REGD. NO. D. L.-33004/99

The Gazette of India

EXTRAORDINARY

PART II—Section 3—Sub-section (i)

PUBLISHED BY AUTHORITY

No. 4911

NEW DELHI, FRIDAY, SEPTEMBER 28, 2001/ASVTNA 6,1923

3029 GI/2001

( I )

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THE GAZETTE OF INDIA: EXTRAORDINARY

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MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS

(Department of Company Affairs)

NOTIFICATION

New Delhi, the 28th September, 2001

G.S.R. 703(E).— in exercise of the powers conferred ty sub-

section

(1) of section 642, read with clause (d) of sub-section

(1) of section 2nQ of the Companies Act, 1956 (1 cf 1 9 3 0 , the

Central Government hereby makes the following rules further to

amend

the Ccst Accounting Records (Aluminium) Rules, 19 72, namely, -

1

(D

Thebe rules may be called the Cost Accounting Records

(Aluminium) Amendment Rules, 2001.

(2)

They

shall

come

into

force

on

the

date

of

their

publication in the Official Gazette.

2.

In the Cost Accounting Records

(Aluminium) Rules, 1972

(herein after referred to as the sajd rules),-

(a) for

rule 2, the following rule shall be substituted,

namely:-

"2. Application.- They shall apply to every

company

engaged m the production, processing or manufacturing

of any of the following

products, namely :-

33

(1)

Alumina

(2)

Aluminium

(3) Aluminium ingots in any form or alloy

(4) Aluminum rolled products including foil

(5) Aluminum extruded products

(6)

Properzirod or Aluminum wire rod

(7) Any other aluminium product or its alloy."

(b)

in rule 3,-

(i) in

sub-rule(1),

after

the

words

"after

the

commencement of these rules", the words, figures

and letters "till the 31"' day of March, 2002 or the

close of the relevant financial year in 2002" shall

be inserted;

(ii) after suo-ruie(2), the following sub-rules shall be

inserted, namely:-

"(2A) Every company to which these rules apply shall, in

respect of each of its financial year commencing on or after

the 1st day of April, 2002, keep proper books of account

relating to utilization of materials, labour and other items

of cost in so far as they are related to the

production or

processing or manufacturing

of products under reference. The

books of account, so maintained, shall contain, inter alia,

the particulars specified in Schedule III annexed to these

rules and Proformae A, B,C,D,E,F and G mentioned in the said

Schedule :

Provided that if the said company is manufacturing any other

product(s)or is engaged in other activities in addition to

manufacture

of products

under

reference,

the

particulars

relating to utilization of materials, labour and other items

of cost in so far as they are related

to the manufacture of

such other products or activities shall not be included in

the determination of cost of aluminium products referred to

in rule 2.

(2B)

The books of account referred to in sub-rule (2A) shall

be kept on a regular basis in such a manner as to make it

possible to calculate the cost of production and cost of

sales of each type of Aluminium products manufactured or

produced

for

every

financial

year

from

the

particulars

entered

therein.

Every

such

books

of

account

and

the

Proformae

specified

in

the

said

Schedule

III

shall

be

completed not later than ninety days from the close of the

financial year of the company to which it relates.

(2C)

The statistical and other records shall be maintained

in accordance with the provisions of Schedule III, which

shall be such as to enable the company to exercise, as far as

possible, control over the various operations and costs with

a view to achieve optimum economies in cost. These records

shall also provide the necessary data required by the Cost

Auditor to suitably report on all the points referred to in

the Cost Audit (Report) Rules, 1996, as amended from time to

time" ;

?,ffl^i M h i ; • / —

5

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THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC. 3(i)|

(iii) in sub-rule

( -•) , for the words, bra.-k^t^ rmi figures

"provisions

of

sub-rules

111 a:,d

i 2 ) " , the wor>ib,

brackets,

figuift: and letter?

