Description
G.S.R. 388(E).- ln exercise of the powers conferred by sub-section (1) of Section 642, read with clause (d) of sub-section (1) of Section 209 of the companies Act, 1956 (1 of 1956), and in supersession of the notification of Government of India, Ministry of Law, Justice and Company Affairs (Department of Company Affairs) bearing G.S.R. 982(E) dated 4th September, 1974 except as respects things.
COST ACCOUNTING RECORDS (SUGAR) RULES, 1997
(Gazetted on - 15.7.97)
Ministry of Finance
(Department of Company Affairs)
Notification
New Delhi, the 15th July, 1997
G.S.R. 388(E).- ln exercise of the powers conferred by sub-section (1) of Section 642, read with clause (d) of
sub-section (1) of Section 209 of the companies Act, 1956 (1 of 1956), and in supersession of the notification of
Government of India, Ministry of Law, Justice and Company Affairs (Department of Company Affairs) bearing
G.S.R. 982(E) dated 4th September, 1974 except as respects things ,done or omitted to be done before such
supersession, the Central government hereby makes the following rules, namely:
1. Short Title and Commencement-
(1) These rules may be called the Cost Accounting Records (Sugar) amended Rules, 1997.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. Application-
(1) These rules shall apply to every company engaged in the production or manufacture of Sugar by
vacuum pan process and excludes jaggery and khandsari.
(2) The provision of sub-rule (1) shall not apply to a company:
[(a) The aggregate value of the machinery and plant installed wherein does not exceed the
limit as specified for a small scale industrial undertaking under the Industries (Development and
Regulation) Act, 1951 (65 of 1951), as on the last date of the preceding financial year.]
1
(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 Rupees ten crores.
3. Maintenance of Records-
(a) Every company to which these rules apply shall, at regular intervals as well as each of its financial
year commencing on or after the commencement of these rules, keep proper books of account
containing, inter-alia, the particulars specified in Schedule I and Schedule II including proformas A,
B, C, D, E and F annexed to these rules, relating to the utilisation of materials, labour and other
products of cost in so far as they are applicable to the product(s). .
Provided that if the said company is manufacturing any other product(s) or is engaged in other
activities in addition to the product(s), the particulars relating to utilisation 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 the product(s).
(b) The books of account referred to in sub-rule (a) shall be kept on a regular 1St of s._ basis in such a
manner as to make it possible to calculate the cost of production r pricit and cost of sales of the
product(s) at regular intervals as well as for the financial year as a whole, from the particulars
entered therein and every such books of account and the proforma specified in Schedules annexed
to these rules shall be completed not later ninety days from the closing of the financial year, of the
company to which they relate.
1
Inserted by G.S.R.464 (E) dated 3
rd
August 1998
(c) It shall be the duty of every person referred to in sub-section (6), a person having been charged by
the person mentioned in the sub section (6) of section cor s.209 of the Companies Act, 1956 (I of
1956) to take all reasonable steps to secure (ii) compliance by the company with the provisions of
sub-rules (a) and (b) of this rule in the same manner as the person is liable to maintain accounts
required under sub-section (I) of section 209 of the said Act.
(d) Statistical and other records shall be maintained in accordance with the ocessinj provisions of the
Schedule annexed to these rules, which shall be such as to enable' p;ces 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.
4. Penalty-
If a company contravenes, the provisions of rule 3, the company and every person who is in default,
includIng the persons referred to in sub-rule (c) of rule 3, shall subject to the provisions of section 209
of the Companies Act, 1956 (1 of 1956) be punishable with fine which may extend to Rupees five
hundred and were the contravention is a continuing one with further fine which may extend to rupees
fifty for every day after the first day during which period sucr contravention continues.
SCHEDULE I
(See rule 3)
1. Materials-(i) (a) Proper records shall be maintained showing separately , all receipts, issues and balances
both in quantities and cost of sugarcane procured at the gate and other locations.
These records shall contain such details as to enable the company to determine the quantity, cost of receipt
(including all direct charges upto the works) in respect of Sugarcane. 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.
(i) (b) Where Sugarcane is grown in farms owned or taken on lease by the company detailed records shall
be maintained so as to enable computation of the cosl of such sugarcane. The State advisory price/
controlled rate will be adopted for pricing the sugarcane supplied by the farm to the sugar factory in cost
records.
(i) (c) Where raw material other than sugarcane is used for manufacture of sugar, records referred to in (i)
(a) shall be maintained for such raw material.
(i) (d) Proper records shall be maintained for transport of raw material from source of supplies of factory. If
Company is operating its own transport, for inward transportation of raw materials logbooks arid other
records including financial records shall be maintained.
(ii) Proper records shall be maintained indicating the quantity and value of by-product recovered in the
different process having significant value say five per cent or above of the cost of input of materials. In case
of by-products recovered, which cannot be reused in the process and are sold or disposed of without further
processing, the rea1isation from such sales shall be recorded and adjusted against the process concemed on
a reasonable basis. In case further processing is necessary to make these by-products usable or saleable, as
the case may be, adequate records of cost involved for such further processing shall be maintained and the
net realisation adjusted against the process concerned. The basis adopted for valuation of the by-products
shall be equitable and consistent. Records indicating the actual sales realisation of by-products shall also be
maintained.
(iii) Proper records shall be maintained to show the receipts, issues and balance both. in quantities and cost
of each item of any process material or chemicals, consumable stores, tools and machinery spares. The cost
shall include all direct charges upto works.
(iv) In the case of consumable stores and tools the cost of which are insignificant, the company may, if it so
desires, maintain such records for such items as a group together.
(v) The cost of consumption of consumable stores, tools, and machinery spare shall be charged to the
relevant cost centres on the basis of actual issues.
(vi) Proper records shall be maintains showing the quantity and value of wastages, spoilages, rejections and
losses of raw materials, process materials, consumable stores, tools and machinery spares, 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 spoilages, if any, in
determining the cost of product shall be indicated in the cost records. Any abnormal wastages or spoilages
etc. shall be indicated distinctly and separately along with reasons thereof.
(vii) Where Modvat is available on any item of material, cost thereof shall be shown at Net of Modvat.
2. Salaries and Wages-
(i) 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. Such records shall contain the salaries &
wages, pertaining to the season and off-season separately. The records shall also indicate the following
separately for each cost centre/department.
(a) Piece rate wages (wherever applicable);
(b) Incentive wages, either individual or collectively as production bonus or under any other scheme
based on output;
(c) Overtime Wages;
(d) Earnings of casual labour;
(e) Retainer allowance;
(ii) The records shall be maintained in such as manner so as to enable the company to furnish necessary
particulars under this head in the Proformae of the Schedules II appended to these rules. Where the
employees work in such a rarrer 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. .
(iii) Idle time shall be separately recorded under classified headings indicatin! the reasons therefore. The
method followed for accounting of idle time paymenu in determining the cost of the product(s) shall be
disclosed in the cost records.
(iv) 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.
3. Service Department Expenses- Detailed records shall be maintained to indicate expenses incurred in respect of
each service department or cost centre like laboratory, welfare, transport etc. These expenses shall be
apportioned to other services and production departments on equitable basis and applied consistently. Where
these services are utilised for other products of the company, the basis of apportionment to the product(s) and to
the other products shall be equitable and clearly indicated in the records and applied consistently.
4. Utilities-
(i) Water: Proper records showing the quantity and cost of treated/cooling water produced and consumed, if
any, for the manufacture of the product(s) in different cost centres/departments shall be maintained in such
details as may enable the company to furnish the necessary particulars in prescribed proforma of schedule
II.
