Dear Bhaskar Sir,
Please help me on below queries as no one is giving reply on them:
What is the correct definition of Building (Under this Act) and weather we need to pay CESS on Machine installed in building for production?
1. If the Factory has been constructed between 2002 - 2007 do we need to pay CESS on this construction ?
2. If a new construction is going on in our Factory and all employees are covered under EPF and ESIC, do we have to pay CESS in such Conditions?
3. Do we need to pay the CESS under BOCW Act on new building Electrical Wiring, Air Conditioners, Lights, and Furniture etc...?
4. Do we need to pay CESS under BOCW Act on Machinery Installed for production in the same premises?
Please help on urgent basis.
Looking forward for your prompt response on the above matter
From India, Bhopal
1Please help me on below queries as no one is giving reply on them:
What is the correct definition of Building (Under this Act) and weather we need to pay CESS on Machine installed in building for production?
1. If the Factory has been constructed between 2002 - 2007 do we need to pay CESS on this construction ?
2. If a new construction is going on in our Factory and all employees are covered under EPF and ESIC, do we have to pay CESS in such Conditions?
3. Do we need to pay the CESS under BOCW Act on new building Electrical Wiring, Air Conditioners, Lights, and Furniture etc...?
4. Do we need to pay CESS under BOCW Act on Machinery Installed for production in the same premises?
Please help on urgent basis.
Looking forward for your prompt response on the above matter
From India, Bhopal
What is the correct definition of Building (Under this Act) and whether we need to pay CESS on Machine installed in building for production?
Any Construction activities being carried out must be covered under BOCW Act, which includes erection, installation, fabrication and other related activities.
1. If the Factory has been constructed between 2002 - 2007 do we need to pay CESS on this construction ?
What is the contention of your Factory Inspector? If he is insisting for the same, you can understand that he is expecting something from you. Please discuss with him and clear the issue.
2. If a new construction is going on in our Factory and all employees are covered under EPF and ESIC, do we have to pay CESS in such Conditions?
If the construction activities is being carried out within the factory campus, then obviously you must obtain the permission from Factories Inspector before commencement. After his approval only you can go ahead with construction. Before approving the same he will instruct your office to remit the BOCWW Cess. On payment of the cess only he will give approval for construction activities in the factory premises.
3. Do we need to pay the CESS under BOCW Act on new building Electrical Wiring, Air Conditioners, Lights, and Furniture etc...?
The cess will be calculated on the Contract Value and not on parts. But you can discuss with your Factory Inspector and ask for exemption from paying the same for the Fixtures and Furnitures by providing the BOQ for your works contract.
4. Do we need to pay CESS under BOCW Act on Machinery Installed for production in the same premises?
For Installation charges you need to pay but not on the cost of machinery.
Hope your doubts are cleared. Please do not argue with the Factory Inspector in Rules and other law matters. Whatever issues please discuss with your Factory Inspector and clear it amicably.
Looking forward for your prompt response on the above matter[/QUOTE]
From India, Kumbakonam
Any Construction activities being carried out must be covered under BOCW Act, which includes erection, installation, fabrication and other related activities.
1. If the Factory has been constructed between 2002 - 2007 do we need to pay CESS on this construction ?
What is the contention of your Factory Inspector? If he is insisting for the same, you can understand that he is expecting something from you. Please discuss with him and clear the issue.
2. If a new construction is going on in our Factory and all employees are covered under EPF and ESIC, do we have to pay CESS in such Conditions?
If the construction activities is being carried out within the factory campus, then obviously you must obtain the permission from Factories Inspector before commencement. After his approval only you can go ahead with construction. Before approving the same he will instruct your office to remit the BOCWW Cess. On payment of the cess only he will give approval for construction activities in the factory premises.
3. Do we need to pay the CESS under BOCW Act on new building Electrical Wiring, Air Conditioners, Lights, and Furniture etc...?
The cess will be calculated on the Contract Value and not on parts. But you can discuss with your Factory Inspector and ask for exemption from paying the same for the Fixtures and Furnitures by providing the BOQ for your works contract.
4. Do we need to pay CESS under BOCW Act on Machinery Installed for production in the same premises?
For Installation charges you need to pay but not on the cost of machinery.
Hope your doubts are cleared. Please do not argue with the Factory Inspector in Rules and other law matters. Whatever issues please discuss with your Factory Inspector and clear it amicably.
