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TMI BlogThe Cost Accounting Records (Petroleum Industry) Rules, 2002X X X X Extracts X X X X X X X X Extracts X X X X ..... n the last date of the preceding financial year, does not exceed the limits as specified for a small scale industrial undertakings under the provisions of Industries (Development and Regulation) Act, 1951 (65 of 1951); and (b) the aggregate value of the turnover made by the company from the sale or supply of all its products during the preceding financial year does not exceed ten crore rupees. 3. Maintenance of records. - (1) 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, 2003 keep proper books of accounts relating to the utilisation of materials, labour and other items of cost in so far as they are applicable to any of the products or activities referred to in rule 2. The books of account, so maintained shall contain, inter-alia, the particulars specified in Schedule annexed to these rules and Proformae A to I mentioned in the said schedule: Provided that if the said company is manufacturing any other product(s)or is engaged in other activities in addition to the products or activities referred to in rule 2, the particulars relating to utilisation of materials, labour and other items of cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records and followed consistently. 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. The cost of materials, consumable stores, casings and other tubular items, chemicals, drilling bits, tools and spares etc. shall be properly identified and charged to the relevant departments, cost centres or activities, on equitable and reasonable basis and applied consistently. (2) Where joint products or more than one product of equal economic importance arises from a process, the cost up to the point of separation of products shall be apportioned to such joint products on reasonable and equitable basis and shall be applied consistently. The basis on which such joint costs are apportioned to different products arising from the process or processes shall be indicated in the cost records. The basis of the apportionment of common selling and distribution expenses to the product in the case of multiproduct unit shall be equitable and applied consistently (3) The proper records shall be maintained indicating the quantity as well as value of by-products reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion bonus or under any other scheme based on output; (c) overtime wages; (d) earnings of casual or contractual labour; (e) bonus or gratuity, statutory as well as other; (f) contribution to superannuation scheme; and (g) any other earning of the nature specified in (a) to (f) above. (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 to I of Schedule annexed to these rules. Where the employees work in such a manner that it is not possible to identify them with any specific cost or work centre or department, the labour charges shall be apportioned to the cost or work centers or departments on equitable basis and applied consistently. (3) Any wages and salaries allocable to capital works, such as, additions to plant and machinery, buildings or other fixed assets of any activity etc. shall be accounted for under the relevant heads. Similarly, payments in the nature of deferred revenue expenditure shall be separately recorded under separate classified headings indicating the reasons therefor. The method followed for accounting of such payments in determining the cost of the product o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of steam raised and consumed for the production, processing or manufacturing of the products or activities referred to in rule 2 shall be maintained. The cost of steam consumed by various units like the petroleum, refining etc., and by other units of the company shall be apportioned on equitable and reasonable basis and applied consistently. Where steam is raised and supplied by any other unit of the company to the referred plant, the cost of steam so supplied shall be charged to the referred Plant on equitable and reasonable basis and applied consistently. (3) Power: - Proper records shall be maintained for the quantity and cost of power purchased for the production, processing or manufacturing of the products or the activities referred to in rule 2 in different cost centers 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 products or activities under reference in different work centers or departments. Records shall also indicate installed capacity, number of units generated, losses and consumption in each work centers or departments separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds shall be maintained for assets used for exploration for and production, processing and manufacturing of the products or activities referred under rule 2 in respect of which depreciation has to be provided for. These records shall inter alia, indicate grouping of assets under each product or activity referred under rule 2, the cost of each item of assets including installation charges, date of acquisition and rate of depreciation. (2) Also such records as will enable to identify and/or allocate gross fixed assets, accumulated depreciation up to the year and net fixed assets under the heads; land and buildings, plant and machinery, furniture and fixtures etc. employed for products or activities referred under rule 2 along with the method and rate of depreciation shall be maintained. The basis of apportionment of common assets to the products or activities under reference shall also be indicated. In case of revaluation of assets, the same shall be indicated separately and shall not be included in the cost statement. The basis of allocation of depreciation on indirect assets to the products or activities under reference shall be on equitable and reasonable basis and applied consis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails of exploratory drilling/development expenses incurred on preparatory cost, rig operation cost, transport, well maintenance, other services and depreciation etc. The records shall indicate details of successful or undecided exploratory wells carried as wells-in-progress and successful wells after commercial production created as 'producing properties'. The producing properties shall be depleted applying unit of production method considering the proved developed hydrocarbon reserves or any other methods as per the accepted standards and practices. (2) The proper records shall be maintained showing details of expenses incurred or provision made in respect of dismantling, abandoning and restoring of on-shore or off shore well sites abandoned during the year and basis followed for charging the abandonment and restoration cost to the product. (3) The proper records shall be maintained in respect of provision made towards impairment of the properties. 