(ii) Steam: Proper records showing the quantity and cost of steam produced and consumed for the
manufacture of the product(s) shall be maintained in such detail as may enable the company to furnish the
necessary particulars in prescribed proforma of schedule II. The cost of steam consumed by the sugar plant
and other units of the company shall be calculated on a reasonable basis and applied consistently. Where
steam is produced and supplied by any other unit of the company to the sugar plant, the cost of steam so
supplied shall be charged to sugar plant on a reasonable basis and applied consistently.
If bagasse, generated as a by-product, is used as fuel in the production of steam, it should be appropriately
valued and accounted.
(iii) Power:
(a) Proper records shall be maintained for the quantity and cost of power purchased. Where power is
generated by the company itself, adequate records shall be maintained to show the cost of power
generated and consumed for the production of sugar in different cost centres and departments etc.
These records shall be maintained in such detail as may enable the company to furnish the necessary
particulars in prescribed proforma of schedule II.
(b) Where power is generated and supplied by any other unit of the company to the sugar plant,
adequate records shall be maintained to indicate the quantity and cost of power so supplied. The cost
of power allocated to production of the product(s) shall be on a reasonable basis and applied
consistently.
(iv) Utilities other than water, steam & power: Proper records shall be maintained in respect of any other
utilities other than water, steam and power produced or purchased by the company.
5. Workshop/Repairs Maintenance/Tool Rooms-
(i) Proper records showing the expenditure incurred by the workshop under different heads and on repairs
and maintenance by the various cost centres / departmens 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 the product(s) shall be
equitable and clearly indicated in records and applied consistently.
(ii) 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 relevant period.
(iii) The jobs carried out by workshops of sugar unit for other units of the company shall be charged on a
reasonable basis and applied consistently.
6. Depreciation- The basis on which depreciation is calculated and allocated apportioned to the various cost
centres/departments and absorbed on the products shall be clearly indicated in the cost records. Depreciation
chargeable to the different cost centres and departments shall not be less than the amount of depreciation
chargeable in accordance with provisions of sub-section (2) of Section 205 of the Companies Act, 1956 (1 of
1956) and shall relate to Plant and Machinery and other fixed assets utilised in such cost centres departments. In
case the amount of depreciation charged in the cost accounts in a financial year is higher than the amount of
depreciation chargeable under the aforesaid provisions of the Companies Act, 1956 (1 of 1956), the amount so
charged in excess shall be indicated clearly in the cost records. The cost records shall also show the effect of the
said excess on the per unit cost of the product(s). 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. .
7. Royalty/ Technical Know-How Fee- Adequate records shall be maintained showing the royalty or other
recurring or non-recurring payments if any, made 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 amounts, including one time payments, to the products shall be indicated
the cost records.
8. Other Overheads-
(i) Proper records shall be maintained showing the various items of expenses oomprising the other
overheads. These expenses shall be analysed, classified and grouped according to functions, viz. Works,
administration, selling and distribution.
(ii) Where the company is manufacturing any product(s) other than the product(s), the records shall clearly
indicate the basis followed for apportionment of the common overheads including head office expense of
the company to the sugar and other activities including capital works. Where certain expenses forming part
of overheads can be identified with a particular activity or 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 cost records. Basis of
apportionment or absorption of overheads to the cost centres and products shall be indicated in the cost
records.
(iii) The details of works, administration, selling and distribution overheads shall be maintained in such a
manner so as to enable the company to fill up the necessary particulars in proformae of schedules II
annexed to these rules.
9. Research and Development Expenses-
(i) Proper records showing the details of expenses, if any, incurred by the company for the research and
development work on the products covered under these rules according to the nature viz., development of
products, existing and new, processes 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.
(ii) The method of charging these expenses to the cost of the 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 the product(s) and
to other products, if any, on a reasonable basis and applied consistently.
(iii) Expenses incurred by the Research and Development department for furnishing technical know-how to
outsiders shall be recorded separately and excluded from the cost of the product(s).The amount charged for
providing technical know-how to outsiders shall also be indicated separately.
10. Interest- The amount of interest shall be allocated/apportioned to the products covered by these rules and other
activities on a reasonable and equitable basis which shall be followed consistently. The basis of such
apportionment shall be spelt out clearly in the cost statements. Basis of further charging of the share of the
interest to the various types of such products shall also be reasonable and the same shall be followed
consistently.
11. Expenses/Incentives on Exports- Proper records showing the expenses incurred on the export sales, if
effected, of the product(s) if any, shall be separately maintained so that the cost of export sales can be
determined correctly. Separate cost statement shall be prepared for products exported giving details of export
expenses incurred/incentive earned. If the duty free imports have been made after actual production, the
statement should reflect this fact.
12. Captive Consumption- Proper records shall be maintained showing the quantity and cost of product(s)
transferred to other departments/units of the company for captive consumption. Such transfers shall be effected
at cost and shall be disclosed in the cost records.
13. Packing-
(i) Proper records shall be maintained showing the quantity and cost of various packing materials and other
expenses incurred for packing the finished products for the marketing of sugar. 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.
(ii) 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.
14. Work in Progress and Finished Goods Stock- The method followed for determining the cost of work in
progress and finished goods of the product(s), shall be indicated in the cost records so as to reveal the cost
elements 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. Records
showing the cost of work in progress and the quantities and the cost of finished goods shall be maintained in
such details as to enable the company to fill up the particulars in relevant Proformae of the Schedule II annexed
to these rules.
15. Cost Statement-
(i) The product emerging from a process, which forms raw material for subsequent process, shall be valued
at the cost of production up to the previous stage.
(ii) If the company is operating more than one factory, separate cost statements as specified above shall be
maintained in respect of each factory.
16. Production Records- Quantitative records of all finished and packed production, issues for sales and balances
of different types of the product(s) produced by the company shall be maintained. The cost of all finished and
packed production shall be kept in detail for each type of the product(s) or in the form of control accounts
provided the value of the balances according to such control accounts are reconciled periodically atleast once in
a year with the value of the quantities shown in the quantitative account maintained for each type of the
product(s).
17. Reconciliation of Cost and Financial Accounts-
(i) Cost records shall be reconciled with the financial books of account for the financial year so as to ensure
accuracy. Variations, if any, shall be clearly indicated and explained. The reconciliation shall be done in
such a manner that profit of the product(s) can be correctly arrived at and reconciled with the over all profit
of the company.
(ii) A statement showing the total expenses incurred and income received by the company under different
heads of accounts and the share applicable to the product(s) shall be maintained and reconciled with the
financial accounts for the periods.
18. 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 product(s) 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 in the respective Proformae of Schedule II annexed to these rules and analysed into
material, labour, overheads and broken up into quantity, price, efficiency, capacity utilisation and shall be made
atleast quarterly during the financial year. The reason for the variances shall be duly explained in the cost
records.
19. Statistical Records-
(i) Data regarding available machine hours/direct labour hours in different production departments and
actually utilised shall also be maintained and shortfall suitably analysed. Suitable records for computation
of idle time of machines shall be maintained.
(ii) Adequate records shall be maintained to enable the company to identify the capital employed, net fixed
assets and working capital separately for the product(s) 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
record. The records shall, in addition show assets added as replacement and that added for increasing
existing capacity.
