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Rule 3 - Application of cost records - Companies (cost records and audit) Rules, 2014Extract 1 [ 3. Application of Cost Records.- For the purposes of sub-section (1) of section 148 of the Act, the class of companies, including foreign companies defined in clause (42) of section 2 of the Act, engaged in the production of the goods or providing services, specified in the Table below, having an overall turnover from all its products and services of rupees thirty five crore or more during the immediately preceding financial year, shall include cost records for such products or services in their books of account, namely:- 2 [TABLE (A) Regulated Sectors Sl. No. Industry/ Sector/ Product/ Service 3 [Customs Tariff Act Heading] (wherever applicable) 1. Telecommunication services made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature and regulated by the Telecom Regulatory Authority of India under the Telecom Regulatory Authority of India Act, 1997 (24 of 1997); including activities that requiresauthorisation or license issued by the Department of Telecommunications, Government of India under Indian Telegraph Act, 1885 (13 of 1885); Not applicable. 2. Generation, transmission, distribution and supply of electricity regulated by the relevant regulatory body or authority under the Electricity Act, 2003 (36 of 2003); Generation- 2716; Other Activity- Not Applicable 3. Petroleum products; including activities regulated by the Petroleum and Natural Gas Regulatory Board under the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006); 2709 to 2715; Other Activity- Not Applicable 4. Drugs and pharmaceuticals; 2901 to 2942; 3001 to 3006. 5. Fertilisers; 3102 to 3105. 6. Sugar and industrial alcohol; 1701; 1703; 2207 (B) Non-regulated Sectors Sr. No. Industry/ sector/ Product/ Service 3 [Customs Tariff Act Heading](wherever applicable) 1. Machinery and mechanical appliances used in defence, space and atomic energy sectors excluding any ancillary item or items; Explanation. For the purposes of this sub-clause, any company which is engaged in any item or items supplied exclusively for use under this clause, shall be deemed to be covered under these rules 8401; 8801 to 8805;8901 to 8908. 2. Turbo jets and turbo propellers; 8411 3. Arms, ammunitions and Explosives; 3601 to 3603; 9301 to 9306. 4. Propellant powders; prepared explosives (other than propellant powders); safety fuses; detonating fuses; percussion or detonating caps; igniters; electric detonators; 3601 to 3603 5. Radar apparatus, radio navigational aid apparatus and radio remote control apparatus; 8526 6. Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons and parts of such vehicles, that are funded (investment made in the company) to the extent of ninety per cent or more by the Government or Government agencies; 8710 7. Port services of stevedoring, pilotage, hauling, mooring, re-mooring, hooking, measuring, loading and unloading 4 [ services rendered for a Port in relation to a vessel or goods regulated by the Tariff Authority for Major Ports under the Major Port Trusts Act, 1963 (38 of 1963) ] ; Not applicable. 8. Aeronautical services of air traffic management, aircraft operations, ground safety services, ground handling, cargo facilities and supplying fuel rendered 5 [ at the airports ] and regulated by the Airports Economic Regulatory Authority under the Airports Economic Regulatory Authority of India Act, 2008 (27 of 2008); Not applicable 9. Iron and Steel; 7201 to 7229; 7301 to 7326 10. Roads and other infrastructure projects corresponding to para No. (1) (a) as specified in Schedule Vl of the Companies Act, 2013 (18 of 2013); Not applicable 11. Rubber and allied products; including products regulated by the Rubber Board constituted under the Rubber Act, 1947 (XXIV of 1947); 4001 to 4017 12. Coffee and tea; 0901 to 0902 13. Railway or tramway locomotives, rolling stock, railway or tramway fixtures and fittings, mechanical (including electro mechanical) traffic signalling