of the instructions contained in Factory Accounting rules and
Without exception whatsoever, all issue handled by the Issue Group will
be entered in accordance with the following instructions without delay on Issue
Voucher supported by Gate Pass, Convey Note etc. as per need basis.
In addition, Store Issue Group will also prepare Issue Vouchers for those
materials, which has been issued from Production/Maintenance Unit in their
Gate Pass to third party for further processing. However, the regularization of
Gate Pass lies with the issuing Unit / Section only.
There is no exception for miscellaneous issues, such as machinery,

Samples, Proof Samples, Firm’s Property returning, Medical stores, contingent
stores, Stores issued to employee on welfare measures, onward forwarded
material or stores sent to a Consignee / Factory, Stores sent on loan if in fact
such materials are handled by the issue Branch.
Issue of Material- Material is issued by the Stores Sections of the factory under
proper authority for the following purposes:
(i) Issues to manufacturing shops.
(ii) Issues to other factories.
(iii) Issues oil on payment to other Government Department etc.
(iv) Issues to Army, Navy & Air Force
(v) Issues to Other Defence Department
(vi) issues to MHA/State Police Units/ Civil Trade etc.
(vii) Issues on account of sale by auction etc.
(viii) Issues to foreign countries
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 of Stores due to causes other than (a) and (b) above
(d) Transfers to Capital.
(e) Miscellaneous.
______________________________________________________________________________________________________________________
Sub-section I
Issue Voucher
(a) Forms – Standard format is to be designed as per format No IAFZ-2096

for Issue Voucher (I/V) with the information viz. Issue Voucher No, Issue
Voucher Date, Consignee’s Name & Address, Order No, Order Date, Inspection
Note No, Inspection Note Date, Item Code, Item Nomenclature, Accounting Unit
& it’s Description, Quantity, Lot No, Unit Rate, Total Value along with Packing
details (Wooden Box/Steel Box/Cartoon Box etc.).
(b) On receipt of Inspection Note from production/planning Sections, Staff from
Store Issue Group shall check the Store packing physically to ensure that there
is no damage by duly checking for the seal if any. If it is found broken,
communication is to be initiated immediately with the concerned authority.
(c) Store Issue Group shall check the Store, for its Product Identity, Lot No and
quantity depicting on the Package or otherwise intimate concerned authority for
making arrangement.
(d) On receipt of material and after checking of packages, if found acceptable
i.e. without any damages Store Issue Group has to arrange for retaining the
material at their custody and provide acknowledgment to the section
concerned.
(e) Store Issue Group Staff shall put proper Tag depicting Item Nomenclature,
Quantity, Lot No etc. on the package of the material.
(f) The Store Issue Group will make plan to dispatch the Store received along
with other stores with suitable Transportation contract made at their end. In
case sufficient load is not available as per the Transportation Contract
alternative arrangements may be made as per the directive of concerned
planning section with due approval from the competent authority.
(g) The Store Issue Group Staff shall prepare a Convey Note for the
consignment to be dispatched and forward the document for raising of Issue
Voucher (I/Vr).
(h) On receipt of Convey Note along with Inspection Note, Issue Voucher shall
be generated by the Issue Group. Issue Voucher is to be generated in Online
PPC Package, by calling respective Inspection Note (I/Note) Nos / Examination
Order Nos / Authority letter (to Issue Nominal Item/Returnable Item) and Item
Code and inserting the issue quantity based on Convey Note.
______________________________________________________________________________________________________________________
(i) On completion of data entry, Issue Voucher Program should generate Issue
Voucher No automatically. The Issue Voucher No will be system generated and
should prefix year in (YY format) before putting serial No. Program should start
with Serial No 1, trailing blank space with 0 at the beginning of fiscal year and
to increment with 1 (One). Date will be entry Date only. System should not
accept any previous or future date. The No so generated should also suffix “P”
for Production, “S” for Stock Item and “N” for Nominal Items.
(j) On generation of Issue Voucher, Outward Gate Pass (OGP) is to be

generated before making physical Issue. This module will update Gate Pass
detail with Issue Voucher for linking purpose only. [ See generation of Outward
Gate pass as mentioned below under Sub Section-II. ]
(k) After completion / raising of Issue Voucher, print is to be taken for

disposals as under :
(i) 6 Copies of Issue Vouchers for issue to Other Defence

Departments Viz. Army, Navy, Air Force, MES, R&D Organisation
and Inspection Organisation
1. One copy to be retained by Consignor for Office group

2. Three copies to be forwarded to Consignor’s AO for pricing.
3. Two copies to the Consignee for accounting purpose.
Consignor AO will return one copy duly priced to Store section
immediately for forwarding to Consignee along with the material.
Consignor AO shall retain two copies by them and out of which one copy
will be forwarded to Consignor Accounts Office subsequently.
Consignee will return one copy duly receipted endorsing the Receipt
Voucher No & Date with Accepted quantity details. Consignor’s Accounts
Office shall price the Issue Vouchers at the price fixed by OF Board or by
Competent authority.
If any deviation found in rate, Consignor’s AO will forward a copy
duly adjusted along with a copy of Punching Medium to the Controller of
Receiving Services. A second copy will be forwarded simultaneously to
the Consignee AO for verification of necessary credit in the ledger.
Note - In the case of Issue of Stores to MES debit for the same will be
raised by the AO of the Consignor Factory through Defence Exchange
Accounts. For this purpose, the DID Schedule duly supported with copies
of vouchers and Punching Medium will be forwarded to the Accounts
Section of the P C of A(Fys) Kolkata by the Accounts Office concerned for
onward transmission to the Regional CDA.
______________________________________________________________________________________________________________________
(ii) 5 Copies of Issue Voucher for issue to Non-Military Department

and Payment Issues
1 One copy to be retained by Consignor for Office group

2 One copy to be forwarded to Consignor’s AO for pricing.
3 Three copies to the Consignee for accounting purpose.
Out of three copies transmitted to the Consignee, two copies should
be return duly receipted endorsing the Receipt Voucher No & Date with
Accepted quantity details to the Consignor of which one copy is sent to
Consignor AO. Consignor’s AO shall raise debits against the consignee
department or, watches credit recovery as the case may be.
(iii) 6 Copies of Issue Vouchers to be prepared for issue on IFD
1. One copy to be retained by Consignor for Office group.

2. Three copies to the Consignee Factory along with the Stores. Out
of the three copies, one copy of Issue Voucher will be priced by
the Consignor’s LAO. On receipt of the stores along-with the said
copies of Issue Vouchers the Consignee Factory will return one
copy of the Unpriced Issue Voucher to the consignor duly
acknowledging receipt of stores. The consignee factory will
prepare Receipt 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 Local Accounts Officer for
necessary accounting in the PSA, PSL and preparation of
Responding IFD P.M at his end.
3. The balance two copies of Issue Vouchers are to be forwarded to
Consignor’s Local Accounts Office by the Consignor Factory. Both
copies will be priced, one copy will be retained by the Consignor
Accounts Officer for accounting purposes and the other copy will
be sent to the consignee Accounts Officer with IFD P.M.
(l) The Issue Voucher including Nominal Vouchers are to be signed by an Officer
not below the rank of Junior Works Manager of Store Issue Group / Store
Section. Due to non-availability of Junior Works Manager of Store Section in
any circumstances then, Group-“B” Non Gazatted Staff of Store Section shall
sign it subject to approval/instruction given thereon.
(m) Store Issue Group staff shall obtain acknowledgement/sign from the
representative of Transporter on Issue Voucher before releasing of consignment
on the office copy of Issue Voucher and shall arrange for filling along with all
documents including Tax Invoice into respective File for future correspondence
if any.
______________________________________________________________________________________________________________________
(n) Store Issue Group may retain the outgoing store especially bulky / heavy
consignment in respective Shop / Godown / Area of Production Section to
reduce man hours in handling of the store.
(o) In respect of IFD transactions, the following accounting procedure should

be strictly followed:
(o.i) Consignor Factory will dispatch the IFD Stores on Awaiting Production
(“P”) Issue Voucher. However, the Stores will not be booked on CCO2
(Non-Financial PM). Tax Invoice will not be generated and will be issued on
Delivery Challan as the goods are sent on approval basis.
[Authority – OFB Letter No 14/4/IFD/POLICY/MM/STORES

dated 30-10-2017 and 02-07-2018]
(o.ii) The consignee factory shall upload the copies of Rt. Voucher on OFB-
Comnet portal for which suitable infrastructure may be developed if not
available at store end to reduce operational time.
(o.iii) Consignor Factory will issue GST Tax Invoice against the already
dispatched IFD stores on Awaiting “P” Issue Voucher on receipt of Receipt
Voucher (RV) from the consignee Factory or after 45 days of issue of issue
of Awaiting Issue Voucher whichever is earlier.

