[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. 695(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 (Nylon)
Rules, 1977, namely :-
1 (1) These rules may be called the
Cost Accounting Records (Nylon) 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 (Nylon) Rules, 1977 (hereinafter
referred to as the said rules), -
(a) in
rule 2,-
(i) for items (a),(b) and
(c), the following shall be
substituted namely:-
“(1) Nylon
chip
(2) Nylon fibre
(3) Nylon filament
yarn
(4) Nylon partially oriented
yarn.
(5) Nylon tyre Yarn or
cord
(6) Nylon tyre cord
fabric
(7) 100% Nylon
fabric.”
(ii) the proviso shall be
omitted;
(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 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 or the relevant closing of the financial
year in 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, processing or manufacturing of nylon products:
Provided that if
the said company is manufacturing any other product(s)or is engaged in other
activities in addition to manufacture of nylon 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 nylon products referred to in rule
2:
Provided further that in case, the
products mentioned in rule 2 are utilised as raw-material or input to produce
the products covered under Cost Accounting Records (Textiles), Rules 1977,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 a manner as to make it possible to
calculate the cost of production and cost of sales of each type of nylon
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 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 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 the quantity and cost of caprolactum and other
materials used in the manufacture of nylon products to which these rules apply.
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 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 showing the quantity and cost of caprolactum recovered from
waste obtained after the polymerisation and re-used for the production of
polymerised caprolactum chips or nylon chips.
(3) 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 acetic
acid, titanium di-oxide, catalysts used in the manufacture of the
intermediate/nylon product. 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. Where these process
materials are produced by the company, separate records showing the quantity and
cost of production, issues and balances in quantity as well as value of each
item of such process material shall be maintained. The records shall also
indicate the break-up of raw materials consumed for production of process
materials. The basis on which the quantities and costs of issue 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 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
these 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, the proper records to show the
quantity sent for processing quantity received after reprocessing 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
2A, 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 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.
(10) If any of the
materials purchased is processed by an outside party proper records shall be
maintained for the quantities 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 and E of Schedule III
annexed to these rules. The records may be maintained to book these expenses
cost centrewise and departmentwise under raw-material preparation,
polymerisation, spinning, twisting etc. with reference to activities like
production of Nylon chips and nylon fibres etc. Where the employees work in such
a manner that it is not possible to identify them with any cost centre and
department, the labour charges shall be apportioned to the cost centres and
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 nylon 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 nylon 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 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 nylon products shall be
maintained. The cost of steam consumed shall be apportioned to the Nylon 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 Nylon plant, the cost of steam so supplied shall be charged to
the Nylon 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 nylon 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 nylon products in different cost centres or departments. The 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 Nylon 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 nylon 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) 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 nylon products. The
nitrogen produced by the company shall be charged to nylon products on actual
cost only. 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) 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 nylon products on actual cost
only.
(6) 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 nylon products on actual cost
only.
(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 nylon products.
(8) Cost statement 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 and 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 a reasonable and
equitable basis and applied consistently. Such costs shall be shown separately
and method of accounting and 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 nylon 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 nylon 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 nylon 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 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 nylon 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 nylon 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 nylon
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 nylon 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
nylon 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, 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 basis and 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 nylon products shall
be separately maintained so that the cost of export sales can be determined
correctly. The separate cost
statement shall be prepared for nylon 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 nylon 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 nylon
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 nylon products
in Proforma 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:
The 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. 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 nylon products and
shortfall suitably analysed. The 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 nylon
products and other products and other activities. The fresh investments on fixed
assets that have not contributed to the production of nylon 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, the 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. The 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. The 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 nylon product is used for
captive consumption proper records shall be maintained showing the quantity and
cost of each item of nylon 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:
The expenditure incurred by
the company on various measures to protect the environment like effluent
treatment, control of pollution of air, water should be properly
recorded.
22. HUMAN RESOURCES
DEVELOPMENT:
The expenditure incurred by
the company on the human resources development activity shall be recorded
suitably.
PROFORMA
A
Name of the
company
Name and address of
the factory
Statement showing the cost
of Utility like nitrogen, 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
utilization |
|
|
|
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 |
|
|
|