[PUBLISHED IN PART II, SECTION 3,
SUB-SECTION (i) OF THE GAZETTE OF INDIA,
EXTRAORDINARY]
MINISTRY OF
LAW, JUSTICE AND COMPANY AFFAIRS
(DEPARTMENT
OF COMPANY AFFAIRS)
Notification
New Delhi, the 31ST August,
2000
G.S.R.
692(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 further to amend the Cost
Accounting Records (Polyester) Rules,1977,namely:-
1. (1) These rules may be called the Cost
Accounting records (Polyester) Amendment Rules, 2000.
(2) They
shall come into force on the date of their publication in the Official
Gazette.
2. In the Cost Accounting Records (Polyester) Rules, 1977 (hereinafter
referred to as the said rules), -
(a) in rule 2, after item (2),the
following shall be inserted, namely:-
“(3)
Polyester chips
(4)
Polyester Fibre Fill (PFF)
(5)
Partially Oriented Yarn (POY)
(6)
Processed Polyester yarn (texturised, twisted, dyed, crimped,
etc.)
(7) 100%
Polyester Fabric.”;
(b) in rule
3,-
(i) in
sub-rule (1), after the words
“after the commencement
of these rules”, the words, figures and letters “till the 31st day of
March, 2001 or the close of the relevant financial year in
2001" shall be
inserted;
(ii) after
sub-rule (2),the following sub-rules shall be inserted,
namely:-
"(2A) 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 III
annexed to these rules and Proformae A, B, C, D and E mentioned in the said
Schedule relating to the utilization of materials, labour and other items of
cost in so far as they are related to the production or manufacture or
processing of polyester products:
Provided
that if the said company is manufacturing any other product(s)or is engaged in other
activities in addition to manufacture of polyester product, the particulars
relating to utilization of materials, labour and other items of cost in so far
as they are related to the manufacture of
such other products or activities shall not be included in the cost of
polyester products referred to in rule 2:
Provided
further that if the products mentioned in rule 2 are utilised as raw-material or
input to produce the products covered under the Cost Accounting Records
(Textiles), Rules 1977,as amended from time to time, proper cost accounting
records shall be maintained as per that rule so as to arrive at the cost and
margin of those products.
(2B) The books of accounts referred to in sub-rule
(3) shall be kept on a regular basis in such a manner as to make it possible to
calculate the cost of production and cost of sales of each type of polyester
products manufactured or produced for every financial year from the particulars
entered therein. Every such books of account and the Proforma specified in the
said Schedule III shall be completed not later than ninety days from the close
of the financial year of the company to which they relate.
(2C) The
statistical and other records shall be maintained in accordance with the
provisions of the Schedule III 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 as amended from time
to time.”
(iii) in
sub-rule 3, for the words, brackets and figures “the provisions of sub-rules (1)
and (2)” the words, brackets,
figures and letters “the provisions of sub-rules (1), (2), (2A), (2B),
(2C), of this rule shall be substituted.
3. In the said rules, after Schedule II,
the following Schedule shall be inserted, namely: -
"SCHEDULE
III
[See rule
3(2A)]
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 such as
Di-Methyl Terephthalate, Ethylene-Glycol, Pure Terephthallic Acid, etc.,
required for the production of Polyester Chips, fibres and other intermediate
product and also for the production of polyesters and polymers referred to in
rule 2. These records shall contain such details so as to enable the company to
determine the quantity and 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. Proper records shall also be maintained showing the quantity and
cost of any raw material recovered from waste obtained after polymerisation and
re-used for the production of intermediate or polyester product.
(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 such as catalysts and additives used in the manufacture of the
intermediate or polyester products. The cost shall include all direct charges
upto works. The issues, consumption shall be properly identified with the
departments, cost-centres and products manufactured.
(3) Where
these process materials are produced by the company, 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 costs of issues and consumption of process
materials produced 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
by-products like, Methanol Ethylene Glycol, burnt-oil and water recovered in the
different processes having significant value of the cost of input of materials.
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 realisation
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 the cost incurred
thereon shall be maintained in detail. The net realisation, if any shall be
adjusted against the major process relatable to such by-product. The basis
adopted for determining cost of the by-products shall be equitable and
consistent. The records indicating the actual sales realisation 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/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) earnings of casual labour;
(e) bonus or gratuity;
(f) contribution to superannuation scheme
(g) any other earning.
(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 and E of Schedule
III annexed to these rules. The records may be maintained to book these expenses
cost centrewise or departmentwise under raw-material preparation,
esterification, polymerisation, spinning, etc., with reference to activities
like production of Polyester chips and polymers etc. 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 utilised for other products of the company also, the basis of apportionment
of such expenses to any type of Polyester products 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 manufacture of any type of polyester
products 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 manufacture of the polyester products
shall be maintained. The cost of steam consumed by the Polyester plant and by
other units of the company shall be apportioned on equitable and reasonable
basis and applied consistently. Where steam is raised and supplied by any other
unit of the company to the Polyester plant, the cost of steam so supplied shall
be charged to the Polyester Plant on equitable and reasonable basis and applied
consistently.
