[TO BE PUBLISHED IN PART II, SECTION 3,
SUB-SECTION (i) OF THE GAZETTE OF NDIA]
Government of
India
MINISTRY OF
LAW, JUSTICE AND COMPANY AFFAIRS
(DEPARTMENT OF
COMPANY AFFAIRS)
NOTIFICATION
New
Delhi, the 24th April, 2001
G.S.R. 276 (E).- In exercise of the powers conferred by
sub-section (1) of section 642,
read with clause (d) of sub-section (1) of section 209 of the Companies Act,
1956 (1 of 1956), the Central Government hereby makes the following rules,
namely :-
1. Short
title and commencement –(1) These rules may be called the Cost Accounting
Records (Mining and Metallurgy)
Rules, 2001.
(2)
They shall come into force on the date of their publication in the Official
Gazette.
2.
Application –
These rules shall apply to every company engaged in the mining, production,
processing or manufacturing activities
of any of the products (metals and non-metals, their minerals, ores and
alloys) as specified in the Appendix
to these rules :
Provided that these
rules shall not apply to a company,-
(a)
the aggregate value of the machinery and plant installed wherein, as on the last
date of the preceding financial year, does not exceed the limits as specified
for a small scale industrial undertaking under the provisions of Industries
(Development and Regulation) Act, 1951 (65 of 1951); and
(b)
the aggregate value of the turnover made by the company from sale or supply of
all its products during the preceding financial year does not exceed ten crore
rupees.
3. Maintenance of
records -
(1) Every company to which these rules apply shall,
in respect of each of its financial year commencing on or after the 1st day of
April, 2001 keep proper books of account containing, inter-alia, the particulars
specified in Schedule I annexed to
these rules and Proformae A,B,C,D,E and
F, relating to the utilization of materials, labour and other items cost in
so far as they are applicable to the mining, production, processing or
manufacture of products referred to in rule 2 :
Provided that
if the said company is engaged in mining or manufacturing of any other
product(s) or is engaged in other activities in addition to mining or
manufacturing of products under reference, the particulars relating to
utilization of materials, labour and other items of cost in so far as they are
applicable to such other products or activities shall not be included in the
cost of products under reference.
(2) The books of accounts referred to in
sub-rule (1) shall be kept on a regular basis in such a manner as to make it
possible to calculate the cost of mining, cost of production and cost of sales of products under
reference, which are mined or manufactured or produced or processed, for every
financial year, from the particulars entered therein and every such books of
account and the Proformae specified in said Schedule I, shall be completed not
later than ninety days from the close of the financial year of the company to
which they relate.
(3) The
statistical and other records shall be maintained in accordance with the
provisions of the Schedule I which shall be such as to enable the company to
exercise, as far as possible, control over the various operations and costs with
a view to achieve optimum economies in cost. These records shall also provide
the necessary data required by the Cost Auditor to suitably report on all the
points referred to in the Cost Audit (Report) Rules, 1996.
(4) It shall be the duty of every person,
referred to in sub-section (6) and (7) of section 209 of the Companies Act 1956
(1 of 1956), to take all reasonable steps to secure compliance by the company
with the provisions of sub-rules (1), (2) and (3) of this rule in the same
manner as he is liable to maintain accounts required under sub-section (1) of
section 209 of the said Act.
4. Penalty – If a company contravenes the
provisions of rule 3, the company and every officer thereof who is in default,
including the persons referred to in sub-rule (4) of rule 3, shall, subject to the
provisions of section 209 of the Companies Act, 1956 (1 of 1956) be punishable
with fine which may extend to five thousand rupees and where the contravention
is a continuing one with a further fine which may extend to five hundred rupees
for every day after the first day during which such contravention continues.
