Indian Railway Codes and Manuals-General Financial Rules-2017-Chapter- 7 (VII) GFR-2017.
Chapter – 7
INVENTORY MANAGEMENT
Rule
207
This
chapter contains the basic rules applicable to all Ministries or Departments
regarding inventory management. Detailed instructions and procedures relating
to inventory management may be prescribed by various Ministries or Departments
broadly in conformity with the basic rules contained in this chapter.
Rule
208 (1)
Receipt
of goods and materials from private suppliers. (i) While receiving goods and
materials from a supplier, the officer–in-charge of stores should refer to the
relevant contract terms and follow the prescribed procedure for receiving the
materials. (ii) All materials shall be counted, measured or weighed and
subjected to visual inspection at the time of receipt to ensure that the
quantities are correct, the quality is according to the required specifications
and there is no damage or deficiency in the materials. Technical inspection
where required should be carried out at this stage by Technical Inspector or
Agency approved for the purpose. An appropriate receipt, in terms of the relevant
contract provisions may also be given to the supplier on receiving the
materials. (iii) Details of the material so received should thereafter be
entered in the appropriate stock register, preferably in an IT-based system.
The officer-incharge of stores should certify that he has actually received the
material and recorded it in the appropriate stock registers.
Rule
209
Receipt/issue
of goods and materials from internal divisions of the same organisation. (i)
The indenting officer requiring goods and materials from internal division(s)
of the same organisation should project an indent in the prescribed form for
this purpose. While receiving the supply against the indent, the indenting
officer shall examine, count, measure or weigh the materials as the case may
be, to ensure that the quantities are correct, the quality is in line with the
required specifications and there is no damage or deficiency in the materials.
An appropriate receipt shall also be given to this effect by the indenting
officer to the division sending the materials. (ii) In the case of issue of
materials from stock for departmental use, manufacture, sale, etc., the
Officer-in charge of the stores shall see that an appropriate indent, in the
prescribed form has been projected by the indenting officer. A written/online
acknowledgement of receipt of material issued shall be obtained from the
indenting officer or his authorised representative at the time of issue of
materials. (iii) In case of materials issued to a contractor, the cost of which
is recoverable from the contractor, all relevant particulars, including the
recovery rates and the total value chargeable to the contractor should be got
acknowledged from the contractor duly signed and dated. (iv) If the
Officer-in-charge of the stores is unable to comply with the indent in full, he
should make the supply to the extent available and make suitable entry to this
effect in the indentor’s copy of the indent. In case alternative materials are
available in lieu of the indented materials, a suitable indication to this
effect may be made in the document.
Rule
210
Custody
of goods and materials. The officer-in-charge of stores having custody of goods
and materials, especially valuable and/or combustible articles, shall take
appropriate steps for arranging their s a f e c u s t o d y, p r o p e r s t o
r a g e accommodation, including arrangements for maintaining required
temperature, dust free environment etc.
Rule
211
Lists
and Accounts. (i) The Officer-in-charge of stores shall maintain suitable
item-wise lists and accounts and prepare accurate returns in respect of the
goods and materials in his charge making it possible at any point of time to
check the actual balances with the book balances. The form of the stock
accounts mentioned above shall be determined with reference to the nature of
the goods and materials, the frequency of the transactions and the special
requirements of the concerned Ministries/Departments. (ii) Separate accounts
shall be kept for (a) Fixed Assets such as plant, machinery, equipment,
furniture, fixtures etc. in the Form GFR-22. (b) Consumables such as office s t
a t i o n e r y, c h e m i c a l s , maintenance spare parts etc. in the Form
GFR-23. (c) Library books in the Form GFR 18 (d) Assets of historical/artistic
value held by museum/government departments in the Form GFR-24. Note: These
forms can be supplemented with additional d e t a i l s b y M i n i s t r i e s
/ Departments as required.
Rule
212
Hiring
out of Fixed Assets. When a fixed asset is hired to local bodies, contractors
or others, proper record should be kept of the assets and the hire and other
charges as determined under rules prescribed by the competent authority, should
be recovered regularly. Calculation of the charges to be recovered from the local
bodies, contractors and others as above should be based on the historical cost.
