[PUBLISHED IN
PART II, SECTION 3, SUB-SECTION (i) 0F 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.
693(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 (Textiles) Rules, 1977, namely: -
1 (1) These rules may be called the
Cost Accounting records (Textiles) 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 (Textiles)
Rules, 1977 (herein after referred to as the said rules), in rule
4,-
(a) in sub-rule (1), after the letters, words
and figures “1st day of July 1977,”, the words, letters and figures “till the
31st day of
March, 2001, or the close of the relevant financial year in
2001," shall be
inserted;
(b) 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-1, D-2, D-3 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 manufacturing, processing or
production of textiles products:
Provided
that if the said company is manufacturing any other product(s)or is engaged in other
activities in addition to manufacture of textiles product, the particulars
relating to utilization of materials, labour and other items of cost in so far
as they are related to manufacture
of such other products or activities shall not be included in the cost of
textiles products referred to in sub-rule (2) of this rule.
(2B) The books of account referred to in sub-rule
(2A), shall be kept on a regular basis in such manner so as to make it possible to
calculate the cost of production and cost of sales of each type of textiles products manufactured or
produced for every financial year from the particulars entered therein. Every
such books of account and the proformae 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 Schedule III, which shall be such as to enable the company to
exercise, as far as possible, control over
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.”;
(c) in
sub-rule (3), for the words, brackets and figures, “the provisions of sub-rule
(1) and (2)”, the words, brackets, figures and letters, ”the provisions of
sub-rules (!),(2),(2A),(2B) and (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
4(2A)]
1. MATERIALS:
(1) The
proper records shall be maintained showing all receipts, issues and balances
both in quantities and cost of cotton, man-made fibres and filament yarn made
from man-made fibre, waste cotton, yarn, cloth in grey stage etc. 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 materials, issues and balances in quantity as well
as value of each item of all such raw materials. The basis on which said
quantities and cost 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 dyes, sizing materials and
processing chemicals used in the manufacture of textiles. 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) The
proper records shall be maintained to show the quantity and realizable value of
usable soft waste collected from each mixing in each cost centre of spinning
department and also of hard waste collected, type-wise, blend-wise, and cost
centre-wise separately from spinning department and pre-weaving department,
quantities reused in the waste plant, if any, sold out with sales realization
thereof and the balance lying in stock. The quantity of these wastes collected
at regular intervals shall be reconciled with such wastes for which due credit
is accorded to the respective production on technical basis or past performance
or trial run during the said period. 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 and equitable basis
and applied consistently. 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, records to show the quantity sent for processing,
quantity received after processing and the cost incurred thereon shall be
maintained in detail. The net
realisation, 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 equitable and consistent. Records indicating the actual sales realisation of
by-products shall also be maintained.
(4) Where
any dyes, sizing materials and processing chemicals are produced by the company
separate records showing the quantity and cost of such materials produced shall
be maintained. The cost of manufacture of such materials shall be charged at
cost, on the basis of actual issues, to the production or process or
manufacturing of the product concerned under sub-rule (2).
(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) The
proper records shall be maintained indicating the quantity of chemicals or
materials recovered from different process and sales realization. Appropriate credit should be given to
the respective cost centre or department of such sales realization.
(7) 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.
(8) 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.
(9) The
proper records shall be maintained showing the quantity and value of wastage
other than that mentioned in sub-rule 2A, 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.
(10) Where any credit under Modified
Value Added Tax (MODVAT) or any
other benefit 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.
(11) 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; and
(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-1,D-2,D-3 and E of
Schedule III annexed to these rules. The records may be maintained to book these
expenses cost centrewise or departmentwise under mixing and blow room, carding,
combing, drawing, slubbing, inter, roving, ring frames, winding, reeling,
doubling, warping, sizing, loom, bleaching, dyeing, printing, finishing, packing
etc. with reference to activities relating to the production of Textiles. 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 textiles products and to the other products
shall be equitable and reasonable 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 textiles products in
different cost centres or departments shall be maintained. The cost of treated water
shall be apportioned to the cost centres or departments concerned on an
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 textiles
products shall be maintained. The cost of steam consumed shall be apportioned to
the textiles plant and other units of the company on an equitable and reasonable
basis and applied consistently. Where steam is raised and supplied by any other
unit of the company to the Textiles plant, the cost of steam so supplied shall
be charged to the Textiles Plant on actual cost basis.
(3)
Power:- The
proper records shall be maintained for the units and cost of power consumed for
the production of textiles 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 textiles products in different cost centres or departments.
The records shall also indicate installed capacity, number of units generated,
losses and consumption in each cost centre or department separately. Where power is generated and supplied by
any other unit of the company to the Textiles 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
Textiles products shall be
on an 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)
Humidification:- The
proper records shall be maintained to enable the determination of the cost of
humidification and its distribution to different cost centres or
departments
(5) 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 textiles
products.
(6) The cost statement
for each utility shall be maintained in
Proforma A.
5. WORKSHOP OR REPAIRS AND MAINTENANCE
OR TOOL ROOM:
(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
equitable and reasonable and clearly indicated in records and applied
consistently. In addition to the above, records should 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 works from which benefit is likely to accrue for
more than one financial year shall be allocated over the period expected to
benefit on an equitable and reasonable basis and applied consistently. Such cost
shall be shown separately and the method of accounting and the basis of the
allocation of such costs shall also be clearly indicated in the 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 cost per unit of textiles 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 textiles product 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 textiles 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 residuary 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.
8. 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 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 product 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 textiles 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
textiles products and all other products if any, on an 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 textiles 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
textiles 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 textiles products and to other products shall be equitable and
reasonable and clearly indicated in the records 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 followed
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
textiles products shall be separately maintained so that the cost of export
sales can be determined correctly.
Separate cost statement shall be prepared for textiles products exported
giving details of export expenses incurred or incentive earned. In case, duty
free import 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
textiles products. Where such expenses are incurred in common for other products
also, the basis of apportioning the expenses between the relevant products shall
be equitable and reasonable 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
textiles 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 of the current financial year and previous year shall be prepared for each
process adopted in manufacture or production of textiles products in Proformae
A,B,C,D-1,D-2, D-3 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 count-wise or
denier-wise or sort-wise for
items whose production is substantial and which constitute 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 shall 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 adjudge the profit of the
product under reference with the overall profit of the company. 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 textiles 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 textiles products and other products and other
activities. Fresh investments on fixed assets that have not contributed to the
production of textiles 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 into 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 textiles
product is used for captive consumption proper records shall be maintained
showing the quantity and cost of each item of textiles product transferred to
other departments or units of the company for self consumption. The rates at
which such 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
:
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|
SerialNumber |
Particulars |
Current
Year (unit) |
Previous
Year (unit) |
|
1. |
Installed
capacity |
|
|
|
2. |
Quantity
produced |
|
|
|
3. |
Capacity
utilisation |
|
|
|
4. |
Quantity
re-circulated |
|
|
|
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) |
|
|
|