(2) They shall come into force on the date of their publication in the Official Gazette.

(a) In sub-rule (1), after the words "commencement of these rules", the words, letters and figures "till 31st day of March, 2000" shall be inserted;

(b) Proviso 3 of sub-rule (1) which reads as "Provided further that a company, if it so desires, need not maintain cost statements in respect of a type of electric motor manufactured........Rupees twenty-five thousand whichever is lower.", is deleted.

(c) After sub-rule (2), the following sub-rules shall be inserted, namely:

"(3) 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, 2000 keep proper books of account containing, inter-alia, the particulars specified in Schedule III annexed to these rules and Proforma 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 manufacture or production of Electric Motors and components thereof:

Provided that if the said company is manufacturing any other product(s) or is engaged in other activities in addition to manufacture of Electric Motors and components thereof, the particulars relating to utilization of materials, labour and other items of cost in so far as they are applicable to such other products or activities shall not be included in the cost of Electric Motors and components thereof.

(4) 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 all types and descriptions of Electric Motors and components thereof manufactured or produced for every financial year from the particulars entered therein and every such books of account and the proforma specified in 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.

(5) 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 and provide the necessary data required by the Cost Auditor to suitably report on all the points referred to in Cost Audit (Report) Rules, 1996.

(6) It shall be the duty of every person, referred to in sub-section (6) and (7) of section 209 of the Companies Act 1956 (1 of 1956), to take all reasonable steps to secure compliance by the company with the provisions of sub-rules (1), (2), (3), (4) and (5) of this rule in the same manner as he is liable to maintain accounts required under sub-section (1) of section 209 of the said Act."

(1) Proper records shall be maintained showing separately all receipts, issues and balances both in quantities and cost of each item of raw material like Steel Plates/Bars, Electric Sheet Steel, Copper Strips/Wires, Cables, Insulating Material, Varnish, Bearing, Casting and Forging, Fan and other raw material including bought out components like stampings, stator, rotor etc., required for the production of each type and description of Electric Motors and components thereof. These records shall contain such details so as to enable the company to determine the quantity, cost of receipt (including all direct charges upto the works in respect of major raw materials), issues and balances in quantity as well as value of each item of all such raw materials. The basis on which the 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, records shall be maintained to show separately details such as FOB value, overseas freight, insurance, customs duty and inland freight charges. If both indigenous and imported materials are consumed, records showing details of percentage mix of the same have to be maintained for each item. Materials processed through outside parties shall be recorded separately.

(2) In case of major components manufactured by the company itself, separate records shall be maintained for the quantity manufactured and the cost of manufacture/production of such component.

(3) Proper records shall be maintained to show the receipts, issues and balances, both in quantities and cost of each item of consumable stores, tools and machinery spares etc. The cost shall include all direct charges upto works.

(4) 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.

(5) 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.

(6) Proper records shall be maintained showing the quantity and value of wastage, spoilage, rejections and losses of raw materials, 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. 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 12 months.

(7) Where any credit under Modified Value Added Tax (MODVAT) or any other benefit 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.

(1) Proper records shall be maintained to show the attendance and earnings of all employees of the cost centres/departments and the work on which they are employed. The records shall also indicate the following separately for each cost centre/department:

(2) The records shall be maintained in such a manner as to enable the company to furnish necessary particulars under this head in Proforma of Schedule III annexed to these rules. Records may be maintained to book these expenses cost centrewise/departmentwise like Forging Shop, Stamping Shop, Machine Shop, Winding etc. as related to manufacture of Electric Motors. Where the employees work in such a manner that it is not possible to identify them with any cost centre/department, the labour charges shall be apportioned to the cost centres/departments on equitable basis and applied consistently.

(3) Idle time 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.

Detailed records shall be maintained to indicate expenses incurred in respect of each service department/ 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 Electric Motors and components thereof and to the other products shall be equitable and clearly indicated in the records and applied consistently.

(1) Power - Proper records shall be maintained for the units and cost of power purchased for the production of Electric motor and components thereof in different cost centres/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 Electric Motors and components thereof in different cost centres/departments. Records shall also indicate installed capacity, number of units generated losses and consumption in each cost centre/department separately. Where power is generated and supplied by any other unit of the company to the Electric Motors 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 Electric Motors and components thereof shall be on a 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.

(2) Other Utilities- Proper records showing quantity and cost shall be maintained in respect of utilities other than power produced or purchased by the company for the production or manufacture of Electric Motors and components thereof.