equipment's of all kind; 8601 to. 6 [ 8609 ] 14. Cement; 2523; 6811 to 6812 15. Ores and Mineral products; 2502 to 2522; 2524 to 2526; 2528 to 2530; 2601. to 2617 16. Mineral fuels (other than petroleum), mineral oils etc. 2707 to 2708 17. Base metals; 7401, to 7403; 7405 to 7413; 7419; 7501 to 7508; 7601 to 7674; 7801 to 7802; 7804; 7806 to 7901, to 7905; 7907; 8001; 8003; 8007; 8101 to 8113 18. Inorganic chemicals, organic or inorganic compounds of precious metals, rare-earth metals of radioactive elements or isotopes, and organic chemicals; 2801 to 2853; 2901. to 2942; 3801 to 3807; 3402 to 3403; 3809 to 3824. 19. Jute and Jute Products; 7 [ 5307 ] , 5310 20. Edible Oil; 1507 to 1518 21. Construction Industry as per para No. (5) (a) as specified in Schedule VI of the Companies Act, 2013 (18 of 2013); Not applicable. 22. Health services, namely functioning as or running hospitals, diagnostic centres, clinical centres or test laboratories; Not applicable. 23. Education services, other than such similar services falling under philanthropy or as part of social spend which do not form part of any business; Not applicable. 24. Milk powder; 0402 25. Insecticides; 3808 26. Plastics and polymers; 3901 to 3914; 3916 to 3921; 3925 27. Tyres and tubes; 4011 to 4013 28. 8 [ Pulp and Paper ] ; 9 [ 4701 to 4704 ] 4801 to 4802. 29. Textiles; 5004 to 5007; 5106 to 5113; 5205 to 5212; 5303; 10 [ 5307 ] ; 5310; 5401 to 5408; 5501 to 5516 30. Glass; 7003 to 7008; 7011;7016 31. Other machinery and Mechanical Appliances; 8402 to 8487 32. Electricals or electronic machinery; 8501 to 8507:8511 to 8512: 8514 to 8515; 8517; 8525 to 8536: 8538 to 8547. 33. Production, import and supply or trading of following medical devices, namely:- (i) Cardiac stents; (ii) Drug eluting stents; (iii) Catheters; (iv) Intra ocular lenses; (v) Bone cements; (vi) Heart valves; (vii) Orthopaedic implants; (viii) Internal prosthetic replacements; (ix) Scalp vein set; (x) Deep brain stimulator; (xi) Ventricular peripheral shud; (xii) Spinal implants; (xiii) Automatic impalpable cardiac 11 [ defibrillators ] ; (xiv) Pacemaker (temporary and permanent); (xv) Patent ductus arteriosus, atrial septal defect and ventricular septal defect closure device; (xvi) Cardiac re-synchronise therapy ; (xvii) Urethra spinicture devices; (xviii) Sling male or female; (xix) Prostate occlusion device; and (xx) Urethral stents:] Provided that nothing contained in serial number 33 shall apply to foreign companies having only liaison offices. Provided further that nothing contained in this rule shall apply to a company which is classified as a micro enterprise or a small enterprise including as per the turnover criteria under sub-section (9) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006). ] ******************** Notes:- 1. Substituted vide F. No. 1/40/2013-CL-V - Dated 31-12-2014 , before it was read as, 3. Application of cost records.- For the purpose of sub-section (1) of section 148 of the Act, the following class of companies, including Foreign Companies defined in sub-section (42) of section 2 of the Act , shall be required to include cost records in their books of account, namely:- (A) Companies engaged in the production of following goods in strategic sectors, such as: (a) (i) machinery and mechanical appliances used in defence, space and atomic energy sectors excluding any ancillary item or items; Explanation: - For the purposes of this sub-clause, any company which is engaged in any item or items supplied exclusively for use under this clause, shall be deemed to be covered under these rules. (ii) turbo jets and turbo propellers; (iii) arms and ammunitions; (iv) propellant powders; prepared explosives, (other than propellant powders); safety fuses; detonating fuses; percussion or detonating caps; igniters; electric detonators; (v) radar apparatus, radio navigational aid apparatus and radio remote control apparatus; (vi) tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons and parts of such vehicles, that are funded (investment