"provisions

of sub-

rules

(1), (2>,

(2A), (2B) and

i2C)",

shall

be

substituted ;

(c)

in the said

rules,

after

Schedule

II, the

following

Schedule and Proformae A, B, C, D, E, F and G shall be

inserted, namely:-

"SCHEDULE III

[Sae rule 3(2A) ]

MATERIALS:

(1) The proper records shall be maintained showing separately

all receipts, issues and balances both in quantities and cost

of each item of raw material

(including all direct charges

upto the works in respect of major raw material such as

Bauxite, Alumina, Carbon Anodes and other materials) required

for the production of Aluminium products. Where the company

have its own facilities to produce basic raw materials and

intermediates such as Bauxite, Alumina, Carbon Anodes, etc.,

detailed records indicating the break up of raw materials

consumed for their production and conversion cost, shall be

maintained in such details so as to enable the ascertainment

of the cost of these raw materials and intermediates. The

basis

on which

said

quantities

and

costs

of

issue

and

consumption have been calculated, shall be indicated in the

cost

records

and

followed

consistently.

In

the

case

of

imported raw materials, proper records shall be maintained

showing FOB value,

overseas freight, insurance, customs duty

and inland freight charges.

If both indigenous and imported

materials

are

consumed,

the

records

showing

details

of

percentage mix of the same, have to be maintained for each

item. In the case of imported raw material, proper records

shall be maintained showing license-wise allowed quantities,

actual

quantities

imported,

actual

quantities

consumed,

quantities in stock and quantities yet to be imported out of

total licensed quantities.

(2) The proper records shall be maintained separately showing

the receipts, issues and balances both in quantities and cost

of each item of process material or chemicals such as caustic

soda, lime, starch, solderberg paste, pot relining mix and

other items used in the manufacture of the products under

reference. The cost shall include all direct charges upto

works.

35

(J) Where

the

company produces

these

process

materials,

separate records showing the cost of production of each such

material indicating the break up of material consumed shall

be maintained

to determine

the cost of process

material

produced. The basis on which the quantities and cost of

issues and consumption of such materials produced or raised

by the company are calculated, shall be indicated in the cost

records and followed consistently.

(4) The issues, consumption of production materials shall be

identified with the departments and

cost centres.

(5) The proper records shall be maintained indicating the

quantity

as

well

as

value

of

by-products

recovered

in

different processes having significant value in relation to

cost

of

material.

In

the

case

of

certain

by-products

recovered, which cannot be reused in the process and are sold

or disposed of without further processing, the realisation

from such sales shall be recorded and adjusted against the

process concerned. In case further processing is necessary to

make the by-products usable or saleable, as the case may be,

adequate

records

of

the

cost

involved

for

such

further

processing shall be maintained. If such processing is done by

any outside agency, proper records to show the quantity sent

for processing, quantity received back after processing

and

cost incurred thereon shall be maintained in detail. The net

realization, if any, shall be adjusted against the major

process relating to such by-product. The cost of by-products

shall be determined on equitable and reasonable basis and

applied consistently. The records indicating the actual sales

realization of by-products shall also be maintained.

(6) The proper

records

shall be maintained

to

show

the

receipts, issues and balances, both m

quantities and cost of

each item of consumable stores, other chemicals not covered

by sub-rule (2), tools and machinery spares.

The cost shall

include all direct charges upto works.

(7) In the case of consumable stores and small tools the cost

of which

are

insignificant,

the

company

may,

if

it

so

desires,

maintain

such

records

for

the

group

of

such

consumable stores and tools.

(8) The cost of consumption of consumable stores, small tools

and machinery spares shall be charged to the relevant cost

centre or department on t ^ ^Kasis of actual issues.

(9)

The proper

records

shall

be maintained

showing

the

quantity

and

value

of wastage,

spoilage,

rejections

and

losses of raw materials, process materials, consumable stores

whether in transit, storage, manufacture or at any other

stage. The method followed for adjusting the above losses dt

well as the income d e n - M from the disposal of rejected and

16

THE GAZETTE OF INDIA: EXTRAORDINARY

TPART II—SEC. 3(i)l

, riH materials including spoilage, if any, in determining

th- cost of product, shall be indicated in the cost records.