dated 30-10-2017 and 02-07-2018]
(o.iv). The Local Accounts Office of the Consignor Factory will book the
material in CCO2 by converting the Awaiting Issue Vouchers as Regular
Issue Vouchers (by retaining the same number) on receipt of Receipt
Voucher (RV) from the Local Accounts Office (LAO) of the consignee
Factory.

dated 30-10-2017]
(o.v) If the Consignee does not communicate the requisite RV within 45

days of the IGP (of their end), the Local Accounts Office of the Consignor
will be permitted to book the issue in the CCO2 based on the copy of the
IGP from the Consignee and simultaneously Consignor factory will issue
GST Tax Invoice against the already dispatched IFD Stores.

dated 30-10-2017 and 02-07-2018]
______________________________________________________________________________________________________________________
(o.vi) In case of discrepancy (in quantity & quality), representative of

Consignor and Consignee Factory should jointly inspect the material and
make a joint report.

dated 30-10-2017 and 02-07-2018]
(o.vii) On receiving of IFD Store from the Consignor, if found defective by

the Joint Inspection Committee, and found to be repairable the same
should be retain in Store physically by labelling it “DEFECTIVE” till issuance
of the same to the Consignor through Nominal Issue Voucher [Defective
Issue Voucher (D-IV)] along with Delivery Challan (without charging GST).

dated 30-10-2017 and 02-07-2018]
(o.viii) The Consignee should take on-charge the defective material

through Defective Receipt Voucher (D-RV) and simultaneously issue to the
Consignor Factory under Defective Issue Voucher (D-IV).

dated 30-10-2017 and 02-07-2018]
(o.ix) A Register for keeping the movements of D-RV & D-IV and physical
balance of the Defective Items to be maintained.

dated 30-10-2017 and 02-07-2018]
(o.x) The above transaction will be Nominal only. The documents i.e. D-RV
and D-IV must clearly mention the minutes’ number and date which is
prepared by the Joint Inspection Committee.

dated 30-10-2017 and 02-07-2018]
(o.xi) The rejected material if repairable should be returned to Consignor

Factory immediately through Defective Issue Voucher (D-IV) along with
Delivery Challan (without charging GST).

dated 30-10-2017 and 02-07-2018]
(o.xii) The Consignor should undertake the repair under rectification /

repair work orders (indirect series work order).

dated 30-10-2017 and 02-07-2018]
______________________________________________________________________________________________________________________
(o.xiii) After rectification of the rejected store, same should be returned to

the Consignee under Nominal Issue Voucher along with Delivery Challan
(without charging GST).

dated 30-10-2017 and 02-07-2018]
(o.xiv) On receipt of rectified / repaired store, Consignee factory will follow

the same process for inspection and simultaneously preparation of Receipt
Voucher within the time frame.

dated 30-10-2017 and 02-07-2018]
(o.xv) If found acceptable after inspection, then the rectified material will
be taken on stock charge against the Awaited Issue Voucher which has
been raised by the Consignor Factory at the beginning.

dated 30-10-2017 and 02-07-2018]
(o.xvi) The above procedure (i.e. n.vi to n.xv) should be completed within
60 days. If defect has not been reported within 45 days, it will be assumed
by the Consignor Factory that material has been accepted and any
subsequent rejection will have to be regularized by the Consignee Factory
only.

dated 30-10-2017]
(o.xvii) The irreparable / defective stores may first be taken on stock by

the consignee through Defective Receipt Voucher (D-RV). These Stores will
be sent back to the Consignor on Defective Issue Voucher (D-IV) in place
of Nominal Voucher (as in case of repairable stores). The associated loss is
to be regularized by the consignor as Production Loss.

dated 30-10-2017 and 02-07-2018]
(o.xviii) Consignor Factory will forward 03 copies of Awaiting Issue Voucher

to their LAO. Out of the 03 Awaiting Issue Voucher, their LAO will return 01
copy immediately after pricing. On receipt of above, the Consignor Factory
will forward 03 copies of Awaiting Issue Voucher (including the priced copy
received from their LAO) to Consignee factory along with the material.
Consignee Factory after taking the material in Stock Charge will forward
the Priced Issue Voucher (received from Consignor) along with their
Receipt Voucher to the Consignee’s LAO.
______________________________________________________________________________________________________________________

dated 30-10-2017 and 02-07-2018]
(o.xix) Consignee LAO will ascertain from Factory management whether

the store / item received or there are any irreparable / repairable items, on
receiving one copy of the Awaiting Issue Voucher from Consignor’s LAO. If
it is there, then the RV will be prepared on net receipt. [Discrepant
quantity to be dealt with as follows:
a) goods returned are to be sent back on delivery challan;
b) if goods are not sent back a separate Tax Invoice to be
generated by seller for Scrap.
A copy of the same will be forwarded to the Consignor’s Local

Accounts Office for preparing the Punching Media and accounting in the
CCO2 (Non-Financial Punching Media) and simultaneously linking the
Awaiting Issue Vouchers (by converting the Awaiting Issue Vouchers to
Regular Issue Vouchers by retaining the same number) with the Receipt
Voucher prepared by the Consignee Factory. Consignor will generate Tax
Invoice simultaneously for charging GST to Consignee and make payment
as required as well as book the Tax amount in CCO2.

dated 30-10-2017 and 02-07-2018]
(p) On completion of day work a summary report (consisting of Issue Voucher