20. Pollution Control- 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.
21. [Inter-Company Transfer:
(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) Utilization 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;
(f) Any other payment related to production, processing or manufacturing of product under reference.
These records shall also indicate the basis followed for arriving at the rates charged or paid for
such products or services so as to enable determination of the reasonableness of such rates in so
far as they are in any way related to product under reference.
(2) The transactions by the following "related party relationships" shall be covered under sub-rule (1):
(a) Enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled
by, of are under common control with, the reporting enterprise (this includes holding companies,
subsidiaries and fellow subsidiaries);
(b) Associates and joint ventures of the reporting enterprise and the investing party or venture in
respect of which the reporting enterprise is an associate or a joint venture;
(c) Individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise
that gives them control or significant influence over the enterprise, and relatives of any such
individual;
(d) Key management personnel and relatives of such personnel; and
(e) Enterprises over which any person described in (c) or (d) is able to exercise significant influence.
This includes enterprises owned by directors or major shareholders of the reporting enterprise and
enterprises that have a member of key management in common with the reporting enterprise.
However, the following shall not be deemed as "related party relationships":
(a) Two companies simply because they have a Director in common, notwithstanding paragraph (d) or
(e) above (Unless the Director is able to affect the policies of both companies in their mutual
dealings);
(b) A single customer, supplier, franchiser, distributor, or general agent with whom an enterprise
transacts a significant volume of business merely by virtue of the resulting economic dependence;
and
(c) The parties listed below, in the course of their normal dealings with an enterprise by virtue only of
those dealings (although they may circumscribe the freedom of action of the enterprise or
participate in its decision making process);
(i) Providers of finance;
(ii) Trade unions;
(iii) Public utilities;
(iv) Government departments and government agencies including government sponsored
bodies.
Explanation: -For the purpose of these Rules,
(a) "Related party relationship" mean parties who are considered to be related if at any time 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,
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 or operating policy decisions of an
enterprise, but not control of those policies;
(e) "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) "Joint venture" means a contractual arrangement whereby two or more parties undertake an
economic activity, which is subject to joint control;
(g) "Joint Control" means the contractually agreed sharing of power to govern the financial and
operating policies of an econottlic activity So as to obtain benefits from it;
(h) "Key management personnel" mean those persons who have the authority and responsibility for
planning, directing and controlling the activities of the reporting enterprise;
(i) "Relative"-in relation to an individual, means the spouse, son, daughter, brother, sister, father and
mother who may connected by blood relationship;
(j) "Holding company" means a holding company within the meaning of Section 4 of the Companies
Act, 1956 (1 Of 1956);
(k) "Subsidiary" means a subsidiary company within the meaning of Section 4 of the Companies Act,
1956 (1 of 1956);
(1) "Fellow subsidiary" means a company is said to be a fellow subsidiary of another company if
both are subsidiaries of the same holding company;
(m) "State-controlled enterprise" means an enterprise which is under the control of the central
Government or a State Government."]
2
2
Inserted by G.S.R.719 (E) dated 28
th
September 2001
Schedule II
(See Rule 3)
Proforma A
Name of the company
Location of the Sugar Factory
Statement showing the cost of Treated Water/ Effluent Treatment during the year/period ended ……………….
Unit Current Year Previous Year
Installed Capacity
Production
Purchases
Total Produced and Purchases
Consumption
Sl.No Particulars Quantity Rate Amount Cost per Unit (Rs.)
Unit Rs. Rs. Current
Year
Previous
Year
1 2 3 4 5 6 7
A. 1. Direct Materials (to be
specified)
(a)
(b)
(c)
2. Utilities
a) Water
b) Steam
c) Power
I. Purchases (Kwh)
II. Own (kwh)
d) Others (specify)
B. Conversion Cost
1. Salaries and wages
2. Consumable Stores/chemicals
3. Repairs and Maintenance
4. Other Process Materials
5. Factory overhead
6. Administrative Overhead
7. Depreciation
Total conversion cost (1 to 7)
C. Credit, if any
D. Net Total (A+B-C)
E. Net transferred /sold
a) Demineralised water plant
b) Steam generator plant
c) Captive power plant
d) Intermediate plants (specify)
e) End product plants (specify)
f) For non plant use
g) Others (specify)
Total (as per Item D above)
Notes:
1. Separate Cost Sheet is to be prepared for each utility as well as effluent treatment.
2. Bonus to employees other than incentive bonus, provision for statutory gratuity or actual amount paid
on this account during the period and interest charges on borrowing debentures shall not be shown in
this Proforma
Schedule II
(See Rule 3)
Proforma B
Name of the company
Location of the Sugar Factory
Statement showing the cost of Steam raised/ consumed during the year/period ended ……………….
Current Year Pressure
Quantity
Previous Year Pressure
Quantity
1. Capacity of Boiler
2. Production
3. 2 as a percentage of 1
Sl.No Particulars Quantity Rate per
Unit
Amount Cost per Ton of steam
raised (Rs.)
Unit Rs. Rs. Current
Year
Previous
Year
1 2 3 4 5 6 7
A. 1. Water
2. Fuels
(a) Bagasse
(b) Coal
(c) Fuel oil
(d) Electricity
(e) Others, (to be specified)
3. Quantity of waste heat from
the plant, if any
Total (1 to 3)
B. Conversion Cost
1. Salaries and wages
2. Consumable Stores/chemicals
3. Repairs and Maintenance
4. Factory overhead
5. Administrative Overhead
6. Other expenses, if any
7. Depreciation
Total conversion cost (1 to 7)
C. Credit, if any
D. “Net Quantity” and cost of Steam
(Total of items A+B-C)
Unit Amount (Rs.)
E. Consumed for
a) Power generation
b) Manufacturing Dept. (to be specified)
c) Other service Dept. (to be specified)
d) Others, if any (to be specified)
Total (as per Item D above)
Notes:
1. If the steam is supplied to any other outside party, necessary credit for recoveries shall be given against
item C
2. Bonus to employees other than incentive bonus, provision for statutory gratuity or actual amount paid on
this account during the period and interest charges on borrowing debentures shall not be shown in this
Proforma.
3. The rate at which waste heat is evaluated vide item A3 of this Proforma should be indicated giving details
of cost center from which transferred.
4. If bagasse, generated as a by-product, is used as fuel it should be appropriately valued.
Schedule II
(See Rule 3)
Proforma C
Name of the company
Location of the Sugar Factory
Statement showing the cost of power generated,purchased/ consumed during the year/period ended …………
Current Year Previous Year
1. Capacity of Boiler
2. No. of units generated (KWH)
3. No. of units purchased (KWH)
4. Total
5. Self consumption in Power House(KWH)
6. Losses (KWH)
7. Net Unit consumed (KWH)
8. Percentage of loss of total power
generated and purchased
9. Percentage of power generated to installed
capacity
Sl.No Particulars Quantity Rate per
Unit
Amount Cost per Unit of Power
generated/ purchased
(Rs.)
Unit Rs. Rs. Current
Year
Previous
Year
1 2 3 4 5 6 7
A. 1. (a) Steam
(b) Other direct charges (such
as Electricity Duty etc.)
B. Conversion Cost
1. Salaries and wages
2. Consumable Stores/chemicals
3. Repairs and Maintenance
4. Factory overhead
5. Administrative Overhead
6. Other expenses, if any
7. Depreciation
Total conversion cost (1 to 7)
C. Less: (i) Credits for supply to other
units of the company
(ii) Sale to outside Parties
D. Net cost of Power Generated
(A+B-C)
E. Purchased Power
F. Total (D and E)
G. Cost per unit (average)
H. Consumed in:
Particulars No. of Unit KWH Amount (Rs.)