(3) Power:
-For power purchased, proper records shall be maintained for the units and cost
of power consumed for the production of Polyester products 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
the production of the Polyester products 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 Polyester plant
adequate records shall be maintained to indicate the quantity and cost of power
so supplied. The cost of
power allocated to the production or manufacture of polyester products 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)
Nitrogen: -The proper records shall be maintained as per the Cost Accounting
Record (Industrial Gases) Rules, 1996 as amended from time to time, showing the
cost of Nitrogen produced or manufactured by the company for use in the
production of polyester products. The cost of Nitrogen produced by the company
shall be apportioned to polyester products on equitable and reasonable basis and
applied consistently. If the Nitrogen is purchased by the company, proper
records showing the quantity purchased and consumed cost centre-wise or
department-wise shall be maintained. These records shall show the cost of
Nitrogen delivered upto works including all direct charges.
(5)
Compressed Air; - The proper records shall be prepared to enable determination
of the cost of compressed air and its distribution cost centre-wise or
department–wise. The cost of compressed air shall be apportioned to polyester
products on equitable and reasonable basis and applied consistently.
(6)
Air-Conditioning; - The proper records shall be prepared to enable determination
of the cost of air-conditioning and its distribution cost centre-wise or
department–wise. The cost of air conditioning shall be apportioned to polyester
products on equitable and reasonable basis and applied consistently.
(7) 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 Polyester products.
(8) 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 utilised 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 should indicate the amount and also the proportion of closing
inventory of stores & spare parts representing items which have not moved
for over 24 months.
(2) The
expenditure on major repair works from which benefit is likely to accrue for
more than one financial year shall be allocated over the period expected to
benefit on a reasonable and equitable basis and applied consistently. Such costs
shall be shown separately and method of accounting and the basis of the
allocation of such costs shall also be clearly indicated in cost records.
6.
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 Polyester product. 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.
7. OTHER
OVERHEADS:
(1) The
proper records shall be maintained for the product under reference showing the
various items of expenses comprising the other overheads. These expenses shall be analysed,
classified and grouped according to functions, namely, works, administration,
selling and distribution.
(2) Where
the company is manufacturing products other than the polyester product there of,
the records shall clearly indicate the basis followed for apportionment of the
common overheads including head office expenses of the company to such products
and polyester products, 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. 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.
8. ROYALTY/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 product 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 amount, including lump sum payment, to the products shall be
indicated in the cost records.
9. 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 product 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 polyester products 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 the
polyester products 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 polyester products. 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
polyester products.
10. QUALITY
CONTROL:
The adequate
records shall be maintained to indicate the expenses incurred in respect of
quality control department or cost centre for product under reference. Where
these services are also utilised for other products of the company, the basis of
apportionment to Polyester products and to other products shall be on equitable
and reasonable basis and applied consistently.
11. INTEREST:
The proper
records shall be maintained for Interest charges paid. The amount of interest
shall be allocated or apportioned to the product covered by 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 such products
shall also be reasonable and equitable and the same shall be followed
consistently. The basis of such allocation or apportionment shall be spelt out
clearly in the cost records or statements.
12. EXPENSES
OR INCENTIVES ON EXPORTS:
The proper
records showing the expenses incurred on the export sales, if any, of the
polyester products shall be separately maintained so that the cost of export
sales can be determined correctly.
Separate cost statement shall be prepared for polyester products 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.
13. 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 the
Polyester products. 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.
14. WORK IN
PROGRESS AND FINISHED STOCK:
The method
followed for determining the cost of work in progress and finished stock of the
polyester products 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.
15. 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 previous year
shall be prepared for each process adopted in manufacture or production of
polyester products in Proformae A, B, C, D and E.
(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.
(4) The cost
statements shall be prepared countwise or denierwise or sortwise for items whose
production is substantial and which constitutes eighty five percent or more of
the total value of production and for the remaining items whose production is
relatively negligible and where all such items put together constitute nearly
fifteen percent of the total value of production, combined cost statements
should be prepared for groups of counts or deniers or sorts.
16.
PRODUCTION
RECORDS:
Quantitative
records of all finished goods, whether packed or unpacked, issues for sales and
balances of different types of the product under reference produced by the
company shall be maintained.
17. 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 products shall
be prepared and reconciled with the financial statement.
18. 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 analysed 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.
19. STATISTICAL
RECORDS:
(1) The
records regarding available machine hours or direct labour hours in different
production departments and actually utilised shall be maintained for production
of Polyester products and shortfall suitably analysed. Suitable records for
computation of idle time of machines shall also be maintained and
analysed.
(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
production or manufacture of polyester products and other products and other
activities. Fresh investments on fixed assets that have not contributed to the
production of Polyester products 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.
20
CAPTIVE
CONSUMPTION:
If
polyester product is used for captive consumption proper records shall be
maintained showing the quantity and cost of each item of polyester 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.
21. 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.
22. HUMAN
RESOURCES DEVELOPMENT:
Expenditure
incurred by the company on the human resources development activity shall be
recorded.
PROFORMA
A
Name of the
company
Name and address of
the factory
Statement
showing the cost of Utility 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. |
Consumption
including other losses |
|
|
|
7. |
Net
units consumed |
|
|
B Cost
Information:
|
SerialNumber |
Particulars |
Quantity |
Rate (Rupees) per
unit |
Amount (Rupees) (in
lacs) |
Cost unit
|
per (Rupees) |
|
|
|
|
|
|
Current Year |
Previous
Year |
|
A
1. |
Materials(specify) (a) (b) (c) |
|
|
|
|
|
|
2. |
Utilities(specify) (a) (b) (c) |
|
|
|
|
|
|
3. |
Consumable
stores |
|
|
|