Facing ESI Scrutiny: Are Our Repair and Freight Charges Justified? Seeking Advice

Recently, our company was inspected by ESI, and they asked the following queries regarding the Profit & Loss Account of 2017-2018. We accounted for Rs. 6000 as freight charges and Rs. 5000 as repair maintenance. We showed the bill and provided an explanation (details below), which was not accepted by the ESI officer. The next hearing may take place by the end of this week.

Explanation and queries are as follows:

1. Repair Maintenance: When we presented the bill copy from the computer service provider for the tally software, ESI requested the ESI registration number, even though only 3 members are currently working. I explained that it was not possible to provide the registration number.

2. Freight Charges: ESI pointed out that we had engaged manpower for loading and unloading. I clarified that the manpower had been provided by our customer, and we had offered the amount to them on a humanitarian basis.

Please review the above information and confirm whether both answers were correct. Additionally, we are seeking further advice on this matter.

It sounds like you're dealing with a couple of tricky issues related to the ESI inspection. Let's address each one:

1. Repair Maintenance: As per ESI Act, an employer is required to register under ESI if they have 10 or more employees. Since you mentioned that there are only 3 members working, you are correct that ESI registration is not mandatory. However, you can voluntarily register under ESI if you wish. The ESI officer may not be aware of your employee count. You should provide evidence of your employee count during the hearing to clarify this point.

2. Freight Charges: The ESI officer's query seems to be based on the assumption that you engaged additional manpower for loading & unloading. If the manpower was provided by your customer, and you did not employ or pay them directly, then this should not fall under your ESI liability. You need to clearly explain and provide evidence that the manpower was provided and paid by your customer, not by your company.

For your upcoming hearing, make sure to:
- Provide evidence of your employee count to clarify why you are not ESI registered. This can be payroll records, attendance records, etc.
- Clearly explain and provide evidence that the manpower for loading & unloading was provided and paid for by your customer. This can be written agreements, payment receipts, etc.

Remember, clear communication and correct documentation are key to resolving these issues. Good luck!