1.
2.
3.
4.
5.
6. etc.
Total as per F
Notes:
1. Cost per unit of Power generated shall be worked out with reference to net units of power available for use
after deducting consumption in the Power House/ Own generator and other losses.
2. Where meters are not installed consumption of power by different cost centers/ deptts. shall be assessed on
a reasonable basis and applied consistently.
3. If rate of electricity duty or the cost of any input is different according to end use, these shall be loaded to
the respective user department and suitably indicated in this statement.
4. Bonus to employees other than incentive bonus, provision for statutory gratuity or actual amount paid on
this account during the period and interest charges on borrowing debentures shall not be shown in this
Proforma.
5. Realisation, if any, by sale of power to outside party etc. shall be shown separately.
6. If purchased power is used in a specific plant; its allocation should be shown accordingly.
Schedule II
(See Rule 3)
Proforma D
Name of the company
Location of the Sugar Factory
Statement showing the cost of Sugarcane used for the Production of sugar during the year/period ended …………
Quantities (Tonnes) Particulars
Purchased Received
Loss,
if any
% of loss (Figure in col. 4 as
a % of figures in Column 2)
1 2 3 4 5
Sugarcane:
a) Own farm
b) Received at Gate
c) Received at other locations
Particulars Quantity Unit Amount
Unit Rs. Rs.
1 2 3 4
1. Sugarcane Cost
(a) Purchased at Statutory Minimum Price
(b) Purchased at State Advisory Price
(c) Purchased at other rate
(d) Total (a+b+c)
2. Commission paid
3. Other expenditure at cane collection centers
(a) Salaries and wages
(b) Stores
(c) Repairs and Maintenance
(d) Other expenses
(e) Total (a+b+c+d)
4. Loading and unloading charges
5. Net harvesting charges
6. Net Transportation charges
7. Taxes and levies
(a) Cane cess
(b) Purchase Tax
(c) Octroi
(d) Other levies
(e) Total (a+b+c+d)
8. Stock adjustments, if any
Add: Opening stock of cane
Less: Closing stock of cane
9. Cost of sugarcane transferred to Proforma E
Notes:
1. Cane supplied from own farm shall be charged at state advisory price/ control rate and profit/loss on farm shall
be taken to profit & loss account directly.
2. All expenses relating to own farm shall be excluded from the Proforma
3. Harvesting expenses are to be shown if cane is purchased ex-field (standing) and the harvesting etc. is done by
the company. Charges if any recovered from the growers shall be deducted.
4. Transportation charges to be shown, if raw material is purchased at a place other than factory gate. Charges, if
any, recovered from suppliers shall be deducted.
5. Bonus to employees other than incentive bonus, provision for statutory gratuity and interest charges shall not be
shown in this Proforma.
6. Wherever beet is used separate proforma on similar lines shall be maintained.
Schedule II
(See Rule 3)
Proforma E
Name of the company
Location of the Sugar Factory
Statement showing the cost of Sugar produced during the year/period ended …………………………………………
Current Year Previous Year
a) Crushing Capacity
b) Quantity of sugarcane (Tonnes Crushed)
c) Duration of crushing season
From……………………
To………………………
No. of days……………..
d) Average sugar content (% in cane)
e) Average recovery of Sugar (% in cane)
f) Quantity of sugar produced (Quintals)
Sl.No Particulars Quantity Rate per
Unit
Amount Cost per Quintals (in Rs.)
Unit Rs. Rs. Current Yr Previous Yr
1 2 3 4 5 6 7
1. Material
a) Sugarcane/ beat cost
b) Lime
c) Sulphur
d) Others (to be specified)
e) Total (a+b+c+d)
2. Cane development charges
a) Salary and wages
b) Others (to be specified)
c) Total (a+b)
3. Cosumable Stores
4. Direct salaries and wages
a) Seasonal
b) Oss seasonal
c) Retainer allowance
d) Total (a+b+c)
5. Utilities
a) Water
b) Steam
c) Power
d) Others (to be specified)
e) Total (a to d)
6. Effluent Treatment expenses
7. Repairs and Maintanance
a) Seasonal
b) Off-seasonal
8. Other Works Overhead
9. Depreciation
10. Administrative overheads
11. Total (1 to 10)
12. Less: Realisable value for
a) Molasses
b) Bagasses
c) Other recoveries (to be specified)
Total (a to c)
13. Adjustment for opening and closing
balance of Work in Progress
14. Stock Adjustment
Add: Opening stock
Less: Closing stock
15. Total cost of naked sugar transferred
for packing
Notes:
1. The apportionment of head office expenses and other common overheads to the product in case of multi-
product units shall be equitable.
2. The basis on which the realisable value for by-product is determined shall be clearly indicated. Expenditure
if any incurred for the disposal of the by-product shall be taken into account in arriving at the realisable
value.
3. The stock adjustment of this Proforma shall relate to naked sugar only.
4. Bonus to employees other than incentive bonus, provision for statutory gratuity and interest charges shall
not be shown in this proforma.
Schedule II
(See Rule 3)
Proforma F
Name of the company
Location of the Sugar Factory
Statement showing the cost of Sugar sold during the year/period ended …………………………………………
Current Year Previous Year
1. Quantity packed
2. Quantity sold
3. Quantity used for self consumption by
other units
Sl.No Particulars Quantity Rate per
Unit
Total
cost
Cost per Quintals (in Rs.)
Unit Rs. Rs. Current Yr Previous Yr
1 2 3 4 5 6 7
1. a) Cost of naked sugar
b) Packing cost
i) Gunny bags
ii) Other packing material
iii) Salaries and wages
iv) Works overheads
v) Depreciation
Total
c) Less: Self consumption
d) Stock adjustments:
Add: Opening stock
Less: Closing stock
e) Net cost of sugar sold
2. Selling and Distribution Expenses
i) Salary and wages
ii) Commission to selling agents
iii) Freight and transport
iv) Loading and unloading charges
v) Godown rent
vi) Others expenses
3. Total cost including selling and
distribution expenses
4. Interest charges
5. Annual bonus to employees
a) Statutory minimum bonus
b) Other
c) Total (a + b)
6. Provision for statutory gratuity
7. Other expenses not included in cost (to
be specified)
Total
8. Less: any other income not considered
in costs (item to be specified)
9. Net expenses excluding excise duty
10. Total sales realisation excluding excise
duty for quantity sold within the
country
a) At levy/ control price
b) At rates for free sales
11. Margin
Notes:
1. The apportionment of common selling and distribution expenses to the product in case of multi-product units shall be equitable.
2. Interest charge actually incurred shall only be shown.
3. Bonus to employees other than incentive bonus, provision for statutory gratuity and interest shall be shown separately in this Proforma
only not in any other Proforma.
4. Sales realisation shall be shown separately for each grade of sugar sold.
5. Separate cost statements under this Proforma shall be maintained in respect of sugar exported wherein expenses incurred on exports
and incentive earned thereon shall also be shown.
[F. No. 52/16/CAB-96]
RD Joshi, Jt. Secy.