Looking forward for your prompt response on the above matter[/QUOTE]
From India, Kumbakonam
Dear Bhaskar Sir,
As per your presentation The Industry where Factory Act - 1948 applies, and a new construction MAPS are approved by the Director Industrial Health and saftey Office, Company need not to pay CESS ??
Where as in Madhya Pradesh we are forced to deposit CESS by Government, what shall be our reaction on this?
From India, Bhopal
As per your presentation The Industry where Factory Act - 1948 applies, and a new construction MAPS are approved by the Director Industrial Health and saftey Office, Company need not to pay CESS ??
Where as in Madhya Pradesh we are forced to deposit CESS by Government, what shall be our reaction on this?
From India, Bhopal
Thank you Bhaskar Sir,
You are right..
Our Building construction Cost including Furniture & Fixtures is approx 3.75crore and our Machine installation and Machine cost is around 42500000, and on the basis of Building & other Cost We have already deposited Rs.400000 as part of 1% CESS. Still the Labor Officer who is also secretary of BOCW Act says we need to deposit the CESS on INSTALLED Machines , More or less he is also in the process of doing assessment of Factory and saying we have to pay CESS on Installed Machine and on installation of Machine.
What shall we do ?
From India, Bhopal
You are right..
Our Building construction Cost including Furniture & Fixtures is approx 3.75crore and our Machine installation and Machine cost is around 42500000, and on the basis of Building & other Cost We have already deposited Rs.400000 as part of 1% CESS. Still the Labor Officer who is also secretary of BOCW Act says we need to deposit the CESS on INSTALLED Machines , More or less he is also in the process of doing assessment of Factory and saying we have to pay CESS on Installed Machine and on installation of Machine.
What shall we do ?
From India, Bhopal
Dear Piyush ji, I read your query. I wish to give a reply, some inputs and guidance. Give me time till Monday. Today Morning only I am back in my home town Mumbai. Need rest today and tomorrow.
From India, Mumbai
From India, Mumbai
Hi Friends,
I almost go through the above discussion; it is very impressive & useful,
But still I am not getting the clarity that which employer( principal ,or contractor / third party)should to maintain register & how they can draw the BOCW Act,
As we have our head office at different location & the construction / site is going on at different location ,we have two / three contractors under which the workers are doing the work & 15 to 16 employees whose are working in our company payroll,
So to whom it is applicable & how we can draw it? , if we are complying with ESIC & PF , then still it is important or what?
From India, Pune
I almost go through the above discussion; it is very impressive & useful,
But still I am not getting the clarity that which employer( principal ,or contractor / third party)should to maintain register & how they can draw the BOCW Act,
As we have our head office at different location & the construction / site is going on at different location ,we have two / three contractors under which the workers are doing the work & 15 to 16 employees whose are working in our company payroll,
So to whom it is applicable & how we can draw it? , if we are complying with ESIC & PF , then still it is important or what?
From India, Pune
Dear Piyush ji,
In the mean time, you are requested to go through the attached Judgment of Orissa H.C. on factory under construction and also of MP H.C. on cess on total cost.
The judgment of MP H.C. on cess on total cost is uploaded by me in one of the earlier postings.
From India, Mumbai
In the mean time, you are requested to go through the attached Judgment of Orissa H.C. on factory under construction and also of MP H.C. on cess on total cost.
The judgment of MP H.C. on cess on total cost is uploaded by me in one of the earlier postings.
From India, Mumbai
Dear Piyush ji,
Your query made me restless and therefore compelled me to reply today itself.
My point wise reply to your query, in my view, is as under:
Point No. 1 : If the Factory has been constructed between 2002 - 2007 do we need to pay cess on this construction?
My Reply : If the Factory has been constructed between 2002-2007 and the trial production is taken, say, first time in 2008, you are liable to pay cess under the BOCW Act from 2002-2007. I repeat, you are liable to pay cess for the period prior to you start your production or manufacturing process first time.
Point No. 2 : If a new construction is going on in existing Factory and all employees are covered under EPF and ESIC, do we have to pay cess in such Conditions?
My Reply : You are not liable to pay cess.
Point No. 3 : Do you need to pay the cess under BOCW Act on new building Electrical Wiring, Air Conditioners, Lights, and Furniture etc...?
My Reply : Yes.
Point No. 4 : Do you need to pay cess under BOCW Act on Machinery Installed for production in the same premises?
My Reply : Yes.
