Code of Principle

All Communication Should
Be addressed to the Government of India,
Ministry of Industry, By the title not by name.
Telegram    : INDMINSTRY
Telex           : 031-66565
Fax              : 011-23012626
                    : 011-23011770
Sankhya No. 09013/3/2002-Salt
Bharat Sarkar/Government of India
Vanijya Avam Udyag Mantralaya/
Ministry of Commerce & Industry
(Audyogik Neeti aur Samvardhan Vibhag)
Department of Industrial Policy & Promotion
Udyod Bhawan, New Delhi- 110011
Dated the 7th September 2005


The Salt Commissioner,
2A, Lavan Bhawan,
Lavan Marg,
Jhallana Doongri,

Subject :- Grant of financial assistance from Salt Cess proceeds for execution of development and labour welfare works – extension of validity of Code of Principle – Regarding.


I am directed to refer to your letter No. 6(1) Dev./97 / Vol. I / 4487 dated 9th June 2005 on the subject mentioned above and to convey the approval of the competent authority to extend the validity of Code of Principles issued vide this Department’s letter No. 09011/2/78 – Salt ( Vol.III) dated the 18th June, 1992 as amended vide this Departments letter of same number dated 14-7-1998, 12th October, 2000, 3rd October, 2002 and letter No. 09013/3/2002 – Salt dated 24th September 2004 for a further period of one year beyond 17th June, 2005.
2.         This issues with the concurrence of IFW vide their Dy. No. 1082 / AS&F A / 2005 dated 6th September 2005.

Yours faithfully
(S.C. Sivaji Rao)
Under Secretary to the Govt. of India
Tele No. 237793510

Government of India
Ministry of Industry
Department of Industrial, Development (a)
New Delhi, dated the....................


The Salt Commissioner,

Subject :- Execution of Development works in salt factories- contribution from Cess/ Process-revision of Code of Principles.