9. OTHER OVERHEADS. - (1) The proper records shall be maintained for the products or activities under reference showing the various items of expenses comprising the other overheads. These expenses shall be analysed, classified an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these rules according to the nature of development of products i.e. existing or new product or 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 etc., shall be maintained separately. The records shall also indicate the payments made to outside parties for the research and development work. (2) The method of charging these expenses to the cost of products or activities under reference 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 revenue expenses and charged to the cost of production of the product or activities under reference and all other products if any, on a reasonable basis and applied consistently in line with the accepted standards and practices. The detailed criteria on which it is decided to extend the utility period of these expenses to more than one financial year shall be disclosed in the cost records. The following criteria, which are only indicative and not exhaustive, may be adopted in such ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eet higher seasonal demand. 14. PACKING EXPENSES. - In case of packing of products under reference for retail sales or retail marketing, the proper records shall be maintained showing the quantity and cost of various packing materials and other expenses incurred on packing for marketing of petroleum products. 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. 15. MARKETING & DISTRIBUTION EXPENSES. - The proper record shall be maintained for the quantity handled, stock loss, if any, and expenses incurred on marketing under various heads such as main installation, distribution and administration etc. The cost of marketing and distribution shall be indicated in respective Proforma. 16. EXPENSES OR INCENTIVES ON EXPORTS. - The proper records showing the expenses incurred on the export sales, if any, of the product under reference shall be separately maintained so that the cost of export sales can be determined correctly. Separate cost statement shall be prepared for product exported giving details of export expenses incurred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t considered in the cost records or statements so as to ensure accuracy and to adjudge the profit of the products or activities under reference with the overall profit of the company. The 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 other activities or products shall be prepared and reconciled with the financial statement. 21. 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 activities and services under such system. The cost variances shall be shown against the separate heads and analysed into material, labour, and overheads and further segregated into quantity, price and efficiency variances. 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 reasons for the variances shall be duly explained in the cost records and statements. 22. STATIS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 25. HUMAN RESOURCES DEVELOPMENT. - Expenditure incurred by the company on the human resources development activity shall be recorded separately. 26. INTER COMPANY TRANSACTIONS. - (1) In respect of related party transactions or supplies made or services rendered by a company to its holding company or subsidiary or a company termed "related party relationship" as defined below and vice-a-versa, records shall be maintained showing contracts entered into, agreements or understanding reached in respect of: (a) purchase and sale of raw materials, finished products, process materials, chemicals and rejected goods including scraps, etc; (b) utilisation of plant facilities and technical know-how; (c) supply of utilities and any other services; (d) administrative, technical, managerial and/or any other consultancy services; (e) purchase and sale of capital goods including plant and machinery; (f) any other payment related to production, processing or manufacturing of product under reference. These records shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e during the reporting period one party has the ability to control the other party or exercise significant influence over the other party in making financial and/or operating decisions; (b) "related party transaction" means a transfer of resources or obligations between related parties, regardless of whether or not a price is charged; (c) "control" means (i) ownership, directly or indirectly, of more than one-half of the voting power of an enterprise; or (ii) control of the composition of the Board of Directors in the case of a company or of the composition of the corresponding governing body in case of any other enterprise; or (iii) a substantial interest in voting power and the power to direct, by statute or agreement, the financial and/or operating policies of the enterprise; (d) "significant influence" means participation in the financial and/or operating policy decisions of an enterprise, but not control of those policies; (e) "an Associate" means an enterprise in which an investing reporting party has significant influence and which is neither a subsidiary nor a joint venture of that party; (f) "a Joint venture" means a contractual arrangement whereby two or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties, proper credit should be given in the cost of production of the respective utility. 