made in the company) to the extent of ninety per cent. or more by the Government or Government Agencies; (b) provisions of clause (A) shall be applicable, if the net worth of the company is rupees five hundred crore or more or the turnover is rupees five hundred crore or more. (B) companies engaged in an industry regulated by a Sectoral Regulator or a Ministry or Department of Central Government: (a) (i) Port services of stevedoring, pilotage, hauling, mooring, re-mooring, hooking, measuring, loading and unloading services rendered by a Port in relation to a vessel or goods regulated by the Tariff Authority for Major Ports under section 111 of the Major Port Trusts Act, 1963(38 of 1963); (ii) Aeronautical services of air traffic management, aircraft operations, ground safety services, ground handling, cargo facilities and supplying fuel rendered by airports and regulated by the Airports Economic Regulatory Authority under the Airports Economic Regulatory Authority of India Act, 2008 (27 of 2008); (iii) Telecommunication services made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature (other than broadcasting services) and regulated by the Telecom Regulatory Authority of India under the Telecom Regulatory Authority of India Act, 1997 (24 of 1997); (iv) Generation, transmission, distribution and supply of electricity regulated by the relevant regulatory body or authority under the Electricity Act, 2003 (36 of 2003), other than for captive generation (as defined under the Electricity Rules 2005); (v) Steel; (vi) Roads and other infrastructure projects; (vii) Drugs and Pharmaceuticals; (viii) Fertilisers; (ix) Sugar and industrial alcohol; (x) Petroleum products regulated by the Petroleum and Natural Gas Regulatory Board under the Petroleum and Natural Gas Regulatory Board Act, 2006(19 of 2006); (xi) Rubber and allied products being regulated by the Rubber Board. (b) For the purposes of clause (B), the thresholds limit shall be as under, - (i) in the case of a multi-product or a multi services company (i.e. a company producing more than one product or service), any product or a service for which the individual turnover (from such specific product or such specific service) is rupees fifty crore or more; (ii) in the case of a company, producing any one specific product or service, if the net worth of the company is rupees one hundred and fifty crore or more or the turnover is rupees twenty five crore or more. (c) in the case of companies engaged in an industry regulated by a sectoral regulator, the requirements of sectoral regulator regarding cost records shall be taken into account. (C) Companies operating in areas involving public interest such as: (a) (i) Railway or tramway locomotives, rolling stock, railway or tramway fixtures and fittings, mechanical (including electro mechanical) traffic signalling equipment s of all kind; (ii) Mineral products including cement; (iii) Ores; (iv) Mineral fuels (other than Petroleum), mineral oils etc.; (v) Base metals; (vi) Inorganic chemicals, organic or inorganic compounds of precious metals, rare-earth metals of radioactive elements or isotopes, and Organic Chemicals; (vii) Jute and Jute Products; (viii) Edible Oil under Administrative Price Mechanism; (ix) Construction Industry; (x) Companies engaged in health services viz. functioning as or running hospitals, diagnostic centres, clinical centres or test laboratories; (xi) Companies engaged in education services, other than such similar services falling under philanthropy or as part of social spend which do not form part of any business. (b) For the purposes of clause (C), the thresholds limit shall be as under, - (i) in the case of a multi-product or a multi services company (i.e. a company producing more than one product or service), any product or a service for which the individual turnover (from such specific product or such specific service) is rupees fifty crore or more; (ii) in the case of a company producing any one specific product or service, if the net worth of the company