The question of revision of Code of Principles for execution of development works in salt factories with the contribution from Cess Proceeds has long been under the consideration of the Government. It has now been decided that in Suppression of the Code of Principles contained in this Ministry’s letter NO.09011/2/78-Salt dated 1.1.1986 the following principles may henceforth be followed while granting financial assistance for such work out of Cess proceeds.
Priority for execution of Development and labour Welfare Schemes may be given in the following order :-
Schemes benefiting the labourers
  • Water Supply Schemes including provisions of water coolers, Storage tanks, Water tankers mounted on trailers etc.
  • Construction of labour rest sheds, creches, toilets etc.
  • Provision of augmentation of medical facilities including conducting General Health-cum-Eye camps.
  • Provision of Community Centers and recreation facilities, including organizing Sports meets, installation of TV Sets, 16 mm. sound projectors etc.
  • Provision of or augmentation of educational facilities for the children of workers employed in the salt industry including grant of rewards to meritorious children of Salt Workers for purchase of books etc.
  • Labour Housing, subject to the provisions of the Scheme formulated in this regard
  • Provision of audiovisual aids in the Salt Department for improving skills in production of salt/ iodised salt/quality control etc.
  • Insurance of Salt Workers.
Schemes benefiting the industry
  • Schemes for augmentation of brine supply.
  • Construction of or improvements to roads, culverts, bridges and protective bunds.
  • Improvements to port/jetty for export of salt and Railway sidings common to a number of licensees.
  • Research and Development Schemes for improved process and mechanization for harvesting of salt and recovery of by-products from brine and bitterns (excluding commercial Schemes).
  • Undertaking/sponsoring feasibility studies for improving salt productivity.
  • Any development work (connected with Salt industry) not covered by the above priorities but considered necessary in the interest of the industry.
  • Contribution from Cess Proceeds shall be confined to schemes of development nature or those aimed at community development, labour welfare and other similar activities and no assistance shall be extended to schemes of purely routine nature like maintenance of platforms/embankments, Railway Tracks, sidings or commercial Schemes. Labour welfare Scheme, community development and consultancy schemes of common interest benefiting the Salt Industry and costing up to Rs.1 lakhs may be considered for sanction by the Salt Commissioner with 100% assistance from the Salt Cess Proceeds on the recommendation of the Regional Advisory Boards for Salt or the Central Advisory Board.
  • Schemes estimated to cost not more than Rs. 10* lakhs each and recommended by the concerned Regional Advisory, Board can be sanctioned by the Regional officers.
  • Schemes estimated to cost more than Rs. 10* lakhs but not more than Rs.20* lakhs can be considered for sanction by the Salt Commissioner on the recommendation of the Regional Advisory Board for salt.
  • Schemes costing more than Rs.20 lakhs but not more than Rs.30* lakhes can be considered for sanction by the Salt Commissioner on the recommendation of the Central Advisory Board for Salt.
  • Works costing more than Rs.30 lakhes will be considered for sanction by the Government on the recommendation of the Central Advisory Board for Salt.
  • Schemes of important and urgent nature estimated to cost not more than Rs.20* lakhs can be considered for sanction by the Salt Commissioner on the recommendation of the works & Loan Sub- Committee of the Regional Advisory Boards for Salt and such works shall be placed before the concerned Regional Advisory Board for salt at their next meeting for information.
  • The extent of contribution to be paid for a particular scheme may generally have some relation to the cess collection, number of licensees/Salt works/laborers benefited. However, the amount of cess collection need not be a criteria for extending assistance to medium, small and co-operative sector salt works. Priority needs to be given for extending assistance to salt works in backward areas.
  • The contributions from the salt cess proceeds will generally be made in partnership with either the beneficiary salt producers and/or the Government/Zilla Parishad / Panchayt Samiti concerned, salt Manufactures Association/ Registered and approved Non Government Organisation as the cases may be. The extent of financial assistance to be provided for the execution of developmental and labour welfare schemes shall, as a rule not exceed one half of the total cost involved in the case of major single salt producer factory/salt works (covering more then 100 acres ) and 70% in the case of multiple Salt Producers, single medium salt producer salt works (covering between 10 & 100 acres) and small scale salt producers (covering not more than 10 acres and co-operative societies
  • In case of development and labor welfare schemes benefiting the community as well as salt laborers such as approach road, drinking water supply etc. sponsored by State Governments/ Local bodies the total cost of the scheme will be shared by Salt Department and State Government in a ratio of 2/3rd* by the center (Salt Department) and 1/3rd* by the State Government. The lone beneficiary licensee should contribute his share as may be decided by the State Government/local bodies and approved by Regional Advisory Board/Central Advisory Board. However, for the schemes of common interest and labour welfare no share from beneficiary licensees is required.
  • Every proposal should be accompanied by an undertaking from the beneficiary licensees/sponsoring agencies that he is/they are willing to bear the proportionate cost of the scheme. The licensees should also submit an estimate dully prepared by qualified engineers in P.W.D. I, II, III forms in consultation with the Departmental Officers. In respect of the schemes to be executed by the State Government, they have to also send the proposals similarly along with estimate and undertaking.
  • The benefits of community development schemes so executed may not be denied to the inhabitants of the locality, whether they are salt workers or not.
  • Works costing upto Rs.10 lakhes each may be executed by the Salt Commissioner departmentally or through other agencies as may be considered expedient by the Salt Commissioner.
  • Works costing more than Rs.10 lakhes shall normally be executed by Central Government/State Government P.W.D. or by any Central /State Government undertaking or by Zilla Parishad/ Municipality/Panchayat authorities provided where such works cannot be entrusted to such agencies/ authorities for sufficient reasons, the Salt Commissioner may with the prior approval of the Central Government, execute such schemes departmentally or through other agencies.
  • Works costing up to Rs.1 lakhs and Rs. 5 lakhs may, however, be entrusted by the Regional Officers and Salt Commissioner respectively to the beneficiary licensees without taking security deposit for their execution at the estimated cost.
  • In respect of the works sponsored by State Government/local bodies any escalation in the cost of the work till it is awarded to a contractor for execution will be considered for sanction by Salt Commissioner/ Government in equal share with Cess proceeds and State Government without making reference to Regional Advisory Board and Central Advisory Board. This is subject to the condition that the work is awarded on contract within a period of one year from the date of approval of the proposal by Regional Advisory Board/ Central Advisory Board after completing all formalities.
  • Advance of contribution from cess proceeds against the sanctioned estimate may be considered by the Government /Salt Commissioner /Regional Officers in respect of the works entrusted to the State Government, local bodies public sector units and other Government agencies for execution as under :-
  • 40% of the Salt Department contribution may be paid as initial advance after physical commencement of the work. Another 50% may be paid as second advance an completion of 50% of the work.