Rule
213 (1)
Physical
verification of Fixed Assets. The inventory for fixed assets shall ordinarily
be maintained at site. Fixed assets should be verified at least once in a year
and the outcome of the verification recorded in the corresponding register.
Discrepancies, if any, shall be promptly investigated and brought to account.
Rule
213 (2)
Verification
of Consumables: A physical verification of all the consumable goods and
materials should be undertaken at least once in a year and discrepancies, if
any, should be recorded in the stock register for appropriate action by the
competent authority.
Rule
213 (3)
Procedure
for verification : (i) Verification shall always be made in the presence of the
officer, responsible for the custody of the inventory being verified. (ii) A
certificate of verification along with the findings shall be recorded in the
stock register. (iii) Discrepancies, including shortages, damages and unserviceable
goods, if any, identified during verification, shall immediately be brought to
the notice of the competent authority for taking appropriate action in
accordance with provision given in Rule 33 to 38.
Rule
214
Buffer
Stock. Depending on the frequency of requirement and quantity thereof as well
as the pattern of supply of a consumable material, optimum buffer stock should
be determined by the competent authority. Note: As the inventory carrying cost
is an expenditure that does not add value to the material being stocked, a
material remaining in stock for over a year shall generally be considered
surplus, unless adequate reasons to treat it otherwise exist. The items so
declared surplus may be dealt as per the procedure laid down under Rule 217.
Rule
215
Physical
verification of Library books. (i) Complete physical verification of books
should be done every year in case of libraries having not more than twenty
thousand volumes. For libraries having more than twenty thousand volumes and up
to fifty thousand volumes, such verification should be done at least once in
three years. Sample physical verification at intervals of not more than three
years should be done in case of libraries having more than fifty thousand
volumes. In case such verification reveals unusual or unreasonable shortages,
complete verification shall be done. (ii) Loss of five volumes per one thousand
volumes of books issued/consulted in a year may be taken as reasonable provided
such losses are not attributable to dishonesty or negligence. However, loss of
a book of a value exceeding Rs. 1,000/- (Rupees One thousand only) and rare
books irrespective of value shall invariably be investigated and appropriate
action taken.
Rule
216
.Transfer
of charge of goods, materials etc. In case of transfer of Officer-in-charge of
the goods, materials etc., the transferred officer shall see that the goods or
material are made over correctly to his successor. A statement giving all
relevant details of the goods, materials etc., in question shall be prepared
and signed with date by the relieving officer and the relieved officer. Each of
these officers will retain a copy of the signed statement.
Rule
217
Disposal
of Goods. (i) An item may be declared surplus or obsolete or unserviceable if
the same is of no use to the Ministry or Department. The reasons for declaring
the item surplus or obsolete or unserviceable should be recorded by the
authority competent to purchase the item. (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
utilised. A report of stores for disposal shall be prepared in Form GFR - 10.
(iv) I n c a s e a n i t e m b e c o m e s 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: Scrap lots comprising of hazardous waste, batteries etc. shall be sold
keeping in view the extant guidelines of Ministry of Environment & Forest.
Prospective bidders of such lots of hazardous waste/scrap batteries/ e-waste
should be in possession of registration, valid on the date of e-Auction and on
the date of delivery, as recycler/ preprocessor agency.
Rule
218
Modes
of Disposal. (I) Surplus or obsolete or unserviceable goods of assessed
residual value above Rupees Two Lakh should be disposed of by : (a) obtaining
bids through advertised tender or (b) public auction. (ii) For surplus or
obsolete or unserviceable goods with residual value less than Rupees Two Lakh,
the mode of disposal will be determined by the competent authority, keeping in
view the necessity to avoid accumulation of such goods and consequential
blockage of space and, also, deterioration in value of goods to be disposed of.
Ministries/ Departments should, as far as possible prepare a list of such
goods. (iii) Certain surplus or obsolete or unserviceable goods such as expired
medicines, food grain, ammunition etc., which are hazardous or unfit for human
consumption, should be disposed of or destroyed immediately by adopting
suitable mode so as to avoid any health hazard and/or environmental pollution
and also the possibility of misuse of such goods. (iv) Surplus or obsolete or
unserviceable goods, equipment and documents, which involve security concerns
(e.g. currency, negotiable instruments, receipt books, stamps, security press
etc.) should be disposed of/ destroyed in an appropriate manner to ensure
compliance with rules relating to official secrets as well as financial
prudence.
