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TMI BlogForm in which Cost Records shall be maintainedX X X X Extracts X X X X X X X X Extracts X X X X ..... share of other administrative overheads, finance cost and marketing overheads. (e) Spare parts shall be recognised as property, plant and equipment when they meet the definition of property, plant and equipment and depreciated accordingly. Otherwise, such items shall be classified as inventory. (f) Normal loss or spoilage of material prior to reaching the factory or at places where the services are provided shall be absorbed in the cost of balance materials net of amounts recoverable from suppliers, insurers, carriers or recoveries from disposal. (g) Losses due to shrinkage or evaporation and gain due to elongation or absorption of moisture etc., before the material is received shall be absorbed in material cost to the extent they are normal, with corresponding adjustment in the quantity. (h) The forex component of imported material 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 the material cost. (i) Any demurrage or detention charges, or penalty levied by transport or other authorities shall not form part of the cost of materials. (j) Subsidy or grant or incentiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The cost of indirect materials shall be assigned to the various cost objects based on a suitable basis such as actual usage or technical norms or a similar identifiable measure. (v) The cost of materials like catalysts, dies, tools, moulds, patterns etc. which are relatable to production over a period of time shall be amortised over the production units benefited by such cost. (w) The cost of indirect material with life exceeding one year shall be included in cost over the useful life of the material. 2. Employee Cost.- (a) Proper records shall be maintained in respect of employee costs in such a manner as to enable the company to book these expenses cost centre wise or department wise with reference to goods or services under reference and to furnish necessary particulars. Where the employees work in such a manner that it is not possible to identify them with any specific cost centre or service centre or department, the employees cost shall be apportioned to the cost centre or service centres or departments on equitable and reasonable basis and applied consistently. (b) Employee Cost shall be ascertained taking into account the gross pay including all allowances payable alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee cost. (n) Any change in the cost accounting principles applied for the determination of the employee cost should be made only if it is required by law or a change would result in a more appropriate preparation or presentation of cost statements of an enterprise. (o) Where the employee services are traceable to a cost object, such employees' cost shall be assigned to the cost object on the basis such as time consumed or number of employees engaged or other related basis or similar identifiable measure. (p) While determining whether a particular employee cost is chargeable to a separate cost object, the principle of materiality shall be adhered to. (q) Where the employee costs are not directly traceable to the cost object, the same shall be assigned on suitable basis like estimates of time based on time study. (r) The amortised separation costs related to voluntary retirement, retrenchment, and termination or other related matters for the period shall be treated as indirect cost and assigned to the cost objects in an appropriate manner provided that unamortised amount related to discontinued operations, shall not be treated as employee cost. (s) Recruitment costs, traini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of utilities is accounted at standard cost, the price variances related to utilities shall be treated as part of cost of utilities and the portion of usage variances due to normal reasons shall be treated as part of cost of utilities. Usage variances due to abnormal reasons shall be treated as part of abnormal cost. (l) Subsidy or grant or incentive and any such payment received or receivable with respect to any cost of utilities shall be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income. (m) The cost of production and distribution of utilities shall be determined based on the normal capacity or actual capacity utilisation whichever is higher and unabsorbed cost, if any, shall be treated as abnormal cost. Cost of a stand-by utility shall include the committed costs of maintaining such a utility. (n) Any abnormal cost where it is material and quantifiable shall not form part of the cost of utilities. (o) Penalties, damages paid to statutory authorities or other third parties shall not form part of the cost of utilities. (p) Credits or recoveries relating to the utilities including c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial year when such subsidy or grant or incentive and any such payment is recognised as income. (i) Any abnormal portion of the direct expenses where it is material and quantifiable shall not form part of the direct expenses. (j) Penalties, damages paid to statutory authorities or other third parties shall not form part of the direct expenses. (k) Credits or recoveries relating to the direct expenses, material and quantifiable, shall be deducted to arrive at the net direct expenses. (l) Any change in the cost accounting principles applied for the measurement of the direct expenses should be made only if, it is required by law or a change would result in a more appropriate preparation or presentation of cost statements of an organisation. (m) Direct expenses that are directly traceable to the cost object shall be assigned to that cost object. 5. Repairs and Maintenance.