Scrap Disposal

Reference of Scrap Disposal

• SCRAP items means “Not wanted, Unserviceable or Obsolete or cannot be used  for original purpose  but have some value  for the material
• SCRAP MANAGEMENT ACTIVITIES ARE           CONTROLLED AND CO-ORDINATED BY  STORES CODE VOLUME-II, CHAPTER – XXIII (23) & XXIV (24)
• MODEL SOP-2018 PART-D, SL.NO.7 (Auction & Tender Sale)  
• Railway Board/Zonal/Divisional Level Circulars

Definition of Scrap in Railways

• In the Railway stores context, scrap broadly includes the following categories of materials:
• Unserviceable Stores:Items that have been used and have become worn out, broken, or damaged beyond economical repair and are no longer fit for their original purpose.
• Condemned Stores:Items that have been formally declared unfit for further use by a competent authority through a condemnation process, even though they may still have residual/scrap value.
• Surplus Stores:Items that are excess to requirement and cannot be utilized or transferred elsewhere. If they cannot be redeployed, they are disposed of as surplus/scrap.
• Obsolete Stores:Items that have become technologically outdated and are no longer required due to changes in design, technology, or operational practice.
• Waste Materials:Off-cuts, turnings, borings, packaging waste, and other by-products generated during manufacturing or maintenance operations in workshops and depots.
• Over-aged Assets:Rolling stock, machinery, plant, and equipment that have completed their prescribed service life and have been

Categories of Scrap in Railways

• Railway scrap is broadly classified as follows for disposal purposes:
• Ferrous Scrap:Includes iron and steel scrap from rails, wheels, axles, fish plates, bolts, structural steel, and general MS scrap. This is the largest category by weight and value.
• Non-Ferrous Scrap:Includes copper, brass, aluminum, lead, zinc, and bronze scrap from electrical equipment, signalling cables, brake fittings, and other components. This category commands higher value per kg.
• Rubber and Plastic Scrap:Includes worn tyres, hoses, gaskets, rubber pads, plastic components, and packaging materials.
• Wooden Scrap:Includes condemned wooden sleepers, broken furniture, packing cases, and timber offcuts.
• Electrical and Electronic Scrap (E-Waste):Condemned electrical equipment, cables, motors, transformers, signalling equipment, and electronic components.
• Textile and Leather Scrap:Worn-out upholstery, uniforms, bedrolls, leather goods, and packing materials.
• Rolling Stock and Heavy Plant:Condemned locomotives, coaches, wagons, cranes, and heavy machinery disposed of as scrap or through auction.
• Chemical and Lubricant Waste:Spent oils, waste chemicals, and lubricants requiring special disposal procedures.

IDENTIFICATION & GENERATION OF SCRAP

Regular arising Scrap

• P-Way Scrap (Rails, Sleepers, Gadders, Joints, ERC’s etc.,),
• Industrial scrap(Borings & Turnings, Cut Parts etc.,.),
• Re-rollable scrap, Melting scrap, Cast Iron scrap,
• Condemned M&P/Rolling stock,
• Non-ferrous scrap  (Silver/Copper/Brass/Lead/Aluminum etc.,.),
• Scrap machinery, Pipes and Pipe fittings, Wooden scrap, Waste paper, Condemned boiler, Steel cut pieces, Condemned furniture, Empties (Drums).

Other Scrap

• Immovable Surplus Items (Dead Surplus Items)
• Over Stock Items (which are not required by any other Railways)
• Obsolete Items (The items that are not required for the purpose for which they procured)
• Return Stores (issued to consignee but not used by them due to change of design, shape etc.,) Advice Note No.S-1539/SR-15/DS-8 through UDM. (Card Code – 48)

Scrap major sources

 Major Head Contribution

• P Way and Fittings 50%
• workshop/depot Scrap 30%
• Rolling Stocks 8%
• Misc Scrap 12%

Procedure for Scrap Disposal

Identification and Segregation

• Materials identified as unserviceable, surplus, or obsolete during stock verification, periodic inspections, or in the course of normal operations are segregated from serviceable stock.
• They are physically moved to a designated Scrap Yard or Condemned Stores area. Proper tagging/labelling is done to prevent accidental reuse.

Survey and Condemnation

• A Survey Committee is constituted to formally examine the materials proposed for condemnation.
• The committee assesses the condition of the items, confirms that they are genuinely unfit for further use, and determines whether any parts can be salvaged for use as spares (cannibalization) before condemnation.
• The committee prepares a Survey Report recording item details, quantity, reason for condemnation, estimated scrap value, and recommendation for disposal method.
• The Survey Report is approved by the competent authority as per delegation of financial powers.

Valuation of Scrap

• Once condemnation is approved, the materials are valued to determine the reserve/upset price for disposal.
• Valuation is done based on current market rates for the particular category of scrap, weight of the material, Last Sale Price (LSP) achieved for similar scrap, and condition and grade of the scrap.
• The reserve price is fixed by a competent officer and is kept confidential until after bids are opened to ensure fair competition.

Preparation for Disposal

• Before disposal, scrap is sorted and stacked category-wise (ferrous, non-ferrous, wood, rubber, etc.) to facilitate inspection by prospective buyers and to ensure maximum realisation.
• Lot numbers are assigned to each group of scrap being disposed of together.
• A detailed lot description is prepared mentioning quantity (weight or number), category, condition, and location.
• Procedure for Scrap Disposal

Invitation of Tenders / Auction

• Tenders/auction notices are widely published to attract maximum participation and competitive bidding.