Rule
219
Disposal
through Advertised Tender. (i) The broad steps to be adopted for this purpose
are as follows : (a) P r e p a r a t i o n o f b i d d i n g documents. (b)
Invitation of tender for the surplus goods to be sold. (c) Opening of bids. (d)
Analysis and evaluation of bids received. (e) Selection of highest responsive
bidder. (f) Collection of sale value from the selected bidder. (g) Issue of
sale release order to the selected bidder. (h) Release of the sold surplus
goods to the selected bidder. (i) Return of bid security to the unsuccessful
bidders. (ii) The important aspects to be kept in view while disposing the
goods through advertised tender are as under:- (a) The basic principle for sale
of s u c h g o o d s t h r o u g h advertised tender is ensuring transparency,
competition, fairness and elimination of discretion. Wide publicity should be ensured
of the sale plan and the goods to be sold. All the required terms and
conditions of sale are to be incorporated in the b i d d i n g d o c u m e n t
comprehensively in plain and s i m p l e l a n g u a g e . Applicability of
taxes, as relevant, should be clearly stated in the document. (b) The bidding
document should also indicate the l o c a t i o n a n d p r e s e n t condition
of the goods to be sold so that the bidders can inspect the goods before
bidding. (c) The bidders should be asked to furnish bid security along with
their bids. The amount of bid security should ordinarily be ten per cent. of
the assessed or reserved price of the goods. The exact bid security amount
should be indicated in the bidding document. (d) The bid of the highest acceptable
responsive bidder should normally be accepted. However, if the price offered by
that bidder is not acceptable, negotiation may be held only with that bidder.
In case such negotiation does not provide the desired result, the reasonable or
acceptable price may be counter offered to the next highest responsive
bidder(s). (e) In case the total quantity to be disposed of cannot be taken up
by the highest acceptable bidder, the remaining quantity may be offered to the
next higher bidder(s) at the price offered by the highest acceptable bidder.
(f) Full payment, i.e. the residual amount after adjusting the bid security
should be obtained from the successful bidder before releasing the goods. (g)
In case the selected bidder does not show interest in lifting the goods, the
bid security should be forfeited and other actions initiated including re-sale
of the goods in question at the risk and cost of the defaulter, after obtaining
legal advice. (iii) Late bids i.e. bids received after the specified date and
time of receipt should not to be considered.
Rule
220
Disposal
through Auction. (i) A Ministry or Department may undertake auction of goods to
be disposed of either directly or through approved auctioneers. (ii) The basic
principles to be followed here are similar to those applicable for disposal
through advertised tender so as to ensure transparency, competition, fairness
and elimination of discretion. The auction plan including details of the goods
to be auctioned and their location, applicable terms and conditions of the sale
etc. should be given wide publicity in the same manner as is done in case of
advertised tender. (iii) While starting the auction process, the condition and
location of the goods to be auctioned, applicable terms and conditions of sale
etc., (as already indicated earlier while giving vide publicity for the same),
should be announced again for the benefit of the assembled bidders. (iv) During
the auction process, acceptance or rejection of a bid should be announced
immediately on the stroke of the hammer. If a bid is accepted, earnest money
(not less than twenty-five per cent. of the bid value) should immediately be
taken on the spot from the successful bidder either in cash or in the form of
Deposit-at-Call-Receipt (DACR), drawn in favour of the Ministry or Department
selling the goods. The goods should be handed over to the successful bidder
only after receiving the balance payment. (v) The composition of the auction
team will be decided by the competent authority. The team should however include
an officer of the Internal Finance Wing of the department
Rule
221
Disposal
at scrap value or by other modes. If a Ministry or Department is unable to sell
any surplus or obsolete or unserviceable item in spite of its attempts through
advertised tender or auction, it may dispose of the same at its scrap value
with the approval of the competent authority in consultation with Finance
division. In case the Ministry or 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.
Rule
222
Asale
account should be prepared for goods disposed of in Form GFR 11 duly signed by
the officer who supervised the sale or auction.