is rupees one hundred and fifty crore or more or the turnover is rupees twenty five crore or more. (D) Companies (including foreign companies other than those having only liaison offices) engaged in the production, import and supply or trading of following medical devices, namely:- (a) (i) Cardiac Stents; (ii) Drug Eluting Stents; (iii) Catheters; (iv) Intra Ocular Lenses; (v) Bone Cements; (vi) Heart Valves; (vii) Orthopaedic Implants; (viii) Internal Prosthetic Replacements; (ix) Scalp Vein Set; (x) Deep Brain Stimulator; (xi) Ventricular peripheral Shud; (xii) Spinal Implants; (xiii) Automatic Impalpable Cardiac Deflobillator; (xiv)Pacemaker (temporary and permanent); (xv) patent ductus arteriosus, atrial septal defect and ventricular septal defect closure device; (xvi) Cardiac Re-synchronize Therapy ; (xvii) Urethra Spinicture Devices; (xviii) Sling male or female; (xix) Prostate occlusion device; and (xx) Urethral Stents. (b) For the purposes of clause (D), the thresholds limit shall be as under, - (i) in the case of a company engaged in multiple products, any product or device for which the individual turnover (from such specific product or device) is rupees ten crore or more, or one third of the turnover, whichever is less. (ii) in the case of a company engaged in one specific product or device, if it has net worth of rupees one hundred and fifty crore or more or the turnover is rupees twenty five crores or more; 2. Substituted vide F. No. 1/40/2013-CL-V - Dated 14-7-2016 , before it was read as, Table (A) Regulated Sectors Sl. No. Industry/ Sector/ Product/ Service CETA Heading (wherever applicable) 1. Telecommunication services made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature (other than broadcasting services) and regulated by the Telecom Regulatory Authority of India under the Telecom Regulatory Authority of India Act, 1997 (24 of 1997); Not applicable 2. Generation, transmission, distribution and supply of electricity regulated by the relevant regulatory body or authority under the Electricity Act, 2003 (36 of 2003), other than for captive generation (referred to in the Electricity Rules, 2005); ------ 3. Petroleum products regulated by the Petroleum and Natural Gas Regulatory Board under the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006 ; 2709 to 2715; 4. Drugs and pharmaceuticals; 2901 to 2942; 3001 to 3006. 5. Fertilisers; 3102 to 3105. 6. Sugar and industrial alcohol; 1701; 1703;2207 (B) Non-regulated Sectors Sl. No. Industry/ Sector/ Product/ Service CETA Heading (wherever applicable) 1. Machinery and mechanical appliances used in defence, space and atomic energy sectors excluding any ancillary item or items; Explanation. - For the purposes of this sub-clause, any company which is engaged in any item or items supplied exclusively for use under this clause, shall be deemed to be covered under these rules 8401 to 8402; 8801 to 8805; 8901 to 8908 2. Turbo jets and turbo propellers; 8411 3. Arms and ammunitions; 3601 to 3603; 9301 to 9306. 4. Propellant powders; Prepared explosives (other than propellant powders); safety fuses; detonating fuses; percussion or detonating caps; igniters; electric detonators; 3601 to 3603 5. Radar apparatus, radio navigational aid apparatus and radio remote control apparatus; 8526 6 Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons and parts of such vehicles, that are funded (investment made in the company) to the extent of ninety per cent. or more by the Government or Government agencies; 8710 7 Port services of stevedoring, pilotage, hauling,. mooring, re-mooring, hooking, measuring, loading and unloading services rendered by a Port in relation to a vessel or goods regulated by the Tariff Authority for Major Ports under section III of the Major Port Trusts Act, 1963(38 of 1963); Not applicable 8. Aeronautical services of air traffic management, aircraft operations, ground safety services, ground handling, cargo facilities and supplying fuel rendered by airports and regulated by the Airports Economic Regulatory Authority under the Airports Economic Regulatory Authority of India Act, 2008 (27 of 2008); Not applicable. 