Foot Note: The principal rules were published vide GSR no. 388(E), dated the 15
th
July, 1997 and subsequently
amended vide:
1. GSR 464(E), dated 3
rd
August, 1998
2. GSR 719(E), dated 28
th
September, 2001
doc_238398952.pdf
G.S.R. 388(E).- ln exercise of the powers conferred by sub-section (1) of Section 642, read with clause (d) of sub-section (1) of Section 209 of the companies Act, 1956 (1 of 1956), and in supersession of the notification of Government of India, Ministry of Law, Justice and Company Affairs (Department of Company Affairs) bearing G.S.R. 982(E) dated 4th September, 1974 except as respects things.
COST ACCOUNTING RECORDS (SUGAR) RULES, 1997
(Gazetted on - 15.7.97)
Ministry of Finance
(Department of Company Affairs)
Notification
New Delhi, the 15th July, 1997
G.S.R. 388(E).- ln exercise of the powers conferred by sub-section (1) of Section 642, read with clause (d) of
sub-section (1) of Section 209 of the companies Act, 1956 (1 of 1956), and in supersession of the notification of
Government of India, Ministry of Law, Justice and Company Affairs (Department of Company Affairs) bearing
G.S.R. 982(E) dated 4th September, 1974 except as respects things ,done or omitted to be done before such
supersession, the Central government hereby makes the following rules, namely:
1. Short Title and Commencement-
(1) These rules may be called the Cost Accounting Records (Sugar) amended Rules, 1997.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. Application-
(1) These rules shall apply to every company engaged in the production or manufacture of Sugar by
vacuum pan process and excludes jaggery and khandsari.
(2) The provision of sub-rule (1) shall not apply to a company:
[(a) The aggregate value of the machinery and plant installed wherein does not exceed the
limit as specified for a small scale industrial undertaking under the Industries (Development and
Regulation) Act, 1951 (65 of 1951), as on the last date of the preceding financial year.]
1
(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 Rupees ten crores.
3. Maintenance of Records-
(a) Every company to which these rules apply shall, at regular intervals as well as each of its financial
year commencing on or after the commencement of these rules, keep proper books of account
containing, inter-alia, the particulars specified in Schedule I and Schedule II including proformas A,
B, C, D, E and F annexed to these rules, relating to the utilisation of materials, labour and other
products of cost in so far as they are applicable to the product(s). .
Provided that if the said company is manufacturing any other product(s) or is engaged in other
activities in addition to the product(s), the particulars relating to utilisation 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 the product(s).
(b) The books of account referred to in sub-rule (a) shall be kept on a regular 1St of s._ basis in such a
manner as to make it possible to calculate the cost of production r pricit and cost of sales of the
product(s) at regular intervals as well as for the financial year as a whole, from the particulars
entered therein and every such books of account and the proforma specified in Schedules annexed
to these rules shall be completed not later ninety days from the closing of the financial year, of the
company to which they relate.
1
Inserted by G.S.R.464 (E) dated 3
rd
August 1998
(c) It shall be the duty of every person referred to in sub-section (6), a person having been charged by
the person mentioned in the sub section (6) of section cor s.209 of the Companies Act, 1956 (I of
1956) to take all reasonable steps to secure (ii) compliance by the company with the provisions of
sub-rules (a) and (b) of this rule in the same manner as the person is liable to maintain accounts
required under sub-section (I) of section 209 of the said Act.
(d) Statistical and other records shall be maintained in accordance with the ocessinj provisions of the
Schedule annexed to these rules, which shall be such as to enable' p;ces 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.
4. Penalty-
If a company contravenes, the provisions of rule 3, the company and every person who is in default,
includIng the persons referred to in sub-rule (c) of rule 3, shall subject to the provisions of section 209
of the Companies Act, 1956 (1 of 1956) be punishable with fine which may extend to Rupees five
hundred and were the contravention is a continuing one with further fine which may extend to rupees
fifty for every day after the first day during which period sucr contravention continues.
SCHEDULE I
(See rule 3)
1. Materials-(i) (a) Proper records shall be maintained showing separately , all receipts, issues and balances
both in quantities and cost of sugarcane procured at the gate and other locations.
These records shall contain such details as to enable the company to determine the quantity, cost of receipt
(including all direct charges upto the works) in respect of Sugarcane. 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.
(i) (b) Where Sugarcane is grown in farms owned or taken on lease by the company detailed records shall
be maintained so as to enable computation of the cosl of such sugarcane. The State advisory price/
controlled rate will be adopted for pricing the sugarcane supplied by the farm to the sugar factory in cost
records.
(i) (c) Where raw material other than sugarcane is used for manufacture of sugar, records referred to in (i)
(a) shall be maintained for such raw material.
(i) (d) Proper records shall be maintained for transport of raw material from source of supplies of factory. If
Company is operating its own transport, for inward transportation of raw materials logbooks arid other
records including financial records shall be maintained.
(ii) Proper records shall be maintained indicating the quantity and value of by-product recovered in the
different process having significant value say five per cent or above of the cost of input of materials. In case
of by-products recovered, which cannot be reused in the process and are sold or disposed of without further
processing, the rea1isation from such sales shall be recorded and adjusted against the process concemed on
a reasonable basis. In case further processing is necessary to make these by-products usable or saleable, as
the case may be, adequate records of cost involved for such further processing shall be maintained and the
net realisation adjusted against the process concerned. The basis adopted for valuation of the by-products
shall be equitable and consistent. Records indicating the actual sales realisation of by-products shall also be
maintained.
(iii) Proper records shall be maintained to show the receipts, issues and balance both. in quantities and cost
of each item of any process material or chemicals, consumable stores, tools and machinery spares. The cost
shall include all direct charges upto works.
(iv) In the case of consumable stores and tools the cost of which are insignificant, the company may, if it so
desires, maintain such records for such items as a group together.
(v) The cost of consumption of consumable stores, tools, and machinery spare shall be charged to the
relevant cost centres on the basis of actual issues.
(vi) Proper records shall be maintains showing the quantity and value of wastages, spoilages, rejections and
losses of raw materials, process materials, consumable stores, tools and machinery spares, 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 spoilages, if any, in
determining the cost of product shall be indicated in the cost records. Any abnormal wastages or spoilages
etc. shall be indicated distinctly and separately along with reasons thereof.
(vii) Where Modvat is available on any item of material, cost thereof shall be shown at Net of Modvat.
2. Salaries and Wages-
(i) 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. Such records shall contain the salaries &
wages, pertaining to the season and off-season separately. The records shall also indicate the following
separately for each cost centre/department.
(a) Piece rate wages (wherever applicable);
(b) Incentive wages, either individual or collectively as production bonus or under any other scheme
based on output;
(c) Overtime Wages;
(d) Earnings of casual labour;
(e) Retainer allowance;
(ii) The records shall be maintained in such as manner so as to enable the company to furnish necessary
particulars under this head in the Proformae of the Schedules II appended to these rules. Where the
employees work in such a rarrer 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. .
(iii) Idle time shall be separately recorded under classified headings indicatin! the reasons therefore. The
method followed for accounting of idle time paymenu in determining the cost of the product(s) shall be
disclosed in the cost records.
(iv) 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.
3. Service Department Expenses- Detailed records shall be maintained to indicate expenses incurred in respect of
each service department or cost centre like laboratory, welfare, transport etc. These expenses shall be
apportioned to other services and production departments on equitable basis and applied consistently. Where
these services are utilised for other products of the company, the basis of apportionment to the product(s) and to
the other products shall be equitable and clearly indicated in the records and applied consistently.