- (a) Proper records showing the expenditure incurred by the workshop, tool room and on repairs and maintenance in the various cost centres or departments shall be maintained under different heads. (b) Repairs and maintenance cost shall be the aggregate of direct and indirect cost relating to repairs and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to normal reasons shall be treated as part of repairs and maintenance cost. Usage variances attributable to abnormal reasons shall be excluded from repairs and maintenance cost. (n) Subsidy or grant or incentive and any such payment received or receivable with respect to repairs and maintenance activity shall be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income. (o) Any repairs and maintenance cost resulting from some abnormal circumstances, namely, major fire, explosions, flood and similar events, if material and quantifiable, shall not form part of the repairs and maintenance cost. (p) Fines, penalties, damages and similar levies paid to statutory authorities or other third parties shall not form part of the repairs and maintenance cost. (q) Credits or recoveries relating to the repairs and maintenance activity, material and quantifiable, shall be deducted to arrive at the net repairs and maintenance cost. (r) Any change in the cost accounting principles applied for the measurement of the repairs and maintenance cost should be made only if, it is required by law or a change would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, it shall be assigned based on either of the following two principles; namely:- i) Cause and Effect - Cause is the process or operation or activity and effect is the incurrence of cost and ii) Benefits received - overheads are to be apportioned to the various cost objects in proportion to the benefits received by them. 7. Overheads.- (a) Proper records shall be maintained for various items of indirect expenses comprising overheads pertaining to goods or services under reference. These expenses shall be analysed, classified and grouped according to functions. (b) Overheads representing procurement of resources shall be determined at invoice or agreed price including duties and taxes, and other expenditure directly attributable thereto net of discounts (other than cash discounts), taxes and duties refundable or to be credited. (c) Overheads other than those referred to above shall be determined on the basis of cost incurred in connection therewith. (d) Any abnormal cost where it is material and quantifiable shall not form part of the overheads. (e) Finance costs incurred in connection with procured or self-generated resources shall not form part of overheads. (f) Overhe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices based on actual capacity utilisation. (p) The fixed production overheads shall be absorbed based on the normal capacity. 3[(q) In case of leased assets, if the lease is an operating lease, the entire rentals shall be included in the respective overheads. If the lease is a financial lease, the finance cost portion shall be segregated and treated as part of finance costs. (r) Selling and Distribution Overheads, the benefits of which are expected to be derived over a long period, shall be amortized on a rational Administrative Overheads basis. (s) Any demurrage or detention charges or penalty levied by the transportation or other authorities in respect of distribution activity shall not form part of Selling and Distribution Overheads.] 8. 4[****] 9. Transportation Cost.- (a) Proper records shall be maintained for recording the actual cost of transportation showing each element of cost such as freight, cartage, transit insurance and others after adjustment for recovery of transportation cost. Abnormal costs relating to transportation, if any, are to be identified and recorded for exclusion of computation of average transportation cost. (b) In case of a manufacturer having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cost of procurement of materials which are to be identified for proper allocation or apportionment to the materials or products. (n) Outward transportation cost shall form the part of the cost of sale and shall be allocated or apportioned to the materials and goods on a suitable basis. (o) The following basis shall be used, in order of priority, for apportionment of outward transportation cost depending upon the nature of products, unit of measurement followed and type of transport used, namely . i) Weight; ii) Volume of goods; iii) Tonne-Km; iv) Unit or Equivalent unit; v) Value of goods; vi) Per cent. of usage of space. (p) Once a basis of apportionment is adopted, the same shall be followed consistently. (q) For determining the transportation cost per unit, distance shall be factored in to arrive at weighted average cost. (r) Abnormal and non-recurring cost shall not be a part of transportation cost. 10. Royalty and Technical Know-how.- (a) Adequate records shall be maintained showing royalty or technical know-how fee including other recurring or non-recurring payments of similar nature, if any, made for the goods or services under reference to collabo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and development costs shall include all the costs that are directly traceable to research or development activities or that can be assigned to research and development activities strictly on the basis of a) cause and effect or b) benefits received. Such costs shall include the following elements, namely:- i. The cost of materials and services consumed in research and development activities; ii. Cost of bought out materials and hired services as per invoice or agreed price including duties and taxes directly attributable thereto net of trade discounts, rebates, taxes and duties refundable or to be credited; iii. The salaries, wages and other related costs of personnel engaged in research and development activities; iv. The depreciation of equipment and facilities, and other tangible assets, and amortisation of intangible assets to the extent that they are used for research and development activities; v. Overhead costs, other than general administrative costs, related to research and development activities; vi. Costs incurred for carrying out research and development activities by other entities and charged to the entity; vii. Expenditure incurred in securing copyrights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e included in the cost of production of that period. If the expenditure is only to improve the quality of the existing product or minor modifications in attributes, the principle shall not be applied. (j) Development costs attributable to a saleable service namely; providing technical know-how to outside parties shall be accumulated separately and treated as cost of providing the service. 