Rule
223 (1)
Powers
to write off. All profits and losses due to revaluation, stock-taking or other
causes shall be duly recorded and adjusted where necessary. Formal sanction of
the competent authority shall be obtained in respect of losses, even though no
formal correction or adjustment in government accounts is involved. Powers to
write off of losses are available under the Delegation of Financial Powers
Rules.
Rule
223 (2)
Losses
due to depreciation : Losses due to depreciation shall be analysed, and
recorded under following heads, as applicable :- (I) normal fluctuation of
market prices; (ii) normal wear and tear; (iii) lack of foresight in regulating
purchases; and (iv) negligence after purchase.
Rule
223 (3)
Losses
not due to depreciation : Losses not due to depreciation shall be grouped under
the following heads :- (I) losses due to theft or fraud; (ii) losses due to
neglect; (iii) anticipated losses on account of obsolescence of stores or of
purchases in excess of requirements; (iv) losses due to damage, and (v) losses
due to extra ordinary situations under ‘Force Majeure’ conditions like fire,
flood, enemy action, etc.;
Multiple choice questions:
- What is the primary focus of the rules contained in the
given chapter?
- a) Financial management
- b) Human resource management
- c) Inventory management
- d) Project management
Answer: c) Inventory management - What should be done when receiving goods and materials
from a private supplier?
- a) Store them immediately
- b) Check the quantities and quality, and issue a
receipt
- c) Only measure the quantity
- d) Record them without inspection
Answer: b) Check the quantities and quality, and issue a receipt - What is required at the time of receipt of materials to
ensure correct quantities and quality?
- a) Technical inspection
- b) Financial audit
- c) Legal review
- d) Marketing analysis
Answer: a) Technical inspection - Which form is used to maintain accounts for fixed
assets such as plant and machinery?
- a) GFR-22
- b) GFR-23
- c) GFR-18
- d) GFR-24
Answer: a) GFR-22 - How often should physical verification of fixed assets
be conducted?
- a) Once every five years
- b) Once every two years
- c) At least once a year
- d) Monthly
Answer: c) At least once a year - Which of the following is a reasonable loss rate for
library books in a year?
- a) 2 volumes per 1,000 volumes issued/consulted
- b) 5 volumes per 1,000 volumes issued/consulted
- c) 10 volumes per 1,000 volumes issued/consulted
- d) No loss is acceptable
Answer: b) 5 volumes per 1,000 volumes issued/consulted - What should be done if an item becomes unserviceable
due to negligence or fraud?
- a) Dispose of the item immediately
- b) Investigate and fix responsibility
- c) Ignore the incident
- d) Transfer the item to another department
Answer: b) Investigate and fix responsibility - In what form is a report of stores for disposal
prepared?
- a) GFR-10
- b) GFR-18
- c) GFR-23
- d) GFR-24
Answer: a) GFR-10 - What is the recommended frequency of physical
verification for libraries with over 20,000 but up to 50,000 volumes?
- a) Annually
- b) Every two years
- c) Every three years
- d) Every five years
Answer: c) Every three years - What action should be taken for hazardous waste like
scrap batteries?
- a) Store them indefinitely
- b) Sell them according to Ministry of Environment
& Forest guidelines
- c) Dispose of them in regular trash
- d) Reuse them within the department
Answer: b) Sell them according to Ministry of Environment & Forest guidelines - When transferring charge of goods and materials, what
must the officers do?
- a) Exchange a verbal agreement
- b) Prepare and sign a detailed statement
- c) Hand over the materials without documentation
- d) Notify their superior officer only
Answer: b) Prepare and sign a detailed statement - What is the role of the Officer-in-charge of stores
regarding consumable goods?
- a) Ignore the stock balance
- b) Conduct a physical verification annually
- c) Store goods indefinitely without verification
- d) Dispose of all goods after a year
Answer: b) Conduct a physical verification annually - When can an item be declared surplus or obsolete?
- a) When it is no longer in use
- b) When it has been in stock for over six months
- c) When the cost is recovered from the contractor
- d) When there is a technical defect
Answer: a) When it is no longer in use - Which form is used for keeping accounts of consumables
such as office stationery?
- a) GFR-18
- b) GFR-22
- c) GFR-23
- d) GFR-24
Answer: c) GFR-23 - Who should verify the physical stock of library books
in case of unusual shortages?