No, Issue Voucher Date, Consignee Name, Item Nomenclature, Quantity,
Inspection Note No, Inspection Note Date, Lot No, Packing Details, order by
Issue Voucher Date, Issue Voucher No) is to be taken from the system for
retention / filing purpose to replace Issue Voucher Register.
______________________________________________________________________________________________________________________
Sub-section – II
Material Outward Gate Pass
(a) Forms – Standard format is to be designed for Material Outward Gate Pass
Alias Outward Gate Pass (OGP) with the information viz. OGP No, OGP Date
with time of generation, Issue Voucher No, Issue Voucher Date, Item
Nomenclature, Accounting Unit, Quantity, Lot Nos, Package Details, Nature of
Supply (by Vehicle / by hand / by courier etc.), Vehicle No, Consignee’s
Representative Name / Name of Authorized Representative.
(b) OGP is to be generated by the Staff of Store Issue Office through Online
PPC Package. The OGP document shall be generated in the Online System with
due validating Issue Vouchers along with Tax invoice / Challans where Order
details are available in the online system (for regular items). While raising OGP
the following information should be captured in the system viz. Issue Voucher
No., Issue Voucher Date, Item Code, Quantity, Lot Nos., Package Details,
Nature of Supply (by Vehicle / by hand / by courier etc.), Vehicle No,
Consignee’s Representative Name / Name of Authorized Representative etc.
(c) On completion of data entry, OGP Program should generate OGP No. The
OGP No. will be system generated and should prefix year in (YY format) before
putting serial No. Program should start with Serial No 1, trailing blank space
with 0 at the beginning of fiscal year and to increment with 1 (One). Date will
be entry Date with time of generation only. System should not accept any
previous or future date.
(d) During raising of OGP if system doesn’t allow to raise due to expiry of
Delivery Period, the concerned Staff / Group In-charge for OGP shall intimate to
concerned User Section & Planning Group for amendment of Delivery Period. If
OGP preparation is required, the same may be generated after due approval
from competent authority in writing.
(e) After generation of OGP, the print copy of OGP is to be signed by an officer
not below the rank of Junior Works Manager of Store Issue Group / Store
Section and is to be approved by D.O./G.O./C.O of Store Section. In case of
non-availability of Junior Works Manager of Store Section in any circumstances,
Group-“B” Non Gazatted Staff of Store Section shall sign it. In case of non-
availability of DO/GO/CO of Store Section, the Orderly Officer detailed for the
day in Factory shall sign it. There after the outgoing materials along with the
raised OGP Copy and Issue documents are to be forwarded to Security Gate for
allowing to take out from the factory.
(f) OGP is also to be raised for irregular items (where Order details are not
available on the system) viz. Machinery, Samples, Proof Samples, Deposit
Stocks, Firm’s Property returning, Medical stores, contingent stores, Stores
______________________________________________________________________________________________________________________
issued to employee on welfare measures, onward forwarded material or stores

sent to a Consignee / Factory, Stores sent on loan.
(g) OGP / suitable documents are to be raised by the Issue Group for the items,
which has been received from Allied establishment based on documents
received along with consignment.
(h) On completion of day work a summary report (consisting of OGP No, OGP
Date, Consignee Name, Item Nomenclature, Quantity, Lot Nos, order by OGP
Date, OGP No) is to be taken from the system for retention / filing purpose to
replace OGP Register.
______________________________________________________________________________________________________________________
Sub-section III
DISCREPANCIES DURING ISSUE

Action where discrepancies of stores are noticed by Consignor –
(e) Store Issue Group shall deploy their representative, a security
representative and a section representative if any items are to be
issued from their end while loading of consignments.
(f) All Transport Trucks Tare Weight & Gross Weight should be taken.
(g) A Convey Note is to be generated for each Truck/Wagon for its loading
details.
(h) When discrepancy arises for other than Sister Factories, proper
communication is to made on priority stating the sanctity of Issue
mentioning the procedure of Issue including the acknowledgement by
their representative in presence of Factory representative.
(i) The items which were issued in packaged condition or for some small
items where accounting may take some time, discrepancy if any
noticed is received after 30 days from the date of receipt of the store
should not be entertained.
(j) In case of discrepancies arises for Sister Ordnance Factories
(Consignee) for quality and quantity, a team / representative is to be
nominated and to be sent to the Consignee Unit for ascertaining the
discrepancy and to be settled as mentioned above.
______________________________________________________________________________________________________________________
Sub-section IV
Issue of Stores and Accounting thereof
(i) All the items of stores issued from the Factory are to dispatched
based on Inspection Note / Examination Order only.
(ii) All the items dispatched is to be made entry on the Convey Note.
(iii) Based on Convey Note, Issue Vouchers are to be generated along
with Tax Invoice or Delivery Challans depending upon each case.
(iv) Material Outward Gate Pass is to be generated at last on completion
of above.
(v) All Issue Vouchers are to be generated on following series :
P - Production Items
S - Stock Items
N - Nominal Items
Sub Type Description
D-IV Defective Issue Voucher
1 Proof Samples
2 Welfare items issued to the Employee on
Payment
3 Firm’s Property Returning
4 Rejection Items
5 Returnable items
______________________________________________________________________________________________________________________
Sub-section V
RAILWAY WAGON LOADING PROCEDURE
For Dispatch of Ammunition to various Depo through Railway Wagon the

following Drills is to be operated:
1) P&P Section shall approach to ARMY HQ / AIR FORCE HQ / NAVY HQ

preferably through FAX stating readiness of Ammunition and
request for forwarding of Loading Orders subject to prior clearance
of all documentation.
2) On receiving of Loading Orders from Headquarters, Store Section
shall place an Indent on Railways (Divisional Railway Office) for
placement of Full Rake / Half Rake / Mini Rake as per requirement
with copies to Chief Freight Manager, Nearest Station Manager, all
concerned Controlling Officers (AGM’s), and DO/GO of P&P Section.
3) While placing an Indent following point have to be mentioned:
a) Normal working hours of the Unit i.e. 7.30 AM to 4.30 PM
b) Non-working Days i.e. Sundays/Holidays and Saturday being
part working day
c) Wagon Placement time i.e. within first 2-3 hours so that in
remaining time loading can be completed. Loading of
Ammunition / Explosive is risky and proper care / safety is to
be maintained. No loading of Ammunition after Sunset is
allowed as per Safety norms.
d) Cleanliness of Wagon i.e. ensuring that floor of wagons
deployed for Ammunition loading are to be cleaned and free
from dust.
e) In case Wagons are provided at late hours the loading to be
done on next working day and date of allotment will be
treated as deferred to the next day.
4) Before arrival of Wagon Rake, intimation is to be given to Electrical
Section, for arrangement of Lighting on Transit Platforms if not
working.
5) Before arrival of Wagon Rake, intimation is to be given to Motor
Transport Section for arrangement of Vehicle Viz. Fork lifter,
Battery Truck etc. on Transit Platforms for loading purpose.
6) Before arrival of Wagon Rake, Intimation is to be given to Security
Officer for keeping Readiness on deployment of DSC Convoy and
making arrangement for opening & closing Railway Gates of the
Unit/Factory.
______________________________________________________________________________________________________________________
7) Intimation to be given to the concerned Contractors for providing

adequate Labour for Loading purpose.
8) Before arrival of Wagon Rake, Intimation (preferably through
FAX/e-mail) to be sent to the concerned Depo (Consignee) about
tentative arrival and likely reaching of loaded consignment at their
end.
9) On date of arrival of Wagon Rake, interaction with Railway
authorities is to be done for placement at right time.
10) On the date of arrival of Wagon Rake, P&P section provides Loading
Item List to Store section to be dispatched to concerned Consignee.
11) On arrival of Wagon Rake, required Wagons are placed inside the
factory at the earmarked loading point / Transit Platform.
12) At loading points, Stores and Production Section representative
shall cross check the loaded lots as per the P&P instruction for
correct loading in the Wagon to avoid any future discrepancies.
13) Store staff shall prepare a Loading Report & Convey Note for each
wagon containing the loaded articles, their lot details, quantity,
packing instruction etc. and obtain signature from user & store
Representative. One copy of Convey Note is to be retained inside
the wagon.
14) On completion of loading of individual wagon, each wagon will be
locked & sealed properly before final passing out of the Unit.
15) One Escort Wagon meant for the moving DSC Convey Team is to be
cleaned and handed over to the Team Leader.
16) Store Staff shall prepare all the Issue Voucher Wagon wise for
loaded ammunition items duly validating with Inspection Note.
17) Store Staff shall also arrange for generation of Railway Receipt
(R.R.) for each wagon against Military Credit Note from the nearest
Railway Yard / Station.
18) Tax Invoice / Challan is to be prepared wagon wise for the
forwarded / issued consignment.
19) On receiving of R. R. from the railway authority, The R.R., Issue
Voucher, I/Note, Convey Note, Tax Invoice / Challan etc. are being
handed over to the moving DSC Convey Team leader before
releasing from the Loading Unit.
20) After releasing of Wagon Rack from the Unit an intimation
(preferably through FAX/e-mail) is to be sent to the Consignee
about the dispatches.
______________________________________________________________________________________________________________________
Sub-section VI
Store In Transit
(Out going)
As per latest guidelines vide OFB Letter No 14/4/IFD/POLICY/MM/STORES

dated 30-10-2017 and 02-07-2018 pertaining to IFD Transaction, there should
not be any SIT after April’2018. If any SIT exists, w.e.f 01/04/2018 the same
should be addressed as per guidelines mentioned above. For old SIT cases, it
should be cleared on priority to avoid possible wearing out.
Sub-section VII
Calibration of measuring Instrument held under Store Issue Group may