12. Quality Control Expenses.- (a) Adequate records shall be maintained to indicate the expenses incurred in respect of quality control department or cost centre or service centre for goods or services under reference. Where these services are also utilised for other goods or services of the company, the basis of apportionment to goods or services under reference and to other goods or services shall be on equitable and reasonable basis and applied consistently. (b) Quality control cost incurred in-house shall be the aggregate of the cost of resources consumed in the Quality control activities of the entity. The cost of resources procured from outside shall be determined at invoice or agreed price including duties and taxes, and other expenditure directly attributable thereto net of discounts ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cost of materials, consumable stores, spares, manpower, equipment usage, utilities, resources for testing and certification and other identifiable resources consumed in activities such as waste processing, disposal, remediation and others. Indirect cost shall include the cost of resources common to various pollution control activities such as pollution control registration and such like expenses. (c) Costs of pollution control which are internal to the entity should be accounted for when incurred. They should be measured at the historical cost of resources consumed. (d) Future remediation or disposal costs which are expected to be incurred with reasonable certainty as part of onerous contract or constructive obligation, legally enforceable shall be estimated and accounted based on the quantum of pollution generated in each period and the associated cost of remediation or disposal in future. (e) Contingent future remediation or disposal costs e.g. those likely to arise on account of future legislative changes on pollution control shall not be treated as cost until the incidence of such costs become reasonably certain and can be measured. (f) External costs of pollution which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income. (q) Any pollution control cost resulting from abnormal circumstances, if material and quantifiable, shall not form part of the pollution control cost. (r) Fines, penalties, damages and similar levies paid to statutory authorities or other third parties shall not form part of the pollution control cost. (s) Credits or recoveries relating to the pollution control activity, material and quantifiable, shall be deducted to arrive at the net pollution control cost. (t) Research and development cost to develop new process, new products or use of new materials to avoid or mitigate pollution shall be treated as research and development costs and not included under pollution control costs. Development costs incurred for commercial development of such product, process or material shall be included in pollution control costs. (u) Any change in the cost accounting principles applied for the measurement of the pollution control cost should be made only if, it is required by law or a change would result in a more appropriate preparation or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eto net of discounts (other than cash discount), taxes and duties refundable or to be credited. This cost shall also include the cost of resources provided to the contractors. (h) Cost of services for the purpose of inter unit transfers shall also include distribution costs incurred for such transfers. (i) Cost of services for the purpose of inter-company transfers shall also include distribution cost incurred for such transfers and administrative overheads. (j) Cost of services rendered to outside parties shall also include distribution cost incurred for such transfers, administrative overheads and marketing overheads. (k) Finance costs incurred in connection with the service cost centre shall not form part of the cost of service cost centre. (l) The cost of service cost centre shall not include imputed costs. (m) Where the cost of service cost centre is accounted at standard cost, the price and usage variances related to the services cost centre shall be treated as part of cost of services. Usage variances due to abnormal reasons shall be treated as part of abnormal cost. (n) Subsidy or grant or incentive and any such payment received or receivable with respect to any serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. (c) Finance costs directly incurred in connection with the acquisition of packing material shall not form part of packing material cost. (d) Self-manufactured packing materials shall be valued including direct material cost, direct employee cost, direct expenses, job charges, factory overheads including share of administrative overheads comprising factory management and administration and share of research and development cost incurred for development and improvement of existing process or product. (e) Normal loss or spoilage of packing material prior to receipt in the factory shall be absorbed in the cost of balance materials net of amounts recoverable from suppliers, insurers, carriers or recoveries from disposal. (f) The forex component of imported packing material 