4. Utilities-
(i) Water: Proper records showing the quantity and cost of treated/cooling water produced and consumed, if
any, for the manufacture of the product(s) in different cost centres/departments shall be maintained in such
details as may enable the company to furnish the necessary particulars in prescribed proforma of schedule
II.
(ii) Steam: Proper records showing the quantity and cost of steam produced and consumed for the
manufacture of the product(s) shall be maintained in such detail as may enable the company to furnish the
necessary particulars in prescribed proforma of schedule II. The cost of steam consumed by the sugar plant
and other units of the company shall be calculated on a reasonable basis and applied consistently. Where
steam is produced and supplied by any other unit of the company to the sugar plant, the cost of steam so
supplied shall be charged to sugar plant on a reasonable basis and applied consistently.
If bagasse, generated as a by-product, is used as fuel in the production of steam, it should be appropriately
valued and accounted.
(iii) Power:
(a) Proper records shall be maintained for the quantity and cost of power purchased. Where power is
generated by the company itself, adequate records shall be maintained to show the cost of power
generated and consumed for the production of sugar in different cost centres and departments etc.
These records shall be maintained in such detail as may enable the company to furnish the necessary
particulars in prescribed proforma of schedule II.
(b) Where power is generated and supplied by any other unit of the company to the sugar plant,
adequate records shall be maintained to indicate the quantity and cost of power so supplied. The cost
of power allocated to production of the product(s) shall be on a reasonable basis and applied
consistently.
(iv) Utilities other than water, steam & power: Proper records shall be maintained in respect of any other
utilities other than water, steam and power produced or purchased by the company.
5. Workshop/Repairs Maintenance/Tool Rooms-
(i) Proper records showing the expenditure incurred by the workshop under different heads and on repairs
and maintenance by the various cost centres / departmens 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 the product(s) shall be
equitable and clearly indicated in records and applied consistently.
(ii) 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 relevant period.
(iii) The jobs carried out by workshops of sugar unit for other units of the company shall be charged on a
reasonable basis and applied consistently.
6. Depreciation- The basis on which depreciation is calculated and allocated apportioned to the various cost
centres/departments and absorbed on the products shall be clearly indicated in the cost records. Depreciation
chargeable to the different cost centres and departments shall not be less than the amount of depreciation
chargeable in accordance with provisions of sub-section (2) of Section 205 of the Companies Act, 1956 (1 of
1956) and shall relate to Plant and Machinery and other fixed assets utilised in such cost centres departments. In
case the amount of depreciation charged in the cost accounts in a financial year is higher than the amount of
depreciation chargeable under the aforesaid provisions of the Companies Act, 1956 (1 of 1956), the amount so
charged in excess shall be indicated clearly in the cost records. The cost records shall also show the effect of the
said excess on the per unit cost of the product(s). 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. .
7. Royalty/ Technical Know-How Fee- Adequate records shall be maintained showing the royalty or other
recurring or non-recurring payments if any, made 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 amounts, including one time payments, to the products shall be indicated
the cost records.
8. Other Overheads-
(i) Proper records shall be maintained showing the various items of expenses oomprising the other
overheads. These expenses shall be analysed, classified and grouped according to functions, viz. Works,
administration, selling and distribution.
(ii) Where the company is manufacturing any product(s) other than the product(s), the records shall clearly
indicate the basis followed for apportionment of the common overheads including head office expense of
the company to the sugar and other activities including capital works. Where certain expenses forming part
of overheads can be identified with a particular activity or 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 cost records. Basis of
apportionment or absorption of overheads to the cost centres and products shall be indicated in the cost
records.
(iii) The details of works, administration, selling and distribution overheads shall be maintained in such a
manner so as to enable the company to fill up the necessary particulars in proformae of schedules II
annexed to these rules.
9. Research and Development Expenses-
(i) Proper records showing the details of expenses, if any, incurred by the company for the research and
development work on the products covered under these rules according to the nature viz., development of
products, existing and new, processes 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.
(ii) The method of charging these expenses to the cost of the 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 the product(s) and
to other products, if any, on a reasonable basis and applied consistently.
(iii) Expenses incurred by the Research and Development department for furnishing technical know-how to
outsiders shall be recorded separately and excluded from the cost of the product(s).The amount charged for
providing technical know-how to outsiders shall also be indicated separately.
10. Interest- The amount of interest shall be allocated/apportioned to the products covered by these rules and other
activities on a reasonable and equitable basis which shall be followed consistently. The basis of such
apportionment shall be spelt out clearly in the cost statements. Basis of further charging of the share of the
interest to the various types of such products shall also be reasonable and the same shall be followed
consistently.
11. Expenses/Incentives on Exports- Proper records showing the expenses incurred on the export sales, if
effected, of the product(s) if any, shall be separately maintained so that the cost of export sales can be
determined correctly. Separate cost statement shall be prepared for products exported giving details of export
expenses incurred/incentive earned. If the duty free imports have been made after actual production, the
statement should reflect this fact.
12. Captive Consumption- Proper records shall be maintained showing the quantity and cost of product(s)
transferred to other departments/units of the company for captive consumption. Such transfers shall be effected
at cost and shall be disclosed in the cost records.
13. Packing-
(i) Proper records shall be maintained showing the quantity and cost of various packing materials and other
expenses incurred for packing the finished products for the marketing of sugar. 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.
(ii) 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.
14. Work in Progress and Finished Goods Stock- The method followed for determining the cost of work in
progress and finished goods of the product(s), shall be indicated in the cost records so as to reveal the cost
elements 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. Records
showing the cost of work in progress and the quantities and the cost of finished goods shall be maintained in
such details as to enable the company to fill up the particulars in relevant Proformae of the Schedule II annexed
to these rules.
15. Cost Statement-
(i) The product emerging from a process, which forms raw material for subsequent process, shall be valued
at the cost of production up to the previous stage.
(ii) If the company is operating more than one factory, separate cost statements as specified above shall be
maintained in respect of each factory.
16. Production Records- Quantitative records of all finished and packed production, issues for sales and balances
of different types of the product(s) produced by the company shall be maintained. The cost of all finished and
packed production shall be kept in detail for each type of the product(s) or in the form of control accounts
provided the value of the balances according to such control accounts are reconciled periodically atleast once in
a year with the value of the quantities shown in the quantitative account maintained for each type of the
product(s).
17. Reconciliation of Cost and Financial Accounts-
(i) Cost records shall be reconciled with the financial books of account for the financial year so as to ensure
accuracy. Variations, if any, shall be clearly indicated and explained. The reconciliation shall be done in
such a manner that profit of the product(s) can be correctly arrived at and reconciled with the over all profit
of the company.
(ii) A statement showing the total expenses incurred and income received by the company under different
heads of accounts and the share applicable to the product(s) shall be maintained and reconciled with the
financial accounts for the periods.
18. 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 product(s) 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 in the respective Proformae of Schedule II annexed to these rules and analysed into
material, labour, overheads and broken up into quantity, price, efficiency, capacity utilisation and shall be made
atleast quarterly during the financial year. The reason for the variances shall be duly explained in the cost
records.
19. Statistical Records-
(i) Data regarding available machine hours/direct labour hours in different production departments and
actually utilised shall also be maintained and shortfall suitably analysed. Suitable records for computation
of idle time of machines shall be maintained.
(ii) Adequate records shall be maintained to enable the company to identify the capital employed, net fixed
assets and working capital separately for the product(s) 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
record. The records shall, in addition show assets added as replacement and that added for increasing
existing capacity.