APPENDIX
(See rule
2)
List
of products (metals and non-metals, their minerals, ores and alloys) for which
the rule shall apply :
1. Uranium
2. Thorium
3. Zirconium
4. Titanium
5. Copper
6. Lead
7. Zinc
8. Nickel
9. Cobalt
10. Chromium
11. Gallium
12. Germanium
13. Platinum
14. Molybdenum
SCHEDULE
I
[See rule
3]
1. MATERIALS:
(1)
The proper records shall be maintained showing separately all receipts, issues
and balances both in quantities and cost of each item of raw material required
for mining or production of products under reference by way of calcination,
oxidation, electrolysis or any other method. Where the company have its own
facilities to produce basic raw materials such as minerals from captive mines,
ores, electrodes, power, etc., detailed records indicating the break up of raw
materials consumed for their production and conversion cost, shall be maintained
in such details so as to enable the ascertainment of the cost of these raw
materials and intermediates. These records shall contain such details so as to
enable the company to determine the quantity, cost of receipt (including all direct charges upto the
works in respect of major raw material), issues and balances in quantity as well
as value of each item of all such raw materials. The basis on which said
quantities and costs of issue and consumption have been calculated, shall be
indicated in the cost records and followed consistently. In the case of imported
raw materials, proper records shall be maintained showing FOB value, overseas freight, insurance, customs
duty and inland freight charges. If
both indigenous and imported materials are consumed, the records showing details
of percentage mix of the same, have to be maintained for each item. In the case
of imported raw material, proper records shall be maintained showing
license-wise allowed quantities, actual quantities imported, actual quantities
consumed, quantities in stock and quantities yet to be imported out of total
licensed quantities.
(2)
The proper records shall be maintained separately showing the receipts, issues
and balances both in quantities and cost of each item of process material or
chemicals used in the mining or manufacturing of products under reference. The
cost shall include all direct charges upto works. The issues or consumption
shall be properly identified with the departments, cost centres and products
manufactured.
(3)
Where the company produces these process materials, separate records showing the
cost of production of each such material indicating the break up of material
consumed shall be maintained to determine the cost of process material produced.
The basis on which the quantities and cost of issues and consumption of such
materials produced or raised by the
company are calculated, shall be indicated in the cost records and followed
consistently.
(4)
The proper records shall be maintained indicating the quantity as well as value
of the by-products recovered in different processes and having significant value
of the cost of input of material. In the case of certain by-products recovered,
which cannot be reused in the process and are sold or disposed of without
further processing, the realization from such sales shall be recorded and
adjusted against the process concerned on a reasonable basis. In case further
processing is necessary to make the by-products usable or saleable, as the case
may be, adequate records of the cost involved for such further processing shall
be maintained. If such processing is done by any outside agency, proper records
to show the quantity sent for processing, quantity received back after
processing and cost incurred thereon shall be
maintained in detail. The net realization, if any, shall be adjusted against the
major process relating to such by-product. The basis adopted for determining
cost of the by-products shall be on equitable and reasonable basis and applied
consistently. The records indicating the actual sales realization of by-products
shall also be maintained.
(5)
The proper records shall be maintained to show the receipts, issues and
balances, both in quantities and cost of each item of consumable stores, other
chemicals not covered by sub-rule (2), tools and machinery spares. The cost shall include all direct
charges upto works.
(6)
In the case of consumable stores and small tools the cost of which are
insignificant, the company may, if it so desires, maintain such records for the
group of such consumable stores and tools.
(7)
The cost of consumption of consumable stores, small tools and machinery spares
shall be charged to the relevant cost centre or department on the basis of
actual issues.
(8)
The proper records shall be maintained showing the quantity and value of
wastage, spoilage, rejections and losses of raw materials, process materials,
consumable stores whether in transit, storage, manufacture or at any other
stage. The method followed for adjusting the above losses as well as the income
derived from the disposal of rejected and waste materials including spoilage, if
any, in determining the cost of product, shall be indicated in the cost records.
Any abnormal wastage or spoilage or rejection shall be indicated distinctly and
separately along with reasons thereof. The records shall also be maintained to
indicate the value of raw materials and components, finished and semi-finished,
which have not moved for more than twelve months.
(9)
Where any credit under Modified Value Added Tax (MODVAT) or any other benefits of the
nature of MODVAT credit under the Central Excise Act, 1944 (1 of 1944), are
available on any item of material, the cost of such material should be shown
after adjusting such credit or benefits.