Measuring instrument mentioned under General Section.
______________________________________________________________________________________________________________________
STOCK VERIFICATION
Sub Section - I
General
The Stock Verification Group (SV Group) working in the factory under
HOD of the unit (Vide OFB L/No 537/Board/MM(P&C) dated 10 th July 2007 will
furnish report to the Accounts office with Stock Taking Sheets in duplicate.
Preamble – The Stock verification as prescribed in Rules–(Rule 470, R.A.I. and

Section X, S.A.I.) and will be carried out in Factories by the Ordnance Factory,
Stock verification Group. In addition to, but not concurrently with this, stocks
will be verified internally by Factories/Departmental staff, in accordance with
the provisions of sub-section II.
Administration – Stock Verifiers, posted at the Factories, will be under the

HOD of the Unit and will work during normal Factory working hours, as
observed by Stores Section of that Factory.
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 Stock Verification

Group in consultation -with the Factory Management. These items will be
verified at more frequent intervals. In addition, at least 10% of the items
should be verified by the factory staff as Departmental Verification.
In selection of 10% items, Units - 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 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.
______________________________________________________________________________________________________________________
Result of stock verification of Stock, Priced Production Ledger(PPL) and

Stock Pile items will be entered in Form No. IAFO-1395. Stock Verifiers will
enter in the appropriate columns the Date, Serial No. Nomenclature of Stores,
Ledger Folio No. (Material Code. No.), Store Accounting 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. 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 Taking Sheets have been shown to
the Stock Verifier."
Senior Stock verifier will be responsible for: -
a) Collecting & distributing instruction, information and reports;

b) Making up the programme of stock-taking;
c) Allocating the work among Stock Verifier;
d) Maintaining progress details;
e) Reporting with details to Directorate General Ordnance Factory when
work is falling or is likely to fall, behind planned programme;
f) Regularly submitting periodical progress reports; and
g) Ensuring that all stock verification records are properly maintained.
[Authority : D.G.O.F. NO. 2834/11/O.F.11-B/SV., DT 21-3-50.]
No Advance Intimation – Stock Verifier will not give any advance intimation
to the Section to be verified for particular items on any day/days.
______________________________________________________________________________________________________________________
Factory Representation – Verification will be carried out in the presence of a

representative of the Factory.
Technical Identification – It will be the responsibility of the management to

identify such items as may not be recognisable by the Stock Verifier.
Assistance. – All labour and equipment needed for proper verification will be
supplied by the concerned section, as required for the work.
Difficulties – Difficulties envisaged in connection with the verification of any

item should be brought to the notice of HOD of the unit as soon as realized, so
that the maximum period of time may be available for deciding upon action to
the best advantage.
Records –
a) A Register will be maintained (entries in ink) to show the number of
items checked daily by each Stock Verifier.
b) Weekly totals will be recorded, for communication to HOD of the Unit,

the week ending on Saturday; calendar monthly totals will also be
recorded for statistical and audit purpose, as necessary record will be
maintained in the prescribed form.
Weekly Progress Reports – Weekly progress reports will be forwarded

promptly to the HOD of the Unit and the Accounts Officer in the prescribed
proforma with details in respect of individual Stock Verifier. Explanation of
certain entries of the form will be as given in the Appendix to this Section.
[Authority - D.G.O.F. NO. 2834/12/O.F.11-B/SV, DT. 21-3-50,
2834/45/OF.11-B/SV, DT 12-3-51, AND 31/SP/V, DT. 26-3-53.]
Monthly Progress Reports – Monthly progress reports of the Unit will be

forwarded to the OFB in the prescribed proforma with details in respect of
individual Stock Verifier through ARS Module(MM-11) in OFB Comnet.
______________________________________________________________________________________________________________________
Annual Reports –
a) At the end of each Stock verification cycle, the Sr. General Manager /
General Manager / HOD of the Unit as the case may be, in conjunction
with the Stock Verification Group, should determine, as soon as
possible after the 31st March in each year, the Ledger Folio Nos. of any
stores items and Register Nos. of other verifiable items which may
have been left unverified and reasons for non-verification.
The Factory Management in respect of these items, comprising: -
i) Serial No.,
ii) Ledger Folio No.,
iii) Nomenclature,
iv) Accounting Unit,
v) Stock Balance on 31st March,
vi) Value of stock,
vii) Date of last verification and
viii) Reasons for non-verification.
On completion of the statement (except Col. (vi), four copies will be
passed to the Account Officer for completing Col. (vi), retaining the
duplicate copy and returning the remaining three copies to the Factory.
Of these, the original copy should be forwarded to the Ordnance Factory
Board, MM/Store Section the triplicate and quadruplicate copies being
intended for retention by the S.V. Group and Factory respectively.
b) The S.V. Group will be in contact with the Accounts Officer/Branch-in-

Charge to ensure that the same figures are reported to respective higher
authorities’ form both sources in respect of unverified as well as the total
number of verifiable items.
c) Following upon the detailed statement referred to above, a regular

report will be furnished to the Ordnance Factory Board, MM/Store Section
in order to show the progress of “clearance” of the items which were not
verified in the previous cycle. The Stock Verification Group will,
accordingly, indicate this regularly on their Weekly Progress Reports, by
referring to the specific Sl. Nos. of the annual report, which of the items
have since been verified (in the current cycle), showing the stock balance
at the time of verifications.
[Authority - D.G.O.F. NOS. 31/SP/V., DT. 26-2-53 AND 5-3-53.]
Audit – The local Accounts Officer, in his official capacity, is required to check
that stock verification is carried out as laid down in standing orders.
______________________________________________________________________________________________________________________
PART II – PROCEDURE.
Scope –
a) Stock verifier will be responsible for the physical verification of Stock
and deposit Stock items, Priced Production Ledger (PPL), Stock Piles
items, Inventory articles, (including School books and Technical Book in
the Factory Libraries), Machinery, Buildings, Electrical Installations, and
Medical Stores borne on Factories books.
NOTE. – Verification of finished articles [Finished Semi] on charge on

Production Ledger Cards(PLC) and stock of materials in process of
manufacture [Work-in Progress (WIP)] held by the shops will not be their
responsibility.
b) They will record the results of verification:

i) for Stock items in Stock-taking Sheet I.A.F.O.–1395;
ii) for Inventory articles, Machinery, electrical Installations and
buildings, in the respective Registers maintained; and
iii) for Deposits Stock items in the respective Bin Cards, but
discrepancies will be communicated in a standard memo. As
prescribed in para. 15(iii)b.
Turn Over –
a) All stock and Deposits Stock items will be verified at least once during
each financial year, unless specific sanction for a deviation, in respect of
any item, has been received from HOD of the Unit.
b) New items of stores, received after the 31 st January in each year,

should be taken as verifiable in the next Stock Verification Cycle, with the
proviso that they are to be completed within 12 months of being brought
to account in the Factory. If any of these new items received during
February/March can, however, be verified conveniently by 31st March,
this should be done, provided that such verification does not affect
adversely the current annual programme.
[Authority-D.G.O.F. NO. 2834/61/O.F.11-B/SV., DT. 16-1-52.]
______________________________________________________________________________________________________________________
c) The work of each Stock Verifier will be planned and verification will
proceed accordingly to plan, locally coordinated and as generally
approved by the HOD of the Unit through Senior Stock Verifier.
d) Lists of certain valuable items will be prepared, in consultation with the