3. The Proforma may be modified suitably including for method of accounting followed e.g. successful effort method or full cost method to incorporate unit specific features, if any, indicating reasons thereof. 4. Delete items not applicable. PROFORMA 'B' Name of the company: ........................... Statement showing the details of Survey Cost during the year ending:................................ I Cost Information: Serial Number Particulars Brought Forward (Rupees in lacs) Current year Amount (Rupees in lacs) Total Amount (Rupees in lacs) 1. Materials a) Explosives and Detonators b) Others(to be specified) 2. Salaries and Wages 3. Contractual Services (a) Shot Hole Drilling (b) Other Contractual Payments (c) Others (to be specified) 4. Other direct Expenses (a) Data Processing cost (b) Data Interpretation Cost (c) Others (to be specified) 5. Repairs and Maintenance 6. Depreciation 7. Royalty or Technical Know-How or Lease Rent 8. Administration. Overheads 9. Others (to be specified) 10 Total Survey Cost II Status Sl.No. Particulars To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific features, if any, indicating reasons thereof. (3) The column for "Brought forward" under the head "Amounts (Rs)" stands for amount charged towards wells-in-progress during the previous year. (4) Separate details shall be maintained for the expenses incurred for offshore and onshore activities. (5) Delete items not applicable. PROFORMA 'D' Name of the company:......................... Statement showing the Cost of Finding Proved Reserves Established during the year ending:.............................. I Quantitative Information: Serial Number Particulars Unit Current Year Previous Year 1. Number of wells for exploratory drilling 2. Number of wells for development drilling 3. Total Meterage drilled 4. Proved Reserves Established/Proved in terms of Oil equivalent II Cost Information: Serial Number Particulars Amount Cost per Unit Current. Year (Rupees in lacs) Previous. Year (Rupees in lacs) Current. Year (Rupees) Previous. Year (Rupees) 1. Survey Cost (From Proforma B) 2. Exploration Drilling Cost (From Proforma C) 3. Development Drilling cost (From Proforma C) 4. Others (to be specified) 5. Total Finding Cost Notes: - 1. The Proform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Number Particulars Amount Cost per Unit Current. Year (Rupees) Previous. Year (Rupees) Current. Year (Rupees) Previous. Year (Rupees) 1. Salary and Wages 2. Consumables (a) Pour Point Depressant (PPD) or Flow Improver (b) Others 3. Crude Oil Conditioning Plant (COCP) Charges 4. Stores and spares or chemicals 5. Logistic Services or Transport Allocation 6. Repairs and Maintenance 7. Power and Fuel 8. General Administrative Overheads 9. Depreciation 10. Others to be specified 11. TOTAL COST OF TRANSPORTATION 12. Less: Amount received separately from customers , if any. 13. Net Cost Notes: - 1. Separate Proforma shall be prepared separately for onshore and offshore production. 2. The administration overheads shall be included in the cost of crude oil or gas only to the extent they contribute in putting the goods or services produced at the present location and condition. The balance of administrative overheads, if any, shall be included in the cost of goods or services sold. The proforma may be amended accordingly, if required. 3. The Proforma may be modified suitably including for method of accounting followed e.g. successful effort meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company:........................... Name and address of the Fuel refining unit: ................. Statement showing the summary Cost of Refining for the year ending:.... Name of the Product:............................. I Quantitative Information: Serial Number Particulars UNIT Current Year Previous Year 1. Installed capacity MMTPA* 2. Crude or Gas refined MMTPA* 3. Capacity utilisation %AGE 4. Fuel and loss (quantity) MT 5. Fuel loss (%) %AGE *MMTPA: - Million Metric Tone Per Annum II Cost Information: Serial Number Particulars Quantity Rate (Rupees per tonne) Amount (Rupees in lacs) Cost per Unit Current Year Previous Year A 1. Material (a) Cost of captive crude oil or gas power transferred . i) (Oil field to be specified) ii) iii) (b) Transportation Cost, if any. (c) Others (specify) (d) Total 2. Crude oil or gas Purchased (i) Indigenous (ii) Imported 3. Process material, Consumable stores and spares 4. Utilities (a) Water (b) Steam (c) Power (d) Others (specify) (e) Total 5. Wages and Salaries 6. Repair and Maintenance 7. Depreciation 8. Royalty or technical Know-how or Lease rent 9. Quality Control 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Royalties on sales b) Cess c) Excise duty d) Sales tax e) Octroi f) Port Trust charges g) Others Total 6. Other Expenses (to be specified) 7. Selling and Distribution Expenses (a) Salaries and wages (b) Freight and Transport Charges (c) Commission to selling agents (d) Advertisement expenses (e) Others Total 8. Total Cost of Sales 9. Borrowing charges a) For manufacturing activity referred to in Rule 2 b) Others c) Total 10. Total cost 11. Sales Realization 12 Less: Excise duty 13. Net sales Realisation 14. Margin 15. Add: Export Benefits and incentives, if any 16. Total Margin (including export benefits) 17. Ex-factory price (excluding sales tax etc.) 18. Maximum retail price (excluding sales tax etc.) 19. Maximum retail price, if any, prescribed by the Government/statutory regulatory body etc. Notes: - 1. Separate statement shall be maintained in respect of each major product. 2. Sales realization for quantity sold at price notified or fixed by Government if any and at the price fixed by company shall be indicated separately. 3. Separate proforma shall be prepared for the quantity sold with in the country and the quantity exported. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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