(10)
If any of the materials purchased is processed by an outside party, proper
records shall be maintained for the quantity sent for processing, quantity
received after processing, by-products received, if any, and the cost involved
in processing.
2. SALARIES AND WAGES:
(1)
The proper records shall be maintained to show the attendance and earnings of
all employees of the cost centres or departments and the work on which they are
employed. The records shall also indicate the following separately for each cost
centre or department:
(a)
piece rate
wages (wherever applicable);
(b)
incentive wages, either individually or collectively as production bonus or under
any other scheme based on output;
(c) overtime wages;
(d) payments to casual or contractual labour;
(e) bonus or gratuity, statutory as well as other;
(f) contribution to superannuation scheme;
(g) any other payment.
(2)
The records shall be maintained in such a manner as to enable the company to
furnish necessary particulars under this head in Proformae A,B,C,D,E and F of
Schedule I annexed to these rules. The records may be maintained to book these
expenses cost centrewise or departmentwise with reference to activities related
to mining and production activities of products under reference. Where the
employees work in such a manner that it is not possible to identify them with
any cost centre or department, the labour charges shall be apportioned to the
cost centres or departments on equitable and reasonable basis and applied
consistently.
(3)
The idle labour cost shall be separately recorded under classified headings
indicating the reasons therefor. The method followed for accounting of idle time
payments in determining the cost of the product shall be disclosed in the cost
records.
(4)
Any wages and salaries allocable to capital works, such as, additions to plant
and machinery, buildings or other fixed assets shall be accounted for under the
relevant capital heads.
3.
SERVICE DEPARTMENT EXPENSES:
The
detailed records shall be maintained to indicate expenses incurred in respect of
each service department or cost centre like laboratory, welfare, transport etc.
These expenses shall be apportioned to other services and production departments
on equitable and reasonable basis and applied consistently. Where these services
are utilized for other products of the company also, the basis of apportionment
of such expenses to mining and
production activities of products under reference and to the other products
shall be on equitable and reasonable basis and applied
consistently.
4. UTILITIES:
(1)
Water:- The proper records showing the quantity and cost of treated or cooling
water produced and consumed, if any, for the mining and manufacturing of products
under reference in different cost centres or departments, shall be maintained. The cost of treated water
apportioned to the cost centres or departments concerned shall be on equitable
and reasonable basis and applied
consistently.
(2)
Steam:- Where steam is
raised by the company, proper records showing the
quantity and cost of steam
raised and consumed for the mining and manufacturing of
products under reference shall be maintained. The cost of steam apportioned to
the cost centres or department concerned shall be on equitable and reasonable basis and applied
consistently. Where steam is raised and supplied by any other unit of the
company for products under reference, the cost of steam so supplied shall be
charged to the products under reference on actual cost
basis.
(3)
Power: - Where power is purchased, proper records shall be maintained for the
units and cost of power consumed for the mining and production of products under
reference in different cost centres or departments. Where power is generated by the
company itself, adequate records, showing all elements of cost shall be
maintained to show the cost of power generated and consumed for products under
reference in different cost centres or departments. Records shall also indicate
installed capacity, number of units generated, losses and consumption in each
cost-centres or departments separately.
Where power is generated and supplied by any other unit of the company to
the mining and production of products under reference, adequate records shall be
maintained to indicate the quantity and cost of power so supplied. The cost of power apportioned to
production or manufacture of products under reference in different cost-centres
or departments, shall be on equitable and
reasonable basis and applied consistently. The records should state
clearly the measures taken on conservation of energy and its corresponding
impact on unit cost of production.
(4)
Other Utilities: - The proper records showing quantity and cost shall be
maintained in respect of any other utilities produced or purchased by the
company for the production or manufacture of products under
reference.
(5)
The cost statements for each utility shall be maintained in Proforma
`A’.
5.