Management, and the items enumerated thereon will be verified at more
frequent intervals as shown on these lists, to be approved by the HOD of
the Unit.
e) Lists of Stores Ledger Folio which have shown a Nil balance (regarding
both quantity and value) continuously for at least three years and on
which no transactions have been recorded during this period, will be
submitted by the Accounts Officer to the Factory Management [in this
case Material Controlling Office (MCO)], who will scrutinize the items and
select those which are to be considered as “DEAD”, i.e., stores unlikely to
be needed in the near future.
These will be intimated to the Accounts Officer for removal of the
folios form the current ledgers and filing separately for future reference;
to Store section of the Factory who will also promptly remove
corresponding Bin Cards; to Information Technology Centre (ITC) for
removal of item Code details from Stock Item Master and to keep backup
for restoration if required subsequently. The Local SV Group should also
be informed, as in (g) below.
[Authority-D.G.O.F. NO. 2834/37/OF-11B/SV DT 13-1-51 AND
2834/62/OF.11-B/SV, DT 28-1-52.]
f) Inventory Articles, Machinery, Buildings, Electrical Installations and

Medical Stores will be verified once in each financial year.
g) In order to keep Stock Verifiers fully posted as to the amount of work

to be done, Factories will notify them of all new items and also those
deleted in respect of stock Ledgers and the other Registers involved.
______________________________________________________________________________________________________________________
Stock-Taking Sheets –
a) In the appropriate columns of Form No.- I.A.F.O.–1395, Stock Verifiers
will enter the Date and Serial No., Nomenclature, Ledger Folio No., Store
Accounting Unit, and Bin Card Balances on date of verifications, Balance
found on physical check and Date of last verification. Each sheet will be
signed by the stock Verifier and the associated Factory representative.
b) I.A.F.O.–1395 will be prepared in triplicate for distribution as follows:

i) Original to Factory,
ii) Duplicate to Accounts Officer, and
iii) Triplicate for retention as office copy in the S.V. Group.
c) The following certificate (as by Factory) will be endorsed on each

Stock-taking sheet:
"I Certify that all of the stocks or Godowns pertaining to the item or
items mentioned in the Stock Taking Sheets have been shown to
the Stock Verifier."
d) 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 verification and the word “Verified”. This entry will be signed and
dated by him, on the date of stock-taking.
NOTE. – The figures will be entered as above, even if agreeing with the
balance already shown on the Bin Card.
e) On each Store Ledger Folio Bin Card, the Stock Verifier will enter the
date of latest verification in the place provided and initial the entry.
f) After completion by the Stock Verifier, the original and duplicate copies
of the I.A.F.O.–1395 will be handed over to the Accounts Officer, under
signature and date in a forwarding book to be maintained especially for
this purpose.
______________________________________________________________________________________________________________________
g) A standard memo will be utilized, to communicate any discrepancies to

the Factory. This memo will be signed by the Stock verifier as well as the
associated Factory Section/Office representative, and a copy endorsed to
the Accounts Officer.
h) The memos will be handed over to the factory and account office under
signature and date in a forwarding book to be maintained specially for
this purpose.
______________________________________________________________________________________________________________________
Verification of Inventory, Machinery, Buildings,

Electrical Installations and Medical Stores Registers
(i) Inventory Register. – The Stock Verifier will enter in ink against
each item the actual quantity found on verification. Each sheet of the
Register will bear the initials with dates of the Stock Verifier and the
number of items checked. On the final sheet of the Register will also be
entered the total number of items checked.
ii) Machinery, Buildings & Electrical Installation Registers. –
1. Machinery, Electrical Installations & Buildings will be verified from

Accounts Block Registers. Electrical Installations like wiring, conduits
and fixed fitting such as light points, plug points, water tap, basin,
etc., are not required to be verified. The items to be verified are those
which are separately borne in Block Registers of Capital Assets.
[Authority - D.G.O.F. Nos. 2834/31/O.F.11-B/SV DT. 3/4-11-50
AND 2834/48/O.F.11-B/SV DT.28-5-51]
2. On each sheet of the Register, the stock verifier will enter in ink at
the foot of the sheet the Registered Nos. of the
Machines/Buildings/Electrical Installations verified, signing and dating
the entry.
iii) Medical Stores Register. – In the next line below the last entry in
the “balance” column of each of the items in the Register, the Stock
verifier will enter in red ink the balance found on physical verification
and the word “verified”. The entries will be signed and dated by him, on
the day of stock-taking.
Additions and alterations. – All amendments to original entries will be made

neatly and attested with initials and date.
______________________________________________________________________________________________________________________
Further Action
a) The Accounts Officer, after allowing for documents outstanding and
comparison with Bin Card entries, if necessary will enter the ledger
balance in his copy of the I.A.F.O.-1395 and in that of the Factory; the
Factory copy will then be passed on.
b) If a discrepancy remains, the Factory authorities will, with reference

to their copy of the I.A.F.O.-1395 initiate action for early preparation of a
Discrepancy Vouchers as required under orders. To maintain the desired
parity between store Ledger balance and physical stock.
c) For Inventory articles, Machinery, Buildings Electrical Installations

and Medical stores, reconciliation, if any, will be the responsibility of the
Factory, and prompt action should be taken.
PART III – METHOD OF VERIFICATION
General – Verification will be carried out by actual counting, weighment or

measurement, except where other methods to determine accurately the
quantities in stock have already been adopted or will be approved, in
consultation with the Local Accounts Officer, under reference to HOD of the
Unit.
The prior approval of the Local Accounts Officer and the HOD of the Unit
should be obtained for the modified method before stock verification is actually
carried out.
NOTE- Time and Labour can be saved if the verification of an item is carried
out, as far as possible, when the stock of it is low.
[Authority - D.G.O.F. NO. 31/3/SP/V., DT. 29-5-52.]
Uniform Unopened Packages – When verifying stores contained in uniform

unopened packages, at least 5 percent of the packages will be opened at
random and examined. After this examination, the contents of one package will
be counted, weighed or measured and the contents of remaining packages
accepted in accordance with package marking.
______________________________________________________________________________________________________________________
NOTE. Ammunition stores contained in intact cases bearing seals or station

labels, will be accepted as correct, in accordance with package marking.
Loose Bulk Items –
a) Loose bulk items, such as coal, coke, timber, etc., are required to be stored
in bins or stacks of convenient size, with markings to facilitate measurement by
cubical content.
b) The Stock Verifier will be informed of all new receipt, which will be weighed/
measured in his presence and stacked apart from the old stock, in such a
manner that he can take measurements to guide him on future stock
verification occasions. Precautions must be taken by the Factory to ensure that
issues are not made from stacks in the course of being built up, and completed
stacks should be suitable marked for the same purpose.
c) Continuous stock-taking will be carried out departmentally, i.e., as each

stock or bin is used up. Stock Verification Group will verify every item once a
year or in two years according to the nature of the stores.
d) When verifying stock, the Stock verifier will satisfy himself that the other
stacks are in order and tally with the details recorded when the stacks were
formed.
NOTE. – The stock of timber will be verified departmentally by stacks, i.e., each
stack will be checked with its own stack register and all deficiencies and
surpluses adjusted in respect of that stack register, irrespective of the total
stock held in the Factory of that particular class of timber.
Stock-Taking of Coal –
a) Coal will be weighed in on receipt and stacked in small units.
b) Completed stacks will be suitably marked with whitewash bands and

certificate as to the correctness of the quantity in each stack will be furnished
to the Stock Verifier when required.
______________________________________________________________________________________________________________________
c) As few stacks as possible will be broken into at one time.
d) A stack book or tally sheet will be maintained for each stack showing a
record of building up as well as of retail issues.
e) Departmental stock-taking will be carried out on the complete issue of a

stack and discrepancies will be adjusted by means of a regular “S” voucher. The
Stock-taking by the Stock Verifier will be carried out separately at least once a
year.
Stock-taking of Coal in Factories where no