I have given you the judgment of MP H.C. on cess on total cost. I suppose you are from Bhopal, MP. Still I feel, you can take a call whether to pay cess or not, on Electrical Wiring, Air Conditioners, Lights, Furniture, Machinery installed etc.
I came across an opinion given by one of the former Chief Justice of India on this subject. This opinion is confidential and privileged to the members of one of the Manufacturing Association.
Secondly, If the authority is demanding cess from you on new construction within the existing factory, you are advised to write a letter the authority. I faced similar issue in Mandi Deep, MP in 2004-5. For your ready reference, I am giving you a draft letter as under:
------------------------------------------------------------------------------------------------------------------------------------------------------------
To,
..
...
Dear Sir,
Our construction work in the existing factory premises
viz. .. at ..
This has reference to your demand for Cess under BOCW Act for above construction work.
We wish to draw your kind attention as under:
1. Our construction work as stated above is within the premises and precints of existing factory under the Factory Act 1948. And hence the said construction work does not include in the definition of building or other construction work as defined in section 2 (1) d of the BOCW Act 1996.
2. Since our construction work does not include in the definition of building or other construction work as defined in section 2 (1) d of the BOCW Act 1996, the provisions of BOCW Act 1996 are not applicable to this construction work and we are not liable to pay cess under this Act.
We further wish to draw your kind attention as under:
1. The said construction work is included in our Factory registration as well in Factory Licence.
2. The manpower engaged for the said construction work is also included in the Factory Licence and Licence fee is also paid by us accordingly.
3. And hence the said construction work is a part and parcel of existing factory.
Under the circumstances we request you to kindly cancel the demand of cess from us.
------------------------------------------------------------------------------------------------------------------------------------------------------------
All the best to you.
From India, Mumbai
Your query made me restless and therefore compelled me to reply today itself.
My point wise reply to your query, in my view, is as under:
Point No. 1 : If the Factory has been constructed between 2002 - 2007 do we need to pay cess on this construction?
My Reply : If the Factory has been constructed between 2002-2007 and the trial production is taken, say, first time in 2008, you are liable to pay cess under the BOCW Act from 2002-2007. I repeat, you are liable to pay cess for the period prior to you start your production or manufacturing process first time.
Point No. 2 : If a new construction is going on in existing Factory and all employees are covered under EPF and ESIC, do we have to pay cess in such Conditions?
My Reply : You are not liable to pay cess.
Point No. 3 : Do you need to pay the cess under BOCW Act on new building Electrical Wiring, Air Conditioners, Lights, and Furniture etc...?
My Reply : Yes.
Point No. 4 : Do you need to pay cess under BOCW Act on Machinery Installed for production in the same premises?
My Reply : Yes.
I have given you the judgment of MP H.C. on cess on total cost. I suppose you are from Bhopal, MP. Still I feel, you can take a call whether to pay cess or not, on Electrical Wiring, Air Conditioners, Lights, Furniture, Machinery installed etc.
I came across an opinion given by one of the former Chief Justice of India on this subject. This opinion is confidential and privileged to the members of one of the Manufacturing Association.
Secondly, If the authority is demanding cess from you on new construction within the existing factory, you are advised to write a letter the authority. I faced similar issue in Mandi Deep, MP in 2004-5. For your ready reference, I am giving you a draft letter as under:
------------------------------------------------------------------------------------------------------------------------------------------------------------
To,
..
...
Dear Sir,
Our construction work in the existing factory premises
viz. .. at ..
This has reference to your demand for Cess under BOCW Act for above construction work.
We wish to draw your kind attention as under:
1. Our construction work as stated above is within the premises and precints of existing factory under the Factory Act 1948. And hence the said construction work does not include in the definition of building or other construction work as defined in section 2 (1) d of the BOCW Act 1996.
2. Since our construction work does not include in the definition of building or other construction work as defined in section 2 (1) d of the BOCW Act 1996, the provisions of BOCW Act 1996 are not applicable to this construction work and we are not liable to pay cess under this Act.
We further wish to draw your kind attention as under:
1. The said construction work is included in our Factory registration as well in Factory Licence.
2. The manpower engaged for the said construction work is also included in the Factory Licence and Licence fee is also paid by us accordingly.
3. And hence the said construction work is a part and parcel of existing factory.
Under the circumstances we request you to kindly cancel the demand of cess from us.
------------------------------------------------------------------------------------------------------------------------------------------------------------
All the best to you.
From India, Mumbai
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