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 the packing material cost. (g) Any demurrage, detention charges or penalty levied by the transport agency or any authority shall not form part of the cost of packing materials. (h) Subsidy or grant or incentive and any such payment received or recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r production of qualifying assets including fixed assets; and ii) Other finance costs for production of goods or operations or services rendered which cannot be classified as qualifying assets. (c) Finance costs directly attributable to the acquisition or construction or production of a qualifying asset shall be included in the cost of the asset. (d) Finance costs shall not include imputed costs. (e) Subsidy or grant or incentive and any such payment received or receivable with respect to finance costs shall be reduced from cost of the cost object in the financial year when such subsidy or grant or incentive and any such payment is recognised as income. (f) Penal interest for delayed payment, fines, penalties, damages and similar levies paid to statutory authorities or other third parties shall not form part of the finance costs. In case the company delays the payment of statutory dues beyond the stipulated date, interest paid for delayed payment shall not be treated as penal interest. (g) Interest paid for or received on investment shall not form part of the finance costs for production of goods or operations or services rendered; (h) Assignment of finance costs to the cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost element that have been taken into account in such computation. All conversion costs incurred in bringing the inventories to their present location and condition shall be taken into account while computing the cost of work-in-progress and finished stock. The method adopted for determining the cost of work-in progress and finished goods shall be followed consistently. 20. Captive Consumption.- If the goods or services under reference are used for captive consumption, proper records shall be maintained showing the quantity and cost of each such goods or services transferred to other departments or cost centres or units of the company for self-consumption and sold to outside parties separately. 21. By-Products and Joint Products.- a) Proper records shall be maintained for each item of by-product, if any, produced showing the receipt, issues and balances, both in quantity and value. The basis adopted for valuation of by-product for giving credit to the respective process shall be equitable and consistent and should be indicated in cost records. Records showing the expenses incurred on further processing, if any, and actual sales realisation of by-product shall be maintained. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted to determine normal price shall be classified as under: i) Comparable uncontrolled price method; ii) Resale price method; iii) Cost plus method; iv) Profit split method; v) Transactional net margin method; or vi) Any other method, to be specified. (d) In respect of related party transactions or supplies made or services rendered by a company to a company termed "related party relationship" and vice-a-versa, records shall be maintained showing contracts entered into, agreements or understanding reached in respect of - i) purchase and sale of raw materials, finished goods, rendering of services, process materials and rejected goods including scraps, and other related materials; ii) utilisation of plant facilities and technical know-how; iii) supply of utilities and any other services; iv) administrative, technical, managerial or any other consultancy services; v) purchase and sale of capital goods including plant and machinery; and vi) any other payment related to the production of goods or rendering of services under reference. (e) These records shall also indicate the basis followed for arriving at the rates charged or paid for such goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pacity utilisation (in-house), stock purchased for trading, stock and other adjustments, quantity available for sale, wastage and actual sale, total quantity of outward supplies as per cost records and total outward supplies as per GST records during current financial year and previous year.] (b) Such statements shall also include details in respect of all major items of costs constituting cost of production of goods and services, cost of sales of goods or services and margin in total as well as per unit of the goods and services. The goods or services emerging from a process, which forms raw material or an input material or service for a subsequent process, shall be valued at the cost of production or cost of service up to the previous stage. 6[(c) Cost statements (monthly, quarterly and annually) in respect of reconciliation of indirect taxes showing details of total clearances of goods or services, assessable value/ taxable value, duties or taxes paid, CENVAT or VAT or Service Tax or GST Credit utilised, duties or taxes recovered and interest or penalty paid.] (d) If the company is operating more than one plant, factory or service centre, separate cost statements as specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be maintained PARTICULARS RELATING TO THE ITEMS OF COSTS TO BE INCLUDED IN THE BOOKS OF ACCOUNTS: 1. INPUT MATERIAL(S)/SERVICE(S): (1) Proper records shall be maintained showing separately all receipts, issues and balances both in quantities and cost of each item of raw material/input services (including all direct charges upto the works) required for the production of goods or rendering of services under reference. The basis, on which quantities, cost of issue and consumption are calculated, shall be indicated in the cost records and followed consistently. In the case of imported raw materials/input services, proper records shall be maintained showing quantity of imported material/service, Free