    Balance 10% of the contribution from cess proceeds will be released on completion of the work and after (i) it is duly passed and certified to be completed in all respects by the competent authority of executing agency , and (ii) on receipt of final completion report and audited accounts duly signed by the competent authority and certified by the concerned competent Accounts Officer of the Executing Agency and , (ii) it is certified that assistance for the work has not been obtained from any other funds/sources.

  • In respect of deposit works, the advance in full or in installments, as the case may be, may be paid to the executing agency subject to settlement of account by the executing agencies on completion and passing of the works by competent authority alongwith the Completion Report and audited accounts duly signed by the Accounts Officer/Divisional Accountant, as the case may be, and by the executing agency. The advance should however be paid to the executing agency only.
  • The Government contribution so paid in advance will be recoverable from the executing agency if the executing agency fails to execute the work within the agreed period of if any extension is asked for and granted, within such extended period.
  • It will be the responsibility of the State Government to certify clear title to the land on which the public utility work is executed and of the cess proceeds.
  • Payment in respect of works entrusted to the contractor will be made as per normal procedure prescribed in the CPWD Manual/Code.
  • In respect of labour welfare works, such as purchase of Audio-Visual-aids benefiting multiple salt licensees and salt workers, Salt Commissioner will be the custodian of such assets and he will be responsible for their proper maintenance.
  • In respect of the execution of any essential work, if the beneficiary licensee concerned does not agree to contribute his share of the cost involved, the Salt Commissioner may get such work executed according to the provisions of Rule 129 and 130 of the Central Excise Rules 1944. The share of the licensee i n respect of the work will be recovered as mentioned at para- 23.
  • Licensees’ share of cost of works which may not include Department’s supervision charges is normally to be recovered in advance. In respect of works benefiting major/medium single licensees executed by the beneficiary licensees themselves, payment will be limited to the Departmental share only. However in case of works executed by the Department by itself or through other agencies salt licensees who may not be in a position to pay their share of the cost in advance the Department may initially meet the expenditure in full and the licensees may be allowed to pay their share in installment : the first installment falling due in the month of commencement of the work. The time allowed for payment of the balance amount may not normally exceed the period in which the work is executed. However, the Regional Officer may extend the period of repayment on the merits of each case.
  • The limits of assistance out of cess proceeds to the different categories of works as set out in Paras 9 and 10 may be relaxed by the Government in special cases on the recommendations of the Central/Regional Advisory Boards or the works & Loans & Sub-Committee of the concerned Regional Advisory Boards formed for the purpose, if the Salt Commissioner is satisfied that such cases call for a special consideration.
  • The maintenance of works thus executed may also be undertaken by the Salt Department provided always that the licensees concerned undertakes to pay the annual expenditure involved on a pro-rata basis either in lumpsum or in the form of a special levy on the issues of salt as may be decided by the Salt Commissioner subject to full recovery being made during the year of maintenance.

Government of India
Min. of Commerce & Industry
(Deptt. Of Industrial Policy & Promotion)
Udyog Bhavan, New Delhi

Dated the 29-08-2006

The Salt Commissioner,

(Fax No. 01412705571)

Subject:- Grant of financial assistance from Salt Cess Proceeds for execution of Development & Labour welfare works- Extension of validity of Code of Principle- regarding.


I am directed to refer to your letter No. 6(1)/Dev./96.Vol.I/5315 dated 8.6.2006 on the above mentioned subject and to convey the approval of the competent authority to extend the validity of Code of Principle issued vide this Department’s letter No.09011/2/78-Salt (Vol-III) dated 18th June, 1992, as amended vide this Department letter of even number dated 14.7.1998, 12th October, 2000, 3rd October,2002 and letter No. 09013/3/2002-Salt dated 24th September, 2004 up to 31-03-2007.
This issue with concurrence of I.F. Wings vide their Dy. No. 1795/ AS& FA/2006 dated 29.08.2006.

Yours faithfully
(S. C. Sivaji Rao)
Under Secretary to the Govt. of India