Railway wagon weighbridge is available
a) At the time of off-loading into a bin, the volume of coal so off-loaded will be
calculated by a member of the Factory staff in the presence of the Stock
Verifier and entered into a separate record in duplicate for the bin concerned
along with the weight as invoiced. The entries will be attested and a copy of the
record retained by both the Factory and the Stock Verifier. This record will be in
addition to the Storekeeper’s tally sheets which will show receipts as invoiced
and issues by actual weighment.
b) Issues will be made, by weighment, from one bin only until it is fully
exhausted.
c) Stock Verification will be carried out when each bin is about to be exhausted
or when the quantity of coal remaining is small enough to be weighed without
inconvenience.
d) The Stock Verifier will, at the time of verification, satisfy himself that the
volume of coal in the other bins is the same as that recorded in the special
records referred to in (a) above. If there is no difference in volumes, he will
assume that the weight of coal in those bins is as recorded in the special record
and also on the tally sheet. The difference between invoiced weight and actual
weight and actual weight issued will be adjusted immediately.
______________________________________________________________________________________________________________________
Stock-taking of Soda Nitrate, Brimstone, Acetate of Lime,

Carbonised Coconut Shell Waste
a) Receipts will be weighed, in the presence of the Stock Verifier and stacked in
lots of convenient size.
b) A tally sheet will be maintained for each lot showing details of receipts and
issues and weight and number of bags or bales.
c) Any system of marking complete lots, which may be practicable will be

adopted.
d) A lot will not ordinarily be disturbed and re-stacked in a manner different

from that in which it was originally stacked. If it should be necessary to do this,
the bags or bales will be counted again in the presence of the Stock Verifier.
e) A certificate as to the correctness of the quantity in each complete lot will be

furnished to the Stock Verifier when required.
f) Departmental stock-taking will be carried out on the complete issue of each

lot and discrepancies will be adjusted by means of regular “S” voucher. The
stock-taking by the Stock Verifier will be carried out separately, as usual.
g) At the time of Stock-taking by the Stock verifier, he will satisfy himself that
the number of bags or bales stacked in all lots in the godown are in order and
tally with that recorded by him when the lots were informed.
Stock-taking of textile materials

a) A test check not exceeding 5 percent of the stock will first be conduct, and
the contents of the remaining packages accepted in accordance with package
marking.
______________________________________________________________________________________________________________________
b) If, as a result of the first test check, there is any wide variation, a second
test check not exceeding 5 percent of the stock from a different lot will be
conducted.
c) If the second test check reveals wide variation, a third test check of 5
percent will be conducted from another lot.
d) If wide variations are observed in all three test checks, the matter will be
reported to the superintendent/Officer-in-charge for necessary action.
Computed Verification – Lists will be maintained for items which are not
actually counted, weighed or measured, with conversion factors recorded for
each item. Details of exact methods of arriving at the conversion factors will be
recorded, including the number of samples counted/weighed/measured, the
number of such checks, variation (accuracy), etc., duly certified by the senior
stock verifier.
[D.G.O.F. NO. 2834/29/OF.11-B/SV., DT 12-10-50.]
Verification Calculations
a) Calculations made by Stock verifier in the course of their work should be
available as permanent Group Records; these may be contained in Work Books,
Day Book, Note Books, etc., as adopted. Example:
45 Gal. Drums---No.7 -315 Gals.

45 Gal. Drums---Part - 20 Gals.
5 Gal. Drums---No.20 -100 Gals.
Total -435 Gals.
Similarly, the recorded of quantities of a store in different clear stacks or

locations should be available.
______________________________________________________________________________________________________________________
b) In all cases where verification is carried out by an indirect method. – i.e., by

conversion factor, the actual findings must be on record. For example, if an
item is being verified by weighing and then converting to number, the weight
found and the conversion calculations should be available.
[Authority - D.G.O.F. NOS. 2834/32/OF.–11/SV., DT. 20-3-50 AND 21-11-50.]
______________________________________________________________________________________________________________________
PART-IV
Stock Verification-Documentation
In the next line below the last entry in the "Balance" Column of the Bin
Card maintained by Store Stock, the Stock Verifier will enter in Red Ink, the
balance found on physical 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.
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 up to the date of
stock verification.
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 competent 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.
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.
______________________________________________________________________________________________________________________
Proforma "A"
Stock Verification Progress Chart Month................

----------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Nature of Total No. Addition No. of items No. of items Balance on 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 Particulars of Discrepancy Adjusted Under
Sheet No. Surplus Deficient No. & date No. & dt. of
Date Qty Qty of Voucher
---------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)

---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Quantity and Value of Date of Sanction Loss Statement Remarks
Surplus Voucher
---------------------------------------------------------------------------------------------------------------------
______________________________________________________________________________________________________________________
(6) (7) (8) (9)
--------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
---
This Register is submitted to the Accounts Officer on the last day of each
month.
______________________________________________________________________________________________________________________
PART-V
Reports generation and forwarding
Vide OFB L/No. 100/15/Discrepancy Report/MM/Stores dated 23/01/2018

each Unit has to submit Stock Verification Discrepancy Report on Yearly basis.
The Report for any discrepancy during the period from 1st April to 31st March is
to be submitted by 10th June of corresponding year. The said report will be
reviewed in Apex Level Monitoring Meeting in the Month of August on Annual
Basis.
Vide OFB L/No. 100/17/Policy(SV)/MM/Stores dated 16/01/2019 each
Unit has to submit MM11, MM13 & MM14 Report through ARS. The frequency &
mode for sending are as follows :
SlNo Report Frequency Mode of Submission
1 Monthly Progress Monthly Through ARS only

Report – MM11
2 Annual Stock Annually Through ARS + Physical

Verification Report ink signed copy
– MM13
3 Stock Verification Annually Through ARS + Physical

Report – MM14 ink signed copy.
______________________________________________________________________________________________________________________
APPENDIX.
Weekly progress reports.
1. For the sake of uniformity and requirements of records the entries on the
reverse of Monthly Progress Reports should comply with the following:-
2. Col.1 – Vocab. Sec./Group. –

(1) Footnote (a) on the pro forma additional items (i.e., those not
under any of the Vocab, Sec. listed) will be entered in the places
marked (a). This will mean that all such items should come after
Signature and before Deposit.
(2) Forms and Stationary should be combined.
(3) Stock pile items should not appear as separate heading, but
included in their appropriate Vocab. Sec. This No. of those items
should, however, be entered as indicated below.
3. Col. 2. – Total No. to be verified. –

(1) The mere opening of a new Ledger Folio does not authorize the
entry of the item in this column; it is only when the first supply has
arrived and been brought to account that it should find a place in
the Weekly Progress Report. This does not, however, detract from
the requirements of para 13.
(2) When any such new/additional/reported newly found item has
in fact been verified and reported in Col. 4 it must also be included
in Col.2, without waiting for reconciliation of total figures, which
latter can be conducted separately. Therefore, if Col.2 shows 150
(total items due), Col. 4 cannot show 152 (items verified).
(3) The No. of Stock pile items, although included in the total
figures against appropriate Vocab. Sections (see para. 2(3) above),
should be shown separately in brackets before the total figures in
Col.2.
(4) The No. of valuable items, to be verified more than once in the
year, although included once in the total figures against appropriate
Vocab. Section, should be shown separately in brackets after the
total figures in Col. 2.
______________________________________________________________________________________________________________________
4. Col. 3 – No. verified in week. –