Any abnormal wastage or spoilage or rejection shall be

indicated

distinctly

and

separately

along with

reasons

thereof.

(10) The proper records shall also be maintained to indicate

the value of raw materials and components, finished and semi-

finished, which have not moved for more than twelve months.

(11) Where any credit under Central Value Added Tax

(CENVAT)

or any other benefits of the nature of CENVAT credit under

the Central Excise Act, 1944 (1 of 1944), are available on

any item of material, the cost of such material shall be

shown after adjusting such credit or benefits.

(12) If any of the materials purchased is processed by an

outside party, proper records shall be maintained for the

quantity

sent

for

processing,

quantity

received

after

processing, by-products

received,

if any, and

the cost

involved in processing.

2.

SALARIES AND WAGES:

(1) The proper

records

shall be maintained to show the

attendance and earnings of all employees of the cost centres

or departments and the work on which they are employed. The

records shall also indicate the following separately for each

cost centre or department:

(a) piece rate wages (wherever applicable);

(b) incentive wages, either individually or collectively

as production bonus or under any other scheme based

on output;

(c) overtime wages;

(<i) earnings of casual or contractual labour;

*(e) bonus or gratuity, statutory as well as other;

(f) contribution to superannuation scheme;

(g) any other earning of similar nature.

s

t

(2) The records shall be maintained in such a manner as to

enable the company to furnish necessary particulars under

this head in Proformae A, B,C,D,E,F and G of Schedule III

annexed'* to these rules. The records may be maintained to book

these

expenses

cost

centrewise

or

departmentwise

with

reference to activities related to production of Aluminium

products. Where the employees work in such a manner that it

is not possible to identify them with any cost centre or

department, the labour charges shall be apportioned to the

37

cost centres or departments on equitable and reasonable basis

and applied consistently.

(3) The idle labour cost shall be separately recorded under

classified

headings

indicating

the

reasons

therefor.

The

method of accounting followed for accounting of idle time

payments shall be disclosed in the cost records.

(4) 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. Similarly, payments m

the nature of deferred

revenue

expenditure

shall

be

separately

recorded

under

separate classified headings indicating the reasons therefor.

The method

followed

for

accounting

of

such

payments

in

determining the cost of the product shall be on equitable and

reasonable basis and applied consistently. The said method

shall be disclosed in the cost records also.

(5) Only such retirement cost, which are likely to provide

benefits in terms of savings in cost m

future shall be

treated as deferred revenue expenditure. This amount shall be

treated

as

extraordinary

item. Therefore

these

expenses

shall not form part of salary and wages and shall be shown

separately as an abnormal item of expense. Similarly, excess

of termination benefits for the past period payable over and

above the provision made in this regard shall also be treated

as abnormal item of expense. The expenses on account of only

voluntary retirement scheme shall be excluded from valuation

of inventories also for that period as these expenses do not

result in putting the inventories to their present location

and condition.

3.

SERVICE DEPARTMENT EXPENSES:

The detailed records shall be maintained to indicate expenses

incurred m

respect of each service department or cost centre

like laboratory, welfare, transport etc. These expenses shdll

be apportioned to other services and production departments

on equitable and reasonable basis and applied consistently.

Where these services are utilized for other products of the

company also, the basis of apportionment of such expenses 'to

any type of Aluminium products and to the other products

shall

be

on

equitable

and

reasonable

basis

and

applied

consistently.

3 8

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART II—SEC. 3 fill

UTILITIES:

\1) Water:- The proper records showing the quantity and cost

of treated or cooling water produced and consumed, if any,

for the

manufacture of any type of Aluminium products

m

different cost centres or departments, shall

be maintained.

The cost of treated or cooling water consumed by aluminium

units and other units of the company shall be apportioned to

the respective units on equitable and

reasonable basis and

applied consistently.