20. Pollution Control- 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.
21. [Inter-Company Transfer:
(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) Utilization 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;
(f) Any other payment related to production, processing or manufacturing of product under reference.
These records shall also indicate the basis followed for arriving at the rates charged or paid for
such products or services so as to enable determination of the reasonableness of such rates in so
far as they are in any way related to product under reference.
(2) The transactions by the following "related party relationships" shall be covered under sub-rule (1):
(a) Enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled
by, of are under common control with, the reporting enterprise (this includes holding companies,
subsidiaries and fellow subsidiaries);
(b) Associates and joint ventures of the reporting enterprise and the investing party or venture in
respect of which the reporting enterprise is an associate or a joint venture;
(c) Individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise
that gives them control or significant influence over the enterprise, and relatives of any such
individual;
(d) Key management personnel and relatives of such personnel; and
(e) Enterprises over which any person described in (c) or (d) is able to exercise significant influence.
This includes enterprises owned by directors or major shareholders of the reporting enterprise and
enterprises that have a member of key management in common with the reporting enterprise.
However, the following shall not be deemed as "related party relationships":
(a) Two companies simply because they have a Director in common, notwithstanding paragraph (d) or
(e) above (Unless the Director is able to affect the policies of both companies in their mutual
dealings);
(b) A single customer, supplier, franchiser, distributor, or general agent with whom an enterprise
transacts a significant volume of business merely by virtue of the resulting economic dependence;
and
(c) The parties listed below, in the course of their normal dealings with an enterprise by virtue only of
those dealings (although they may circumscribe the freedom of action of the enterprise or
participate in its decision making process);
(i) Providers of finance;
(ii) Trade unions;
(iii) Public utilities;
(iv) Government departments and government agencies including government sponsored
bodies.
Explanation: -For the purpose of these Rules,
(a) "Related party relationship" mean parties who are considered to be related if at any time 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,
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 or operating policy decisions of an
enterprise, but not control of those policies;
(e) "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) "Joint venture" means a contractual arrangement whereby two or more parties undertake an
economic activity, which is subject to joint control;
(g) "Joint Control" means the contractually agreed sharing of power to govern the financial and
operating policies of an econottlic activity So as to obtain benefits from it;
(h) "Key management personnel" mean those persons who have the authority and responsibility for
planning, directing and controlling the activities of the reporting enterprise;
(i) "Relative"-in relation to an individual, means the spouse, son, daughter, brother, sister, father and
mother who may connected by blood relationship;
(j) "Holding company" means a holding company within the meaning of Section 4 of the Companies
Act, 1956 (1 Of 1956);
(k) "Subsidiary" means a subsidiary company within the meaning of Section 4 of the Companies Act,
1956 (1 of 1956);
(1) "Fellow subsidiary" means a company is said to be a fellow subsidiary of another company if
both are subsidiaries of the same holding company;
(m) "State-controlled enterprise" means an enterprise which is under the control of the central
Government or a State Government."]
2
2
Inserted by G.S.R.719 (E) dated 28
th
September 2001
Schedule II
(See Rule 3)
Proforma A
Name of the company
Location of the Sugar Factory
Statement showing the cost of Treated Water/ Effluent Treatment during the year/period ended ……………….
Unit Current Year Previous Year
Installed Capacity
Production
Purchases
Total Produced and Purchases
Consumption
Sl.No Particulars Quantity Rate Amount Cost per Unit (Rs.)
Unit Rs. Rs. Current
Year
Previous
Year
1 2 3 4 5 6 7
A. 1. Direct Materials (to be
specified)
(a)
(b)
(c)
2. Utilities
a) Water
b) Steam
c) Power
I. Purchases (Kwh)
II. Own (kwh)
d) Others (specify)
B. Conversion Cost
1. Salaries and wages
2. Consumable Stores/chemicals
3. Repairs and Maintenance
4. Other Process Materials
5. Factory overhead
6. Administrative Overhead
7. Depreciation
Total conversion cost (1 to 7)
C. Credit, if any
D. Net Total (A+B-C)
E. Net transferred /sold
a) Demineralised water plant
b) Steam generator plant
c) Captive power plant
d) Intermediate plants (specify)
e) End product plants (specify)
f) For non plant use
g) Others (specify)
Total (as per Item D above)
Notes:
1. Separate Cost Sheet is to be prepared for each utility as well as effluent treatment.
2. Bonus to employees other than incentive bonus, provision for statutory gratuity or actual amount paid
on this account during the period and interest charges on borrowing debentures shall not be shown in
this Proforma
Schedule II
(See Rule 3)
Proforma B
Name of the company
Location of the Sugar Factory
Statement showing the cost of Steam raised/ consumed during the year/period ended ……………….
Current Year Pressure
Quantity
Previous Year Pressure
Quantity
1. Capacity of Boiler
2. Production
3. 2 as a percentage of 1
Sl.No Particulars Quantity Rate per
Unit
Amount Cost per Ton of steam
raised (Rs.)
Unit Rs. Rs. Current
Year
Previous
Year
1 2 3 4 5 6 7
A. 1. Water
2. Fuels
(a) Bagasse
(b) Coal
(c) Fuel oil
(d) Electricity
(e) Others, (to be specified)
3. Quantity of waste heat from
the plant, if any
Total (1 to 3)
B. Conversion Cost
1. Salaries and wages
2. Consumable Stores/chemicals
3. Repairs and Maintenance
4. Factory overhead
5. Administrative Overhead
6. Other expenses, if any
7. Depreciation
Total conversion cost (1 to 7)
C. Credit, if any
D. “Net Quantity” and cost of Steam
(Total of items A+B-C)
Unit Amount (Rs.)
E. Consumed for
a) Power generation
b) Manufacturing Dept. (to be specified)
c) Other service Dept. (to be specified)
d) Others, if any (to be specified)
Total (as per Item D above)
Notes:
1. If the steam is supplied to any other outside party, necessary credit for recoveries shall be given against
item C
2. Bonus to employees other than incentive bonus, provision for statutory gratuity or actual amount paid on
this account during the period and interest charges on borrowing debentures shall not be shown in this
Proforma.
3. The rate at which waste heat is evaluated vide item A3 of this Proforma should be indicated giving details
of cost center from which transferred.
4. If bagasse, generated as a by-product, is used as fuel it should be appropriately valued.
Schedule II
(See Rule 3)
Proforma C
Name of the company
Location of the Sugar Factory
Statement showing the cost of power generated,purchased/ consumed during the year/period ended …………
Current Year Previous Year
1. Capacity of Boiler
2. No. of units generated (KWH)
3. No. of units purchased (KWH)
4. Total
5. Self consumption in Power House(KWH)
6. Losses (KWH)
7. Net Unit consumed (KWH)
8. Percentage of loss of total power
generated and purchased
9. Percentage of power generated to installed
capacity
Sl.No Particulars Quantity Rate per
Unit
Amount Cost per Unit of Power
generated/ purchased
(Rs.)
Unit Rs. Rs. Current
Year
Previous
Year
1 2 3 4 5 6 7
A. 1. (a) Steam
(b) Other direct charges (such
as Electricity Duty etc.)
B. Conversion Cost
1. Salaries and wages
2. Consumable Stores/chemicals
3. Repairs and Maintenance
4. Factory overhead
5. Administrative Overhead
6. Other expenses, if any
7. Depreciation
Total conversion cost (1 to 7)
C. Less: (i) Credits for supply to other
units of the company
(ii) Sale to outside Parties
D. Net cost of Power Generated
(A+B-C)
E. Purchased Power
F. Total (D and E)
G. Cost per unit (average)
H. Consumed in:
Particulars No. of Unit KWH Amount (Rs.)
