[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 31^ST August,2000        

               

               

G.S.R.694(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 (Rayon) Rules, 1976, namely :-

               

1    (1) These rules may be called the Cost Accounting Records (Rayon) 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  (Rayon) Rules, 1976 (herein after referred to as the said rules),-

 

(a) for  rule 2, the following rule shall be substituted, namely:-

 

“2. They shall apply to every company engaged in the production, processing or manufacturing of any of the following rayon products:

(1)         Viscose Staple Fibre in all forms

(2)         Viscose Filament Yarn

(3)         Viscose Tyre Yarn/Cord/Fabric

(4)         100% viscose yarn fabric

(5)         Acetate Yarn/Fibre and

(6)         Rayon film (cellophane film).” ;

    

(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 31^st day of March, 2001 or the relevant close of the 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 and D 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, processing or manufacturing  of rayon products:

               

Provided that if the said company is manufacturing any other product(s)or is engaged in other activities in addition to manufacture of rayon products, 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 rayon 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 (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 rayon 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 it relates.

               

(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.” ;

               

(iii) in sub-rule (3) for the words, brackets and figures “provisions of sub-rules (1) and (2)”, the words, brackets,  figures and letters “provisions of sub-rules (1), (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 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 Rayon Grade Pulp, Tyre Grade Pulp, Caustic Soda and other materials required for the production of rayon products. If the company have its own plantation to produce Rayon Grade Pulp and/or Tyre Grade Pulp, detailed records indicating the break up of raw materials consumed for its production and conversion cost shall be maintained in such details so as to enable the ascertainment of the cost of Rayon Grade Pulp and/or Tyre Grade Pulp. The records shall also indicate the proportion of different kind of pulps used from different sources for the manufacturing of different rayon products.  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.

              

(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/chemicals such as Charcoal, Titanium dioxide, Carbon-di-sulphide, sodium sulphide, sulphuric acid, liquid chlorine, cotton linters, zinc, dyes and other items used in the manufacture of the Rayon Grade Pulp or rayon 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. The basis on which the quantities and cost of issues and consumption of process materials produced by the company are calculated, shall be indicated in the cost records and followed consistently.

 

(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. In case, any process chemical/intermediate like Caustic Soda or Sulphuric Acid, etc., for which Cost Accounting Records Rules have been prescribed, is manufactured/produced by the company, proper cost records shall be maintained as per those rules so as to arrive at the cost of such items. These inputs will be transferred at cost price only.

 

(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 like Glauber Salt 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. 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. The total waste in terms of cellulose content of pulp made up from waste in different departments shall also be recorded separately to enable control of such losses.  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) 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 and D of Schedule III annexed to these rules. The records may be maintained to book these expenses cost-centrewise or departmentwise like Viscose preparation, spinbath preparation, spinning, after treatment, conversion into final packing, etc., with reference to activities related to production of rayon products. 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 any type of rayon products and to the other products shall be on equitable and reasonable basis and clearly indicated in the records 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 rayon 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 rayon products 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 to the rayon plant, the cost of steam so supplied shall be charged to the rayon plant on actual cost basis.

 

(3) Power: - For power purchased, proper records shall be maintained for the units and cost of power consumed for the production of rayon 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 rayon 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 rayon 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 rayon 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)  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 charged to rayon products on equitable and  reasonable basis and applied consistently.

 

(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 charged to rayon products on equitable and  reasonable basis and applied consistently.           

 

(6) 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 rayon products.

 

(7) 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 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 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 method of accounting with the basis of 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 rayon 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 analyzed, classified and grouped according to functions, namely, works, administration, selling and distribution.

               

(2) Where the company is manufacturing products other than the rayon products, 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 Rayon 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. 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 rayon 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 rayon 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 rayon 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 rayon 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 utilized for other products of the company, the basis of apportionment to rayon products and to other products shall be equitable 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, which shall be 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/statements.

              

12. EXPENSES OR INCENTIVES ON EXPORTS:

               

The proper records showing the expenses incurred on the export sales, if any, of the rayon products shall be separately maintained so that the cost of export sales can be determined correctly.  Separate cost statement shall be prepared for rayon 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 rayon 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 rayon 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 rayon products in Proformae A, B, C and D.

               

(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 showing production, issues for sales and balances of different types of the product under reference  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. 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 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.

               

19.  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 rayon products 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 production or manufacture of Rayon products and other products and other activities. Fresh investments on fixed assets that have not contributed to the production of rayon 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 rayon product is used for captive consumption, proper records shall be maintained showing the quantity and cost of each item of rayon 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 separately.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFORMA `A’

 

 

Name of the company

     Name and address of the factory

   

Statement showing the cost of Utility like Power, Steam, Air-conditioning, Water, Compressed Air, 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 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)