WORKSHOP OR
REPAIRS AND MAINTENANCE OR TOOL ROOMS:
(1)
The proper records showing the expenditure incurred by the workshop or tool room
under different heads and on repairs and maintenance in the various cost centres
or departments shall be maintained. The records shall also indicate the basis of
charging the workshop or tool room expenses to different cost centres or
departments. Where maintenance work
is done by direct workers of any production cost centre or department, the wages
and salaries of such workers shall be treated as direct expenses of the
respective cost centre or department. If the services are utilized for other
products also, the manner of charging a share to such products shall be on
equitable and reasonable basis and applied consistently. In addition to the
above, records shall indicate the amount and also the proportion of closing
inventory of stores and spare parts representing items which have not moved for
over 24 months.
(2)
The expenditure on major repair work from which benefit is likely to accrue for
more than one financial year shall be allocated over the period expected to
benefit, on equitable and
reasonable basis and applied consistently. Such costs shall be shown separately
and the method of accounting alongwith the basis of allocation of such costs
shall also be clearly indicated in cost records.
6. RELINING OF POTS:
The proper records shall be maintained
showing the expenditure incurred in the relining or patching up of pots, where
such pots are used in smelter house. The records shall indicate the cost of pot
relining mix, pot lining coke, side and bottom lining blocks, collector bars,
insulating bricks, wages, sundry supplies and outside services, if any. The
records shall also indicate the number of pots relined during the relevant
period. The basis of charging such expenses to the products under reference,
shall be clearly indicated in the cost records. The details of cost incurred for
initial pot lining and starting at the time of commissioning a new smelter or a
new set of pots shall be maintained. The cost incurred for re-starting of pots
shall also be maintained separately. The treatment of such expenses in costs
shall be clearly indicated in the cost records.
7.
DEPRECIATION:
The
basis on which depreciation is calculated and allocated or apportioned to the
various cost centres or departments and absorbed on all products shall be
clearly indicated in the cost records. If depreciation charged or chargeable to
the cost centres or departments is in excess or lower than the depreciation
calculated by applying the rates of depreciation prescribed under the provisions
of sub-section (2) of Section 205 of the Companies Act, 1956 (1 of 1956), such
amount of excess or lower depreciation shall be indicated clearly in the cost
records. The cost records shall also show the effect of such excess or lower
depreciation as the case may be, on the per unit cost of products under
reference. The cumulative depreciation charged in the cost records, against any
individual item of asset shall not, however, exceed the original cost of the
respective asset.
8. OTHER
OVERHEADS:
(1)
The proper records shall be maintained for the products under reference showing
the various items of expenses comprising the other overheads. These expenses shall be analyzed,
classified and grouped according to functions, namely, works, administration,
selling and distribution.
(2)
Where the company is manufacturing other products not under reference, the
records shall clearly indicate the basis followed for apportionment of the
common overheads including head office expenses of the company to such other
products and the products under reference, including capital works. Where
certain expenses forming part of overheads can be identified with a particular
activity or a product, such expenses shall be first segregated and charged to
the relevant activity or product
and thereafter the residue expenses under the above categories of
overheads shall be apportioned on a reasonable and equitable basis and applied
consistently. The overheads chargeable to capital works shall be indicated
separately in the cost records. The basis of apportionment or absorption of
overheads to the cost centres or departments and products shall be indicated in
the cost records. The records shall be maintained in such a manner as to
indicate the details of works, administration, selling and distribution
overheads.
9. ROYALTY OR TECHNICAL KNOW-HOW
FEE:
The
adequate records shall be maintained showing the royalty and/or technical
know-how fee including other recurring or non-recurring payments of similar
nature, if any, made for the products under reference to collaborators or
technology suppliers in terms of agreements entered into with them. Such records
shall be kept separately in respect of each such collaborator or supplier. The
basis of charging such royalty
amount, including lump sum payment, to the products shall be at point of
incidence in accordance with the royalty agreement and shall be indicated in the
cost records.
