Does BOCW Act/ Labour Cess Apply To An Industrial Construction

Dear Sir,
May anyone help me for that is Labour Cess Applicable on Free issue Material provided by Principal Contractor. Company "A" Construct one factory from Company "B". Company "A" Provide Cement & Steel to Company "B" as Free Issue Material.The value of Free issue material also not included in BOQ as per our BOQ we raised properly bill on him regular basis and they deduct BOCW on work done. but in the final settlement they are saying that BOCW on free issue material also impose on Company "B".
Total Work Order Value - 71 Cr. (Excluded FIM)
Total Work done Value - 71 Cr. (Excluded FIM)
Total Labor Cess Deduct Value - 0.71 Cr. (Excluded FIM)
FIM Value - 47 Cr.
They are Deducting Rs. 0.47 Cr. BOCW on FIM
Is it Correct because that is not our cost of Construction.
Vinay

Dear Mr.Tripathi,
The deducted cess on FIM is correct. There is no ambiguity. Total cost of construction would be inclusive of 47 Crores if it was not supplied by A.
There is no exemption if cost of material is supplied by Client.
Only Cost of land and Compensation paid or to be paid to workers under WC Act can be deducted from Cess Amount.
The only impact would be on the cess amount. It would be less if client is able to procure material at less cost than contractor. So 1% charged on it would be lesser than if the material is bought through contractor.
But even in that case accessing officer can see through under invoicing or costing. Then they will ask for higher cess with appropriate higher cost charged for material.
I guess in this case your company is benefited with less cess.

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