9. Steel; 7201 to 7229; 7301 to 7326 10. Roads and other infrastructure projects corresponding to para No. (1) (a) as specified in Schedule VI of the Companies Act, 2013 ; Not applicable 11. Rubber and allied products being regulated by the Rubber Board constituted under the Rubber Act, 1947 (XXIV of 1947). 4001 to 4017 12. Coffee and tea; 0901 to 0902 13. Railway or tramway locomotives, rolling stock, railway or tramway fixtures and fittings, mechanical (including electro mechanical) traffic signalling equipment's of all kind; 8601 to 8608 14. Cement; 2523; 6811 to 6812 15. Ores and Mineral products; 2502 to 2522; 2524 to 2526; 2528 to 2530; 2601 to 2617 16. Mineral fuels (other than Petroleum), mineral oils etc.; 2701 to 2708 17. Base metals; 7401 to 7403; 7405 to 7413; 7419; 7501 to 7508; 7601 to 7614; 7801 to 7802; 7804; 7806; 7901 to 7905; 7907; 8001; 8003; 8007; 8101 to 8113. 18. Inorganic chemicals, organic or inorganic compounds of precious metals, rare-earth metals of radioactive elements or isotopes, and Organic Chemicals; 2801 to 2853; 2901 to 2942; 3801 to 3807; 3402 to 3403; 3809 to 3824. 19. Jute and Jute Products; 5303, 5310 20. Edible Oil 1507 to 1518 21. Construction industry as per pars No. (5) (a) as specified in Schedule VI of the Companies Act, 2013 (18 of 2013) Not applicable. 22. Health services, namely functioning as or running hospitals, diagnostic centres, clinical centres or test laboratories; Not applicable. 23. Education services, other than such similar services falling under philanthropy or as part of social spend which do not form part of any business. Not applicable. 24. Milk Powder ; 0402 25. Insecticides; 3808 26. Plastics and polymers; 3901 to 3914; 3916 to 3921; 3925 27. Tyres and tubes 4011 to 4013 28. Paper; 4801 to 4802 29. Textiles; 5004 to 5007; 5106 to 5113; 5205 to 5212; 5303; 5310; 5401 to 5408; 5501 to 5516 30. Glass; 7003 to 7008; 7011; 7016 31. Other machinery 8403 to 8487 32. Electricals or electronic machinery; 8501 to 8507; 8511 to 8512; 8514 to 8515; 8517; 8525 to 8536; 8538 to 8547 33. Production, import and supply or trading of following medical devices, namely:- (i) Cardiac stents; (ii) Drug eluting stents; (iii) Catheters; (iv) Intra ocular lenses; (v) Bone cements; (vi) Heart valves; (vii) Orthopaedic implants; (viii) Internal prosthetic replacements; (ix) Scalp vein set; (x) Deep brain stimulator; (xi) Ventricular peripheral shud; (xii) Spinal implants; (xiii) Automatic impalpable cardiac deflobillator; (xiv) Pacemaker (temporary and permanent); (xv) Patent ductus arteriosus, atrial septal defect and ventricular septal defect closure device; (xvi) Cardiac re-synchronize therapy ; (xvii) Urethra spinicture devices; (xviii) Sling male or female; (xix) Prostate occlusion device; and (xx) Urethral stents: 9018 to 9022 3. Substituted vide F. No. 1/40/2013-CL-V - Dated 20-12-2017, before it was read as, Central Excise Tariff Act Heading 4. Substituted vide Notification No. F. No. 1/40/2013 -CL-V Part 1 dated 03-12-2018 before it was read as services rendered by a Port in relation to a vessel or goods regulated by the Tariff Authority for Major Ports 5. Substituted vide Notification No. F. No. 1/40/2013 -CL-V Part 1 dated 03-12-2018 before it was read as by airports 6. Substituted vide Notification No. F. No. 1/40/2013 -CL-V Part 1 dated 03-12-2018 before it was read as 8608 7. Substituted vide Notification No. F. No. 1/40/2013 -CL-V Part 1 dated 03-12-2018 before it was read as 5303 8. Substituted vide Notification No. F. No. 1/40/2013 -CL-V Part 1 dated 03-12-2018 before it was read as Paper 9. Inserted vide Notification No. F. No. 1/40/2013 -CL-V Part 1 dated 03-12-2018 10. Inserted vide Notification No. F. No. 1/40/2013 -CL-V Part 1 dated 03-12-2018 11. Substituted vide Notification No. F. No. 1/40/2013 -CL-V Part 1 dated 03-12-2018 before it was read as deflobillator
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