(1) Proper records showing the expenditure incurred by the workshop/tool room under different heads and on repairs and maintenance by the various cost centres/departments shall be maintained. The records shall also indicate the basis of charging the workshop/tool room expenses to different cost centres/departments. Where maintenance work is done by direct workers of any production cost centre/department, the wages and salaries of such workers shall be treated as direct expenses of the respective cost centre/department. If the services are utilised for other products also, the manner of charging a share to such products shall be equitable 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) Expenditure on major repair works from which benefit is likely to accrue for more than one financial year shall be shown separately in the cost records indicating the method of accounting in determining the cost with reference to the period for which the benefit of such expenditure is likely to last.

The basis on which depreciation is calculated and allocated/apportioned to the various cost centres/ departments and absorbed on all products shall be clearly indicated in the cost records. If depreciation chargeable to the cost centres/departments is in excess or lower than the rate 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 per unit cost of Electric Motors and components thereof. 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.

(1) 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 product(s) other than Electric Motors and components thereof, the records shall clearly indicate the basis followed for apportionment of the common overheads including head office expenses of the company to such product(s) and Electric Motors and components thereof, including capital works. Where certain expenses forming part of overheads can be identified with a particular activity or a product, such expenses shall be segregated and charged to the relevant activity or product in the first instance 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. Basis of apportionment or absorption of overheads to the cost centres/departments and products shall be indicated in the cost records.

(3) The records shall be maintained in such a manner as to indicate the details of works, administration, selling and distribution overheads.

Adequate records shall be maintained showing the royalty and/or technical know-how fee including other recurring or non-recurring payments 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.

(1) 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, development of process of manufacture, existing and new, design and development of new plant facilities and market research for the existing and new products etc., shall be maintained separately.

(2) The method of charging these expenses to the Electric Motors and components thereof 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 Electric Motors and components thereof and all other products if any, on a reasonable basis and applied consistently.

(3) 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 Electric Motors and components thereof. The amount recovered for providing technical know-how to outsiders shall also be indicated separately.

Adequate records shall be maintained to indicate the expenses incurred in respect of quality control department/cost centre for the product under reference. Where these services are also utilized for other products of the company, the basis of apportionment to all types and descriptions of electric motors and components thereof and to the other products shall be equitable and clearly indicated in the records and applied consistently.

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. 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.

Proper records showing the expenses incurred on the export sales, if any, of the Electric Motors and components thereof shall be separately maintained so that the cost of export sales can be determined correctly. Separate cost statements shall be prepared for Electric Motors and components there of exported giving details of export expenses incurred/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.

(1) Proper records shall be maintained showing the quantity and cost of various packing materials and other expenses incurred on packing for marketing of the Electric Motors and components thereof. Where such expenses are incurred in common for other products also, the basis of apportioning the expenses between the relevant products shall be clearly indicated in the cost records and applied consistently.

(2) 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.

The method followed for determining the cost of work in progress and finished stock of the Electric Motors and components thereof 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.

(1) 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 Electric Motors and components thereof.

(2) Components manufactured in different production centres and going into final assembly of the product under reference shall be valued at the cost of production up to the stage of such transfer.

(3) If the company is operating more than one plant/factory, separate cost statements as specified above shall be prepared in respect of each plant/factory.

Quantitative records of all finished and packed production, issues for sales and balances of different types of the products under reference produced by the company shall be maintained.

(1) Cost statements shall be reconciled with the financial statements for the financial year specifically indicating the expenses/income not considered in the cost records/statements so as to ensure accuracy. Variations, if any, shall be clearly indicated and explained.

(2) A statement showing the total expenses incurred and income received by the company under the products shall be prepared and reconciled with the financial statement.

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/statements.

(1) Records regarding available machine hours/direct labour hours in different production departments and actually utilized shall be maintained and shortfall suitably analyzed. Suitable records for computation of idle time of machines shall also be maintained and analyzed.

(2) Adequate records shall be maintained to enable the company to identify the capital employed, net fixed assets and working capital separately for the production/ manufacture of Electric Motors and components thereof, other products and other activities. Fresh investments on fixed assets that have not contributed to the production 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.

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.

Expenditure incurred by the company on the human resources development activity shall be recorded.

Statement showing the summary cost of sales, sales realization and margin in respect of Electric Motors/Components produced or manufactured during the year/period

2. Separate proforma shall be prepared for the quantity sold within the country and the quantity exported. Expenses incurred on export and the incentive earned thereon shall be indicated in the proforma applicable for the quantity produced and exported."