(1) Stock Pile items will be included in the main figures recorded
here; they should also be shown in brackets before. As explained
above.
(2) Valuable items will be included in the main figures recorded
here, when verified for the first time. When verification is repeated
they should be shown separately in brackets after the main figure.
5. Col. 4. – Progressive Total. –

Stock pile and Valuable items should be shown in brackets
respectively before and after the main figure as explained. A
valuable item will appear in brackets in Col. 4 only when it has been
verified for the second time, the first time it will be included in the
main figure.
6. Example:-
1 2 3 4 5
G-2(NF) (3)525 (1)15 (3)433
W 823(23) 56(5) 753(21)
The first example clearly shows that, out of the 3 Stock pile items
included in the figure 525 under this Vocab. Sec. 1 was verified during the week
and all have been completed. The second example shows that there are 23
Valuable items/included in the figure 823; 5 if these have been repeated during
the week (i.e., verified for the second time) and so far 21 of them have been
verified more than once.
7. “Dead” Ledger Folios. –

If any items have already been verified by the SV Groups before
the L.F.’S have been removed, these should be included in Cols. 2 and 4.
______________________________________________________________________________________________________________________
PART-VI
DEPARTMENTAL VERIFICATION
Verification by Factory/ Departmental Staff
1) In addition to but not concurrently with the regular stock verification

carried out in Factories by the Stock Verification Group, at least 10
percent of the total items of stores stock will be verified by
Factory/Departmental staff as an additional check.
2) The items selected should be those which are costly per unit, those
frequently received and issued and easily salable in the market and, in
general, where past experience shows the desirability of greater
vigilance.
3) Stock-taking Sheets will be prepared as usual and prompt action taken to

regularize the discrepancies according to the existing procedure.
4) An annual report will be submitted to HOD of the Unit in the month of

April, showing the number of items verified in the past year ending 31st
March.
[Authority : D.G.O.F. Letter NO. 39/SP/V., DT. 21-3-53.]
______________________________________________________________________________________________________________________
COPMPREHENSIVE WRITE-UP OF IMPORT CONSIGNMENTS CLEARANCE &

COLLECTION
1) Import consignments are received by two modes Viz. Sea & Air.
2) Air shipments are generally received at Mumbai airport.
3) These import consignments can further be classified in to two categories based on
respective UNHD class as :
i. IMO Class – I Explosive/Hazardous &
ii. Non-Explosive/Non- Hazardous.
4) If the quantity is more than IMO Class–I (Explosive/Hazardous) has to be imported
through Cochin Port only. Smaller quantity of IMO Class–I (Explosive/Hazardous)
cargo can be imported through Mumbai Port.
5) Consignment can be imported in the following two ways:
i. Break – Bulk Cargo,
ii. Containerized Cargo in SOC containers.
6) Non-Explosive/Non-Hazardous Cargo consignments received by Sea are to be cleared
by EHQ or its authorized agent, only at Mumbai OFBMO extend coordination during
clearance.
7) IMO Class-I Explosive/Hazardous Cargo consignments received by Sea at Mumbai is
cleared by private agencies against Rate Contract of OFBMO and under supervision of
NAD, Mumbai.
8) IMO Class-I Explosive/Hazardous Cargo consignments received by Sea at Cochin is
cleared by NAD, Alwaye.
9) As on date there is no authorizing agency for clearance or for providing supervision to
IMO Class-I Cargoes or Non-Explosive Cargoes arriving at Mumbai Airport.
10) Air shipments received at Mumbai Airport, irrespective of category, clearance is done
by Air Wing, Embarkation HQ Mumbai.
11) OFBMO functions as facilitating & coordinating body at Mumbai for both, Sea & Air
cargos. Filing of BOE & payment of Customs Duty is carried out by OFBMO.
12) Documents to be SUBMITTED to Customs Authorities for import consignment Customs
Clearance.
I. Copy of Supplement of Agreement/ Supply Order
II. Bill of Lading
III. Commercial Invoice
IV. Packing List
V. Shipping Specification Certificate of Quality
VI. Certificate of Origin
VII. Certificate of Conformity
VIII. Marine Insurance Policy
IX. Customs Open Examination Exemption Certificate
13) Documents to be SUBMITTED to Port Authorities/Embarkation HQ/NAD for import
consignment collection by factory representative(s).
i. Request letter addressed to EHQ/Port Authorities/NAD for “Direct Port Delivery
of goods” – authorising factory representative(s) to collect/take delivery of
goods directly from the Port & the goods are to be directly loaded from Sea
Port/Airport into Factory/Hired Vehicle for onward transport to the factory.
ii. Certificate of Non-Hazardous/Non-Explosive or IMO Class-I as per UNHD class
of cargo.
14) Documents to be COLLECTED after import consignment collection by factory
representative(s).
______________________________________________________________________________________________________________________
i. T.R.: - It is document issued by NAD or EHQ stating brief particulars of Cargo.

ii. Gate-Pass / Out-Pass: – It is issued by Port Authority for exiting the vehicle
from Port premises. It is submitted at Port gate.
iii. Bill of Entry: – Original Bill of Entry is issued by Customs Authority. It is
collected by NAD/EHQ/OFBO/Authorised Clearance Agent from Customs &
handed over to factory representative(s).
iv. Out of Charge Certificate: - Issued by Customs Authority after payment of
Customs Duty & material removal from ship.
v. Out Turn Report: - Issued by NAD/EHQ/OFBO/Authorised Clearance Agent
after dispatching of consignment.
vi. GST E-Waybill exemption Certificate: - To be collected from NAD.
15) Procedure for Taking over of consignment:

i) Factory representative(s) is/are to be deputed for witnessing & collection of
imported consignments.
ii) Factory representative(s) have to report to NAD/OFBMO/EHQ/Authorised
Agent appointed by OFB/Factory and & handover above documents as
mentioned at Sl. No. 12. It is also required to co-ordinate with Shipping Agency
intimated by consignor for arrival & berthing of vessel
iii) Permission letter for entry of factory representatives to Port area is prepared &
issued by the clearing agent i.e., NAD/OFBMO/EHQ/Authorised Agent.
iv) Clearing Agent will file Bill-of-Entry (Advance Bill of Entry). After Bill of Entry is
filed, Customs Duty amount is to be paid online by factory to Customs
Department.
v) After Berthing of Vessel & upon confirmation from Customs & Port Authorities
inspection of cargo is carried out in presence of representatives from Factory,
Clearing Agent, Shipping Agent, Customs, Port Authorities & Captain of
Ship/Vessel.
vi) Factory representative(s) is required to confirm number of packages as per
packing list and visual check of condition goods for any damage during
transport in vessel.
vii) After inspection of packages and confirmation from port authorities, unloading
of packages is started. It is required to ensure for placement of vehicles at Port
parking area well before time. It may be coordinated with clearing agent for
timing of placement of vehicles.
viii)Storage of Explosive/Hazardous Cargo inside the Port premises after unloading
from Vessel is not permitted by Port Authorities. Hence, it is necessary to
ensure that vehicle for onward transport is available and ready at Port Gates at
the time of Berthing (arrival at Port) of Vessel.
ix) In case of large quantity cargo, unloading from Vessel is carried out in Shifts as
per Port Timings.
x) Labours for unloading from vessel & loading in vehicle/trailer/containers are to
be arranged by factory, they may take cooperation from clearing agent.
xi) PPEs such as Cotton Gloves, Safety Shoes, helmets, & tools need to be
arranged by factory.
xii) After completion of unloading form ship & loading in vehicle(s), Out-Pass is
issued by Port Authority & T.R. is issued by NAD/EHQ. Convey Notes are
required to be prepared by factory rep. for onward handover to DSC escort
commander.
______________________________________________________________________________________________________________________
viii) Back Loading of incorrect stores – When the imported factory stores are decided to
be back loaded to the suppliers abroad, factories will immediately forward such stores
under advice to all concerned to the Embarkation authorities at the port with the instructions
to re-ship them at the earliest opportunity on “freight to pay” basis. The cost of one-way
freight paid on the original importation including the transportation port trust, and other
incidental charges incurred from port of disembarkation to the consignee deport in India
and back to the port for re-shipment will be recovered from the suppliers.
ix) Regularisation of loss of imported stores – Losses are likely to arise as summarised
below: -
a) Losses occurring during transit from port of disembarkation in India, b) Losses occurring
during transit from port of disembarkation in India to the ultimate consignee factory, c)
Losses found on account of deficiency by the consignee factory after taking on charge to
stock as per marking on the packages before opening them but actually found at the time of
actual issue.
Loss referred to tin a) and b) above arise before accounting of the stores by the consignee
and will be treated as “Cash loss” as it represents the value of stores paid for but not
received.
Losses referred to in c) above will be treated as “losses in stock” because the consignee
Factory is in fact undertaking the responsibility for the contents of the packages whilst
accounting for the stores in terms of markings on packages.
CUSTOMS NOTIFICATION
For import consignments, payment of Custom Duty on Foreign
procurements are made to Central & State Governments at the port of Import.
Vide Notification No. 39/96-Customs dated 23-07-1996 are exempted for
Ministry of Defence.
As per Notification No. 14/2016-Customs dated 01-03-2016 the
exemption issued to Ministry of Defence on Import Consignment have been
withdrawn w.e.f 01-04-2016.
With the above notification, it is construed that all the import
consignments are required to be cleared on payment of Custom Duty w.e.f 01-
04-2016. Considering statutory requirement all the Ordnance Factory and units
under OFB are to pay Custom Duty inclusive of cess at prevailing rate of
assessable value depending upon the item.
The Standard Operating Procedure (SOP) for Customs Duty is
implemented vide MoD(Fin) Letter No. Dy.No.3641/SDF dated 30-06-2016.
1) The importing services are required to pay Customs Duty at port of
delivery within a period of 72 hours.
______________________________________________________________________________________________________________________
2) In order to pay Custom Duty, Unit has to be registered on Custom

portal “ICEGATE”.
3) Port wise DAD Offices are being assigned the responsibility of making
Customs Duty payment. These DAD Offices are called by Customs
Payment Offices(CPOs).
4) The CPOs will process and pay Custom Duty within 48 hours of receipt
of following documents:
a) Contingent Bill indicating amount of Customs Duty payable and
Code Head to which the expenditure is to be booked (To be
prepared by the executive authorities)
b) TR6 Challan – Challan given by the Customs Authority that serves
as their payment authority and primary link document for effecting
online payment through ICEGATE.
5) The SOP is presented in five parts
i) Identified Ports of Import and the designated PCDS/CDA Offices
for processing Custom Duty Bills : 15 Ports have been identified
as Post of Import and AO(DAD) EHQ covers entire Army & OFB
imports
ii) Action to be taken by the Services :
 Each service will obtain IEC(Import Export Code) from
Director General Foreign Trade (DGFT) under Ministry of
Commerce. For Ordnance Factories, OFB Mumbai Office
has obtained certificate of IEC.
 On obtaining IEC, the services will register under
Accredited Client Programme(ACP) at each import port.

iii) Action to be taken by the Paying Authorities

iv) Step by Step Customs Duty Payment process from issue of IEC
to filling of e-receipt
v) General Advisory.
Reference :
1) OFB, Kolkata, MM Division Letter No. 14/4/Custom Duty/MM(P&C)
dated 31-03-2016
2) Ministry of Defence, [Acquisition Wing Secretariat] Dy. No. 874 dated
06/07/2016
3) CGDA Letter No. IAW/9/9504/Custom Duty dated 07-10-2016
4) OFB, Mumbai Letter No. 33/OFBMO/AEO(ACP) dated 05-06-2017
______________________________________________________________________________________________________________________

MM Draft Store Procedure 1

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MM Draft Store Procedure 1

Uploaded by

Copyright:

Available Formats

STORE PROCEDURE FOR ORDNANCE FACTORIES

Organization of the Factory

Each production section is engaged in producing one or more similar

Planning for the Manufacture Programme

Material Control Procedure Covers

1. (i) Provisioning, purchasing and receipts of stores.

2. (a) The Provision Section of the Factory is responsible for the

(c) The Junior Works Manager/NT(Store), Incharge Stock, erstwhile Store

(d) The physical verification of stock is carried out continuously

(e) The accounting of materials as well as payments to contractor is

Materials handled in a factory can be classified as

2. Material on "Stores Charge" includes

(iii) Miscellaneous items of trade supply, electricity and water for

3. The materials on stores charge may also be grouped as

Use of Numerical Code Numbers

This codification of material is done to help in

a) Major Code (2 Digits)

have been left blank / unused to accommodate future item and to

23 - Fire Fighting Equipments

b) Minor Code (3 Digits)

Chemical items including paints example (Major Code-10) :

e.g. : Paint Glossy Synthetic Enamel finishing white is represented by code :

e.g. : Oil linseed boiled to specification IND/SL 2620 is represented by

ELECTRICAL STORES INCLUDING CABLES &WIRES

The structure for belts, chains, ropes etc. is as under

e.g.: GRIPIT Nylon Endless Flat Belt, size

(ii) Numbering of Work Orders

Classification of Work Series of Work Orders

Components manufactured for further utilization in the same factory

1. In some factories materials manufactured for stock are retained on

2. These components will be drawn for utilization on concerned out-turn

3. These Demand Notes are accounted separately by Accounts Office. “41”

5. This procedure will not apply to :

In relation to Accounting, the working falling under the above three

Section II - Accounting for Materials

Direct and Indirect Materials

Stores Accounting Documents

The nominal transactions are settled by preparing regular vouchers

Primary Store Accounting Documents

SUB SECTION – I Stock Pile Items

a) Definition – Stockpile is an emergency reserve of imported and

b) Sanctioning Authority – The final authority for sanctioning Stock-

c) Conditions – Any material to be held in Stock-pile should fulfil both

(Authority : D.G.O.F. No. 2000/VII/OF11-B(C), dt. 2-2-52.)

d) Basis of calculation – The Stock-pile will be calculated on the basis

Once an item is identified for stockpiling and its quantity

[Authority : D.G.O.F. No. 3154/Vol.II/O.F.11-B/BSP, dt 28-12-51.]

(ii) Stock-pile will also be built up by transfer of stores form

(1) No item of stores below Rs. 5,000.00 in value will be

(3) Non-ferrous Virgin metals and Ferro-alloys are outside the

(4) Normally transfer from Working Stock to Stock-pile should

[Authority : D.G.O.F. Letter NO. 154/III/SP/S, dated 30-6-52 and

(5) While proposing transfer of materials from Working Stock-

[Authority : D.G.O.F. NO. 3154/VOL.II/O.F.11-B/BSP., dt. 4-2-52.]

f) Provision of Funds – Funds for Stock-pile purchase will be provided

ii) Senior General Manager / General Manager / HOD of the Unit /

iv) Wherever any item is transferred from normal stock to Stock-pile, a

b) Transfer of material between Stock-pile and Working Stock will be

c) As and when Stock-pile materials are required to be used in

d) The turn-over of Stock-pile items for the purpose explained above

f) The following procedure should be adopted for compilation of Stock

located in the Provision Section in order to afford facilities of