On Board value, overseas freight, insurance, customs duty and inland freight charges along with license-wise quantities allowed, actual quantities imported, actual quantities consumed, quantities in stock and quantities yet to be imported out of total licensed quantities. If both indigenous and imported materials/services are consumed, the records showing details of percentage mix of the same have to be maintained for each item. (2) Proper records shall be maintained separately showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done by any outside agency, proper records to show the quantity sent for processing/augmentation, quantity received back after processing/augmentation and cost incurred thereon shall be maintained. The net realization, if any, shall be adjusted against the major process relating to such recoveries. The cost of recoveries shall be determined on equitable and reasonable basis and applied consistently. The records indicating the actual sales realization of recoveries shall also be maintained. (6) Proper records shall be maintained to show the receipts, issues and balances, both in quantities and cost of each item of consumable stores, other process materials/services not covered above, small tools and machinery spares, indirect materials/services etc. The cost shall include all direct charges upto works/services delivered. (7) The cost of consumable stores, small tools and machinery spares shall be charged to the relevant cost center/service centre or department or production process of goods or rendering of services on the basis of actual issues. In the case of consumable stores and small tools, indirect services, the cost of which are insignificant (less than 5% of the cost of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) incentive wages, either individually or collectively as production 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 superannuating scheme; (g) cost of employees stock option; (h) leave travel concession; (i) paid holidays; (j) leave with pay; (k) Training, workshop, seminar expenses; (l) Medical/health, safety, education expenses; (m) any other statutory provision for labour welfare; (n) any other free or subsidized facility. (2) The records shall be maintained in such a manner as to enable the company to book these expenses cost centre wise or department wise with reference to goods/services under reference and to furnish necessary particulars. Where the employees work in such a manner that it is not possible to identify them with any specific cost centre/service centre or department, the employees cost shall be apportioned to the cost centre/service centres or departments on equitable and reasonable basis and applied consistently. (3) The idle labour cost shall be separately recorded under classified headings indicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly. (7) Proper records indicating any subsidy, grant/incentive, credits, recoveries, abnormal costs, penalties or damages paid etc. in respect of utilities shall be maintained. (8) The records shall also indicate the measures taken on conservation of energy and its corresponding impact on per unit cost of goods/services. 4. SERVICE DEPARTMENT EXPENSES: Proper records shall be maintained to indicate expenses incurred in respect of each service cost centre like engineering, work shop, designing, laboratory, safety, transport, computer cell, welfare 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 goods/services of the company also, the basis of apportionment of such expenses to goods/services under reference and to the other goods/services shall be on equitable and reasonable basis and applied consistently. The said basis shall be disclosed in the cost records also. Proper records shall be maintained to indicate cost of purchase, production, distribution, marketing and price of services with reference to sales to outside parties. Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant and machinery, furniture and fixtures etc. employed for goods/services under reference shall be maintained. The basis of apportionment of common assets to the goods/services under reference shall be on equitable and reasonable basis and applied consistently. In case of revaluation of assets, the same shall be indicated separately and depreciation on revaluation shall also be indicated separately. (3) The basis on which depreciation is calculated and allocated or apportioned to various cost centre/service centres or departments and absorbed on all goods/services 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 Companies Act, 2013 , 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 each good/service. The cumulative depreciation charged in the cost records, against any individual item of asset shall not, however, exceed the original c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e kept separately in respect of each such agreement or arrangement. The basis of charging such amount, including lump sum payment and its treatment shall be indicated in the cost records. 9. RESEARCH AND DEVELOPMENT EXPENSES: (1) Proper records showing the details of expenses, if any, incurred by the company for research and development work on the goods/services covered under these rules, according to the nature of development of goods/services - existing and new, design and development of new facilities and market research for the existing and new goods/services, shall be maintained separately. The records shall also indicate the payments made to outside parties for the research and development work. The basis of charging such amount, including lump sum payment and its treatment shall be indicated in the cost records. (2) The basis of charging these expenses to the cost of production of goods/services under reference and to other goods/services shall be indicated in the cost records. Where the utility of research and development work extends to over more than one financial year, such expenses shall be charged to the cost of goods/services under reference and to all other goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach such goods/services transferred to other departments or cost centres or units of the company for self-consumption and sold to outside parties separately. 