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TMI BlogManufacturing costX X X X Extracts X X X X X X X X Extracts X X X X ..... re of Manufacturing Cost of excisable goods. 4. Definitions The following terms are being used in this standard with the meaning specified. 4.1 Abnormal and non-recurring cost: An unusual or atypical cost whose occurrence is usually irregular and unexpected and/or due to some abnormal situation of the production or operation. 4.2 Administrative Overheads: Cost of all activities relating to general management and administration of an organisation. Administrative overheads need to be analysed in relation to production/manufacturing activities and other activities. Administrative overheads in relation to production/manufacturing activities shall be included in the manufacturing cost. Administrative overheads in relation to marketing, projects management, corporate office or any other expense not related to the manufacturing activity shall be excluded from manufacturing cost. 4.3 Captive Consumption: Captive Consumption means the consumption of goods manufactured by one division or unit and consumed by another division or unit of the same organization or related undertaking for manufacturing another product(s), as defined in section 4(3) of the Central Excise Act, 1944. 4.4 Def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.8 Interest and Finance Costs: Costs incurred by an enterprise in connection with the borrowing of funds. 4.9 Manufacturing Cost: Manufacturing cost of an excisable good is the aggregate of costs of all resources used in the process of its manufacturing. Manufacturing cost includes cost of Materials (including process materials), Employee Cost, Cost of Utilities, Packing Cost, Direct Expenses, Repairs &Maintenance Cost, Pollution Control Cost, Quality Control Cost, Research & Development Cost, Cost of Inputs received free of cost or received at concessional value from the buyer of the excisable good, Depreciation and Amortisation (including amortisation cost of free tools, patterns ,dies, drawings, blue prints, technical maps, charts, engineering, development, art work, design work, plans, sketches, packaging material and the like necessary for production of excisable goods), Cost of Rework, reconditioning, retro-fitment, Manufacturing Overheads, other costs allocable to such activity, adjustment for stock of work-in-process and recoveries for sales of scrap and wastages and the like but does not include expenses of the above nature incurred for post manufacturing purposes. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adhering to quality standard. These expenses include salaries & wages relating to employees engaged in quality control activity and other related expenses. 4.15 Repairs & Maintenance Cost: Cost of all activities which have the objective of maintaining or restoring an asset in or to a state in which it can perform its required function at intended capacity and efficiency. 4.16 Research and Development Cost: The research and development cost incurred for development and improvement of the process or the excisable good. 4.17 Royalty: Royalty is compensation/periodic payments for the use of asset (tangible and/or intangible) to the owner for use of his asset in the production/manufacture, selling and distribution by an entity. 4.18 Scrap: Discarded material having some value in few cases and which is usually either disposed of without further treatment (other than reclamation and handling) or reintroduced into the production process. 4.19 Technical Know-how Fee: Technical Know-how Fee is a lump sum or periodical amount payable to provider of Technical Know-how in the form of design, drawings, training of personnel, or practical knowledge, skills or experience. 4.20 Waste and Spoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asured for each excisable good separately. 5.10 Depreciation and Amortisation cost for manufacturing of excisable goods shall be measured for each excisable good separately. 5.11 Research & Development cost for manufacturing of excisable goods shall be measured for each excisable good separately. 5.12 Cost incurred for manufacturing of excisable goods after split-off point shall be measured for each Joint/By-Product. In case the manufacturing process generates scrap or waste, realized or realizable value net of cost of disposal, of such scrap and waste shall be deducted from the cost of Joint Product. 5.13 Royalty and Technical Know-how Fee for manufacturing of excisable goods paid or incurred in lump-sum or which are in the nature of 'one-time' payment, shall be amortised on the basis of the estimated output or benefit to be derived from the related Technical Know-how. Royalty paid on sales shall not form part of manufacturing cost of excisable good. 5.14 Quality Control cost incurred in-house for manufacturing of excisable goods shall be the aggregate of the cost of resources used in the Quality Control activities in relation to each excisable good. The cost of res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or actual capacity utilization whichever is higher and unabsorbed cost, if any, shall be treated as abnormal cost. 5.21 Fines, penalties, damages, demurrage and similar levies paid to statutory authorities or other third parties shall not form part of the manufacturing cost of excisable good. 5.22 The forex component of imported material or other element of cost shall be converted at the rate on the date of the transaction. Any subsequent change in the exchange rate till payment or otherwise shall not form part of manufacturing cost of excisable good. 5.23 Credits/recoveries relating to the manufacturing cost, which are material and quantifiable, shall be deducted from the total manufacturing cost to arrive at the net manufacturing cost of excisable good. 5.24 Work in process/progress stock shall be measured at cost computed for different stages of completion. Stock of work-in-process/progress shall be valued at cost on the basis of stages of completion as per cost accounting principles. Opening and closing stock of work-in-process/progress shall be adjusted for computation of manufacturing cost of an excisable good. 6. Assignment of Cost 6.1 While assigning various elemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period(s), the same shall be disclosed. 9. Effective date This Cost Accounting Standard shall be effective from the period commencing on or after 1st April 2015 for being applied for the preparation and certification of Cost Accounting Statements for excisable goods. APPENDIX 1 Cost Statement showing Manufacturing Cost of (Name of excisable good) for the period: Name of the Manufacturer Address of the Manufacturer Excise Registration Number Name of the unit Address of the unit Central Excise Tariff Heading A Quantitative Information Unit Quantity 1 Normal/Installed Capacity 2 Production 3 Captive Consumption 4 Production as %age of Normal/Installed Capacity B Cost Information Unit Quantity Rate Amount Cost per Unit Materials (specify) 1 A. B. C. D ...... Total Materials Consumed 2 Process Materials 3 Utilities 4 Direct Employee Cost 5 Direct Expenses 6 Consumable Stores and Spares 7 Repairs and Maintenance Cost 8 Quality Control Cost 9 Research & Development Cost B Cost Information Unit Quantity Rate Amount Cost per Unit 10 Technical Know-how Fee/Royalty, if any 11 Depreciation/Amortization 12 Other Manufacturing Ove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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