1.
2.
3.
4.
5.
6. etc.
Total as per F
Notes:
1. Cost per unit of Power generated shall be worked out with reference to net units of power available for use
after deducting consumption in the Power House/ Own generator and other losses.
2. Where meters are not installed consumption of power by different cost centers/ deptts. shall be assessed on
a reasonable basis and applied consistently.
3. If rate of electricity duty or the cost of any input is different according to end use, these shall be loaded to
the respective user department and suitably indicated in this statement.
4. Bonus to employees other than incentive bonus, provision for statutory gratuity or actual amount paid on
this account during the period and interest charges on borrowing debentures shall not be shown in this
Proforma.
5. Realisation, if any, by sale of power to outside party etc. shall be shown separately.
6. If purchased power is used in a specific plant; its allocation should be shown accordingly.
Schedule II
(See Rule 3)
Proforma D
Name of the company
Location of the Sugar Factory
Statement showing the cost of Sugarcane used for the Production of sugar during the year/period ended …………
Quantities (Tonnes) Particulars
Purchased Received
Loss,
if any
% of loss (Figure in col. 4 as
a % of figures in Column 2)
1 2 3 4 5
Sugarcane:
a) Own farm
b) Received at Gate
c) Received at other locations
Particulars Quantity Unit Amount
Unit Rs. Rs.
1 2 3 4
1. Sugarcane Cost
(a) Purchased at Statutory Minimum Price
(b) Purchased at State Advisory Price
(c) Purchased at other rate
(d) Total (a+b+c)
2. Commission paid
3. Other expenditure at cane collection centers
(a) Salaries and wages
(b) Stores
(c) Repairs and Maintenance
(d) Other expenses
(e) Total (a+b+c+d)
4. Loading and unloading charges
5. Net harvesting charges
6. Net Transportation charges
7. Taxes and levies
(a) Cane cess
(b) Purchase Tax
(c) Octroi
(d) Other levies
(e) Total (a+b+c+d)
8. Stock adjustments, if any
Add: Opening stock of cane
Less: Closing stock of cane
9. Cost of sugarcane transferred to Proforma E
Notes:
1. Cane supplied from own farm shall be charged at state advisory price/ control rate and profit/loss on farm shall
be taken to profit & loss account directly.
2. All expenses relating to own farm shall be excluded from the Proforma
3. Harvesting expenses are to be shown if cane is purchased ex-field (standing) and the harvesting etc. is done by
the company. Charges if any recovered from the growers shall be deducted.
4. Transportation charges to be shown, if raw material is purchased at a place other than factory gate. Charges, if
any, recovered from suppliers shall be deducted.
5. Bonus to employees other than incentive bonus, provision for statutory gratuity and interest charges shall not be
shown in this Proforma.
6. Wherever beet is used separate proforma on similar lines shall be maintained.
Schedule II
(See Rule 3)
Proforma E
Name of the company
Location of the Sugar Factory
Statement showing the cost of Sugar produced during the year/period ended …………………………………………
Current Year Previous Year
a) Crushing Capacity
b) Quantity of sugarcane (Tonnes Crushed)
c) Duration of crushing season
From……………………
To………………………
No. of days……………..
d) Average sugar content (% in cane)
e) Average recovery of Sugar (% in cane)
f) Quantity of sugar produced (Quintals)
Sl.No Particulars Quantity Rate per
Unit
Amount Cost per Quintals (in Rs.)
Unit Rs. Rs. Current Yr Previous Yr
1 2 3 4 5 6 7
1. Material
a) Sugarcane/ beat cost
b) Lime
c) Sulphur
d) Others (to be specified)
e) Total (a+b+c+d)
2. Cane development charges
a) Salary and wages
b) Others (to be specified)
c) Total (a+b)
3. Cosumable Stores
4. Direct salaries and wages
a) Seasonal
b) Oss seasonal
c) Retainer allowance
d) Total (a+b+c)
5. Utilities
a) Water
b) Steam
c) Power
d) Others (to be specified)
e) Total (a to d)
6. Effluent Treatment expenses
7. Repairs and Maintanance
a) Seasonal
b) Off-seasonal
8. Other Works Overhead
9. Depreciation
10. Administrative overheads
11. Total (1 to 10)
12. Less: Realisable value for
a) Molasses
b) Bagasses
c) Other recoveries (to be specified)
Total (a to c)
13. Adjustment for opening and closing
balance of Work in Progress
14. Stock Adjustment
Add: Opening stock
Less: Closing stock
15. Total cost of naked sugar transferred
for packing
Notes:
1. The apportionment of head office expenses and other common overheads to the product in case of multi-
product units shall be equitable.
2. The basis on which the realisable value for by-product is determined shall be clearly indicated. Expenditure
if any incurred for the disposal of the by-product shall be taken into account in arriving at the realisable
value.
3. The stock adjustment of this Proforma shall relate to naked sugar only.
4. Bonus to employees other than incentive bonus, provision for statutory gratuity and interest charges shall
not be shown in this proforma.
Schedule II
(See Rule 3)
Proforma F
Name of the company
Location of the Sugar Factory
Statement showing the cost of Sugar sold during the year/period ended …………………………………………
Current Year Previous Year
1. Quantity packed
2. Quantity sold
3. Quantity used for self consumption by
other units
Sl.No Particulars Quantity Rate per
Unit
Total
cost
Cost per Quintals (in Rs.)
Unit Rs. Rs. Current Yr Previous Yr
1 2 3 4 5 6 7
1. a) Cost of naked sugar
b) Packing cost
i) Gunny bags
ii) Other packing material
iii) Salaries and wages
iv) Works overheads
v) Depreciation
Total
c) Less: Self consumption
d) Stock adjustments:
Add: Opening stock
Less: Closing stock
e) Net cost of sugar sold
2. Selling and Distribution Expenses
i) Salary and wages
ii) Commission to selling agents
iii) Freight and transport
iv) Loading and unloading charges
v) Godown rent
vi) Others expenses
3. Total cost including selling and
distribution expenses
4. Interest charges
5. Annual bonus to employees
a) Statutory minimum bonus
b) Other
c) Total (a + b)
6. Provision for statutory gratuity
7. Other expenses not included in cost (to
be specified)
Total
8. Less: any other income not considered
in costs (item to be specified)
9. Net expenses excluding excise duty
10. Total sales realisation excluding excise
duty for quantity sold within the
country
a) At levy/ control price
b) At rates for free sales
11. Margin
Notes:
1. The apportionment of common selling and distribution expenses to the product in case of multi-product units shall be equitable.
2. Interest charge actually incurred shall only be shown.
3. Bonus to employees other than incentive bonus, provision for statutory gratuity and interest shall be shown separately in this Proforma
only not in any other Proforma.
4. Sales realisation shall be shown separately for each grade of sugar sold.
5. Separate cost statements under this Proforma shall be maintained in respect of sugar exported wherein expenses incurred on exports
and incentive earned thereon shall also be shown.
[F. No. 52/16/CAB-96]
RD Joshi, Jt. Secy.
Foot Note: The principal rules were published vide GSR no. 388(E), dated the 15
th
July, 1997 and subsequently
amended vide:
1. GSR 464(E), dated 3
rd
August, 1998
2. GSR 719(E), dated 28
th
September, 2001
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