- a) The head librarian
- b) An external audit team
- c) The Officer-in-charge of stores
- d) The procurement officer
Answer: b) An external audit team
16.What is the preferred mode of
disposal for surplus or obsolete goods with an assessed residual value above
Rupees Two Lakh?
- A) Donation to charitable organizations
- B) Private negotiation
- C) Advertised tender or public auction
- D) Destruction in an eco-friendly manner
- Answer:
C) Advertised tender or public auction
17.What action should be taken if
a Ministry is unable to sell surplus goods even at their scrap value?
- A) Donate the goods to another department
- B) Return the goods to the supplier
- C) Destroy the goods in an eco-friendly manner
- D) Store the goods for future use
- Answer:
C) Destroy the goods in an eco-friendly manner
18.Which of the following is NOT
a head under which losses due to depreciation should be recorded?
- A) Normal wear and tear
- B) Negligence after purchase
- C) Lack of foresight in regulating purchases
- D) Theft or fraud
- Answer:
D) Theft or fraud
19.What percentage of the
assessed or reserved price of goods is usually required as bid security during
disposal through advertised tender?
- A) 5%
- B) 10%
- C) 20%
- D) 25%
- Answer:
B) 10%
20.What should be done if a
selected bidder does not show interest in lifting the goods after winning the
bid?
- A) Offer the goods to the next highest bidder
- B) Return the bid security to the bidder
- C) Cancel the auction and restart the process
- D) Forfeit the bid security and consider re-sale at the
defaulter's risk and cost
- Answer:
D) Forfeit the bid security and consider re-sale at the defaulter's risk
and cost
21.Which of the following items
should be disposed of immediately due to the possibility of health hazards or
environmental pollution?
- A) Office furniture
- B) Expired medicines
- C) Computer equipment
- D) Surplus office stationery
- Answer:
B) Expired medicines
22.What is the minimum amount of
earnest money required from the successful bidder during an auction?
- A) 10% of the bid value
- B) 15% of the bid value
- C) 20% of the bid value
- D) 25% of the bid value
- Answer:
D) 25% of the bid value
23.What document must be prepared
and signed by the officer who supervised the sale or auction of goods?
- A) GFR-10
- B) GFR-11
- C) GFR-22
- D) GFR-24
- Answer:
B) GFR-11
24.What should be done if there
are discrepancies found during the physical verification of consumables?
- A) Ignore the discrepancies
- B) Report them in the stock register for appropriate
action
- C) Adjust the stock without reporting
- D) Inform the supplier for a refund
- Answer:
B) Report them in the stock register for appropriate action
25.How should surplus goods that
involve security concerns be disposed of?
- A) Through public auction
- B) By destruction in an appropriate manner
- C) Donated to non-profit organizations
- D) Stored for future disposal
- Answer:
B) By destruction in an appropriate manner
26.What type of goods should be
sold keeping in view the extant guidelines of the Ministry of Environment &
Forests?
- A) Office supplies
- B) Hazardous waste, batteries, e-waste
- C) Office furniture
- D) Historical artifacts
- Answer:
B) Hazardous waste, batteries, e-waste
27.Who should prepare the auction
plan for goods to be auctioned?
- A) The highest bidder
- B) The auctioneer
- C) The Ministry or Department
- D) The Finance Department
- Answer:
C) The Ministry or Department
28.Which of the following losses
is considered a loss due to depreciation?
- A) Losses due to theft or fraud
- B) Losses due to normal fluctuation of market prices
- C) Losses due to neglect
- D) Losses due to extraordinary situations under ‘Force
Majeure’
- Answer:
B) Losses due to normal fluctuation of market prices
29.Which form is used to record
the sale account of disposed goods?
- A) GFR-10
- B) GFR-11
- C) GFR-18
- D) GFR-22
- Answer:
B) GFR-11
30.What should be done if a
Ministry or Department cannot dispose of an item through advertised tender or
auction?
- A) Store the item indefinitely
- B) Return the item to the original supplier
- C) Dispose of the item at scrap value or destroy it
- D) Transfer the item to another department
- Answer:
C) Dispose of the item at scrap value or destroy it
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