10. RESEARCH AND DEVELOPMENT
EXPENSES:
(1)
The proper records showing the details of expenses, if any, incurred by the
company for the research and development work on the products covered under
these rules according to the nature of development of products, existing and new
products and processes, development of process of manufacture, existing and new,
design and development of new plant facilities and market research for the
existing and new products, shall be maintained separately.
(2)
The method of charging these expenses to the cost of products under reference
and all other products shall be indicated in the cost records. Where the utility of such research and
development work extends over more than one financial year, such expenses shall
be treated as deferred expenses and charged to the cost of production of
products under reference and all other products if any, on equitable and
reasonable basis and applied consistently.
(3)
The expenses incurred by the Research and Development Department for providing
technical know-how to outsiders shall be recorded separately and excluded from
the cost of products under reference. The amount recovered for providing
technical know-how to outsiders shall also be indicated separately and excluded
from the income arising from the sale of products under reference.
11. SCRAP LOSS AND MELTING LOSS
:
The proper
records showing the quantity of scrap generated in the cast house while
converting basic metal into any marketable form or shape and the materials
scrapped on account of sales returns, deterioration due to storage and handling
or for any other reasons, shall be maintained. The basis of ascertaining the
loss on account of such materials and method of treating the same in determining
the cost of products shall be indicated in the cost records and applied
consistently. Adequate records shall also be maintained showing the melting loss
in the remelting furnace. Adjustment for realisation from dross shall also be
indicated in the cost records.
12. QUALITY
CONTROL:
The
adequate records shall be maintained to indicate the expenses incurred in
respect of quality control department or cost centre for products under
reference. Where these services are also utilized for other products of the
company, the basis of apportionment to products under reference and other
products, shall be on equitable and reasonable basis and applied
consistently.
13.
INTEREST:
The
proper records shall be maintained for interest charges paid. The amount of
interest shall be allocated or apportioned to the products covered under these
rules and other activities on a reasonable and equitable basis and applied
consistently. The basis of further
charging of the share of the interest to the various types of products under
reference shall also be on a reasonable and equitable basis and applied
consistently. The basis of such allocation or apportionment shall be spelt out
clearly in the cost records or statements.
14. EXPENSES OR
INCENTIVES ON EXPORTS:
The
proper records showing the expenses incurred on the export sales, if any, of the
products under reference shall be separately maintained so that the cost of
export sales can be determined correctly.
Separate cost statement shall be prepared for products under reference,
if exported, giving details of export expenses incurred or incentive earned. In
case, duty free imports are made, the cost statements should reflect this fact.
If the duty free imports have been made after actual production, the statement
should reflect this fact also.
15. PACKING
EXPENSES:
(1)
The proper
records shall be maintained showing the quantity and cost of various packing
materials and other expenses incurred on packing for marketing of products under
reference. Where such expenses are incurred in common for other products also,
the basis of apportioning the expenses between the relevant products shall be on
equitable and reasonable basis and applied consistently.
(2)
The detailed records of the expenses incurred on export packing, if any, shall
also be kept separately and exhibited in the relevant cost statements for
exports.
16. WORK-IN-PROGRESS AND FINISHED
STOCK:
The
method followed for determining the cost of work-in-progress and finished stock
of the products under reference, shall be indicated in the cost records so as to
reveal the cost element that have been taken into account in such computation.
The appropriate share of conversion cost upto the stage of completion shall be
taken into account while computing the cost of work-in-progress. The method
adopted for determining the cost of work-in-progress and finished goods shall be
followed consistently.
17. COST
STATEMENTS:
(1)
The cost statement showing details of installed capacity, production, wastage,
issues and sales and all elements of cost of the current financial year and the
previous year shall be prepared for each process adopted in the production of
products under reference in Proformae A,B,C,D,E and F.
(2)
The product emerging from a process, which forms raw material for a subsequent
process, shall be valued at the cost of production up to the previous
stage.
(3)
If the company is operating more than one plant or factory, separate cost
statements as specified above shall be prepared in respect of each plant or
factory.
18. PRODUCTION RECORDS:
Quantitative
records of all finished goods, whether
packed or unpacked, showing production, issues for sales and balances of
different types of the product under reference shall be
maintained.