13. BY-PRODUCTS: Proper Records shall be maintained for each item of by-product, if any, produced showing the receipt, issues and balances, both in quantity and value. The basis adopted for valuation of by-product for giving credit to the respective process shall be equitable and consistent and should be indicated in cost records. Records showing the expenses incurred on further processing, if any, as well as actual sales realization of by-product shall be maintained. The proper records shall be maintained in respect of credits/recoveries from the disposal of by-products. 14. JOINT PRODUCTS/SERVICES: Where more than one product/service which is of equal economic importance arises from a process, the cost up to the point of separation of products/services shall be apportioned to joint products/services on reasonable and equitable basis and shall be applied consistently. The basis on which such joint costs are apportioned to different products/services arising from the process shall be indicated in the cost records. Proper r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred or incentive earned. (2) Proper records shall be maintained giving the details of export commitments license wise and the fulfillment of these commitments giving the reasons for non-compliance, if any. 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. 18. POLLUTION CONTROL: (1) 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. Records relating to basis of distribution of pollution control expenses, such costs of jobs done in-house and outsourced separately, pollution control costs paid/payable to related parties, incurred in foreign exchange and any subsidy, grant, incentive, credits/recoveries, any abnormal portion of such costs, penalty and damages paid and any amount received/receivable from pollution control agency. 19. PRODUCTION RECORDS: Quantitative records of all finished goods (packed or unpacked)/services rendered showing production, issues for sales and balances of different type of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Such statements shall also include details in respect of all major items of costs constituting cost of production of goods/services, cost of sales of goods/services and margin in total as well as per unit of the goods/services. The goods/services emerging from a process, which forms raw material or an input material/service for a subsequent process, shall be valued at the cost of production/cost of service up to the previous stage. (3) Cost Statements (quarterly and annually)in respect of reconciliation of indirect taxes showing details of total clearances of goods/services, assessable value, duties/taxes paid, CENVAT/VAT/Service Tax credit utilized, duties/taxes recovered and interest/penalty paid. (4) If the company is operating more than one plant, factory or service centre, separate cost statements as specified above shall be prepared in respect of each plant, factory or service centre. (5) Any other statement/information considered necessary for suitable presentation of Costs and Profitability of goods/services produced by the Company shall also be prepared. 24. RECONCILIATION OF COST AND FINANCIAL ACCOUNTS: (1) The cost statements shall be reconciled with the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersa, records shall be maintained showing contracts entered into, agreements or understanding reached in respect of - (a) purchase and sale of raw materials, finished good(s), rendering of service(s), process materials 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 or any other consultancy services; (e) purchase and sale of capital goods including plant and machinery; and (f) any other payment related to the production of goods/rendering of services under reference. (2) These records shall also indicate the basis followed for arriving at the rates charged or paid for such goods or services so as to enable determination of the reasonableness of such rates in so far as they are in any way related to goods/services under reference." 2. Inserted vide Notification No. F. No. 1/40/2013 -CL-V Part 1 dated 03-12-2018 3. Substituted vide Notification No. G.S.R. 792(E) dated 15-10-2019 w.e.f. 01-04-2018 before it was read as "(m) Overheads shall be classified according to functions, viz., works, administration, selling and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an organisation. (j) While assigning administrative overheads, traceability to a cost object in an economically feasible manner shall be the guiding principle. (k) Assignment of administrative overheads to the cost objects shall be based on either of the following two principles; namely:- (i) Cause and Effect - Cause is the process or operation or activity and effect is the incurrence of cost. (ii) Benefits received - overheads are to be apportioned to the various cost objects in proportion to the benefits received by them." 5. Substituted vide Notification No. G.S.R. 792(E) dated 15-10-2019 w.e.f. 01-04-2018 before it was read as "(k) Records for transportation cost for exempted goods, excisable goods cleared for export shall be maintained separately." 6. Substituted vide Notification No. G.S.R. 792(E) dated 15-10-2019 w.e.f. 01-04-2018 before it was read as "(a) Cost statements (monthly, quarterly and annually) showing quantitative information in respect of each good or service under reference shall be prepared showing details of available capacity, actual production, production as per excise records, capacity utilisation (in-house), stock purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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