Opening of Bids and Evaluation

• Bids received are opened in the presence of a committee.
• Offers are evaluated and compared against the reserve price.
• The highest offer above the reserve price is accepted.
• If all offers are below the reserve price, the committee may negotiate with the highest bidder or re-tender.

Issue of Sale Order

• After acceptance, a Sale Order is issued to the successful bidder specifying the lot details, sale price, payment terms, and delivery period.

Payment and Delivery

• The buyer deposits the full sale value (and applicable taxes/GST) within the stipulated period.
• After receipt of payment, a Delivery Order is issued and the scrap is weighed/measured and handed over to the buyer under proper supervision. A Delivery Certificate is obtained from the buyer.

Accounting and Record Update

• The scrap disposal is accounted for in the stores records.
• The item is written off from the Bin Card and Stock Register.
• Sale proceeds are credited to the appropriate revenue head of Railway accounts.

Survey committee requirement

• To condemn /Scrap the items survey committee required for some items, not required for some items.
• Survey Committee required for Rolling stock,  M&P , overstock, surplus, Inactive etc., based on their codal life, usage, overage etc.,
• No Survey committee required for regular arising Scrap and P-Way items (Open Line).  Joint Survey will conducted by Custodian(SSE) and ASV and submit joint survey report to concerned Division/Depot.
• Survey Committee appointed by GM, its Three member committee
• Composition: The committee typically consists of a representative from the user/technical department (to assess serviceability), a representative from the Stores department (for stock accounting), and a representative from the Finance/Accounts department (to safeguard financial interests).

Procedure for scrap sales

• After Lot Formation, the sale conducted normally through e-Auction in ireps.gov.inwebsite (Auction Module).
• Therefore a lot should not be too small or not be too large as this will restrict auction.
• After Lot Formation, the lot will sold in following methods:
• Sale through e-Auction
• Sale through e-Auction
• Direct Sale to Employees and govt offices
• Direct Sale to Other Railways
• Direct Sale by Sr.Supervisors (SSE’s) independent charge at Field Units up to Rs.2,500/- per item as per extant RB instructions.
• Auction Conducting Officer will be minimum JAG level (Sr.DMM in divisions and Dy.CMM in Scrap Depots
• To participate in e-Auction, the bidders(Purchaser) to be register in IREPS website, and one time registration fees of Rs.10,000/- to be paid.
• After Sale through e-Auction by Division/Depot, the Bid Sheetwill be generated and firm has to pay 10% of the Earnest Money Deposit (EMD) and Balance Sale value to be paid. If the total sale value below 1 Lakh firm has to pay the entire amount at one stretch.

Payment of Balance sale value and free delivery period

Free time for Balance Sale Value (BSV) payment and delivery of P-Way Scrap and open line lots:

• Free time for Balance Sale Value (BSV) payment and delivery of Depot / Workshop Scrap lots:

Bid sheet digitally signed by the following officials after successful completion of e-Auction:

• Custodian(Stock holder)
• Accounts Representative (Witnessing official)
• Scrap Yard Incharge (DMS/CDMS)
• Purchaser
• Auction Conducting Officer

Penalties on Non-payment of BSV & lifting of the material

• After paying BSV (Balance Sale Value) within free time allowed by the purchaser the Delivery Order/Sale Release Order(DO/SRO) will be generated and the purchaser should lift the sold lot within Free Delivery Period.
• If the Purchaser failed to pay the BSV within free time, the interest shall be levied at on delayed payment  at 15% per year.
• If the Purchaser failed to lift the sold lot within Free Delivery Period, the Ground Rent will be levied at 0.5% per day of the total Lot Value.
• However, time for payment of BSV with interest may be extended by Railway for P.Way scrap and other line lots up to 40 days and     Depots lots up to 35 days
• The EMD shall be forfeited, if the balance sale value BSV is not deposited by purchaser within the said period of 40/35 days.
• Free delivery period shall be maximum 50 open lots /40 days depot lots However Railway administration in deserving cases may extend the delivery period by 15 days for open lots /10 days for depot lots over and above the prescribed period of 50/40 days.

Condemned Rolling Stock Disposal

• Disposal of condemned locomotives, coaches, and wagons is a major scrap disposal activity:
• Rolling stock is condemned by a Competent Railway Authority after completion of prescribed service life or beyond economic repair
• A detailed survey is carried out to determine residual value of metal, components, and fittings
• Reusable components (bogies, wheel sets, seats, fittings) are salvaged before the shell is scrapped
• The remaining structure is cut up and disposed of as ferrous scrap
• E-auction is the preferred mode for rolling stock scrap disposal
• Environmental regulations regarding disposal of hazardous materials (asbestos, batteries, oils) from old rolling stock must be complied with

Common Irregularities and Audit Observations

• The following irregularities are frequently observed in scrap disposal and are subject to audit scrutiny:
• Long-pending undisposed scrap accumulating in yards causing deterioration in value and pilferage risk
• Reserve price fixed below market rates resulting in under-realization
• Disposal without proper survey/condemnation procedure
• Mixing of categories (non-ferrous mixed with ferrous) resulting in lower realization
• Delivery of scrap before receipt of full payment
• Shortage in quantity delivered compared to quantity sold
• Safety-critical items disposed of without proper defacing, risking re-entry into service
• Lack of GST compliance in scrap sale transactions
• Inadequate publicity for auction/tender leading to poor participation and low bids