19. RECONCILIATION OF COST AND FINANCIAL
ACCOUNTS:
(1)
The cost statements shall be reconciled with the financial statements for the
financial year specifically indicating the expenses or incomes not considered in
the cost records or statements so as to ensure accuracy and to adjudge the
profit of the product under reference with the overall profit of the company.
The variations, if any, shall be clearly indicated and
explained.
(2)
A statement showing the total expenses incurred and income received by the
company under different heads of accounts and the share applicable to the other
products and the products under reference shall be prepared and reconciled with
the financial statement.
20. ADJUSTMENT OF COST
VARIANCES:
Where the
company maintains cost records on any basis other than actual such as standard
costing, the records shall indicate the procedure followed by the company in
working out the cost of the product under such system. The method followed for
adjusting the cost variances in determining the actual cost of the product shall
be indicated clearly in the cost records. The cost variances shall be shown
against the separate heads and analyzed into material, labour, overheads and
further segregated into quantity, price and efficiency variances. The reasons
for the variances shall be duly explained in the cost records or
statements.
21. STATISTICAL
RECORDS:
(1)
The records regarding available machine hours or direct labour hours in
different production departments and actually utilized shall be maintained for
production of products under reference and shortfall suitably analyzed. Suitable
records for computation of idle time of machines shall also be maintained and
analyzed.
(2)
The adequate records shall be maintained to enable the company to identify the
capital employed, net fixed assets and working capital separately for the mining
or production or manufacture of products under reference and other products or
activities not under reference. Fresh investments on fixed assets that have not
contributed to the production of products under reference during the relevant
period shall be indicated in the cost records. The records shall, in addition,
show assets added as replacement and those added for increasing existing
capacity.
3)
Whenever WTO provisions are attracted, proper records shall be maintained to
identify the competitiveness of the product in the domestic as well as global
market and the expenses, if any, incurred to combat the competition arising out
of WTO provisions. Adequate
statistical records shall also be maintained to identify the market share of the
product manufactured and the likely impact thereon on account of competitive
goods imported in to the country.
These records shall indicate, inter alia, the total volume of imports,
names of importers countries of origin and contain such empirical evidence as to
show whether such imports can be construed as dumping and affecting the market
share of the product. Proper records shall also be maintained, containing such
details as may be necessary to show that the export price of the product is not
such as to be construed as dumping in the importing country, by applying the
provisions of WTO regarding anti dumping measures under Article VI of GATT
94.
22.
CAPTIVE
CONSUMPTION:
If
any of the products under reference is used for captive consumption, proper
records shall be maintained showing the quantity and cost of each such product
transferred to other departments or units of the company for self-consumption.
The rates at which the transfers are effected shall be at cost only.
23. POLLUTION CONTROL:
Expenditure
incurred by the company on various measures to protect the environment like
effluent treatment, control of pollution of air, water, etc., should be properly
recorded.
24. HUMAN RESOURCES
DEVELOPMENT:
Expenditure
incurred by the company on the human resources development activity shall be
recorded separately.
PROFORMA
`A’
Name of the
company :
Name and
address of the factory :
Statement
showing the cost of Utilities like
Power, Steam, Water, etc., produced and consumed during the year/period :
A.
Quantitative
Information:
|
Serialnumber |
Particulars |
Current
Year (unit) |
Previous
Year (unit) |
|
1. |
Installed
capacity |
|
|
|
2. |
Quantity
produced |
|
|
|
3. |
Capacity
utilisation |
|
|
|
4. |
Quantity
recirculated |
|
|
|
5. |
Quantity
purchased |
|
|
|
6. |
Self-consumption
including other losses |
|
|
|
7. |
Net units
consumed |
|
|
B. Cost Information
:
|
Serialnumber |
Particulars |
Quan-tity |
Rate (Rupees) per
unit |
Amount (Rupees) |
Cost Per
Unit
(Rupees) | |
|
|
|
|
|
|
Current Year |
Previous Year |
|
A
1. |
Materials(specify) (a) (b) (c) |
|||||