(2) Steam:-

Where

steam

is

raised

by

the company,

proper records showing the quantity and cost of steam

raised

and

consumed

for the manufacture of the Aluminium products

shall be maintained.

The cost of steam consumed by

the

aluminium units and by other units of the company shall be

apportioned on equitable and

reasonable basis and applied

consistently. Where steam is raised and supplied by any other

unit of the company to the Aluminium plant, the cost of steam

so supplied shall be charged to the Aluminium plant on actual

cost basis.

(3) Power: - Where power is purchased, proper records shall

be maintained for the units and cost of power consumed for

the

production

of Aluminium

products

in

different

cost

centres or departments.

Where power is generated by the

company itself, adequate records, showing all elements of

cost shall be maintained to show the cost of power generated

and consumed for the production of the Aluminium products in

different cost centres or departments. Records shall also

indicate

installed

capacity,

number

of

units

generated,

losses and consumption

in each cost-centre or

department

separately.

Where power is generated and supplied by any

other unit of the company to the Aluminium plant, adequate

records shall be maintained to indicate the quantity and cost

of power so supplied.

The cost of power consumed by the

aluminium units and other units of the company shall be

apportioned on equitable and reasonable basis and applied

consistently. The records shall state clearly the measures

taken on conservation of energy and its corresponding impact

on per unit cost of production.

(4) Other Utilities: - The proper records showing quantity

and

cost

shall

be

maintained

m

respect

of

any

other

utilities

produced

or purchased

by

the

company

for

the

production or manufacture of Aluminium products.

(5) The cost statements for each utility shall be maintained

separately m

Proforma "A'.

39

5.

WORKSHOP OR REPAIRS AND MAINTENANCE OR TOOL ROOMS:

(1) The proper records showing the expenditure incurred by

the workshop or tool room under different heads and on

repairs and maintenance in the various

cost

centres or

departments

shall be maintained. The records

shall

also

indicate the basis of charging the workshop or tool room or

repairs and maintenance expenses to different cost centres

or departments.

Where maintenance work is done by direct

workers of any production cost centre or department, the

wages and salaries of such workers

shall be treated as

direct expenses of the respective cost centre or department.

If the services are utilized for other products also, the

manner of charging a share of the cost of workshop or tool

room or repairs and maintenance expenses to such products

shall be on equitable and reasonable basis and applied

consistently.

(2) In addition to the above, records shall indicate the

amount and also the proportion of closing inventory of stores

and spare parts representing items which have not moved for

over twenty four months.

(3) The expenditure on major repair works from which benefit

is likely to accrue for more than one financial year shall be

allocated over the period expected to benefit, on

equitable

and reasonable basis and applied consistently. Such costs

shall be shown

separately and the method of

accounting

alongwith the basis of allocation of such costs shall also be

clearly indicated in cost records.

6.

DEPRECIATION:

Depreciation shall be allocated or apportioned to various

cost centres or departments and absorbed on all products on

equitable and reasonable basis and applied consistently which

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 provisions of sub-section (2) of Section 205 of the

Companies Act, 1956 (1 of 1956), 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 the per

unit cost of Aluminium product. The cumulative depreciation

charged in the cost records, against any individual item of

40

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART II—SEC 3(i)|

asset shall not, however, exceed the original cost of the

respective asset.

7.

OTHER OVERHEADS:

(1) The proper records shall be maintained for the products

under

reference

showing the various

items of expenses

comprising the other overheads.

These expenses shall be

analyzed,

classified and grouped

according to functions,

namely, works, administration, selling and distribution.

(2) Where the company is manufacturing products other than

the Aluminium products, the records shall clearly indicate

the basis followed for apportionment of the common overheads

including

head

office

expenses of the company to such

products and Aluminium products, including capital works.

Where certain expenses

forming part of overheads can be

identified with a particular activity or a product, such

expenses

shall be first

segregated and charged to the

relevant activity or product

and thereafter the residual

expenses under the above categories of overheads shall be

apportioned on equitable and reasonable basis and applied

consistently. The overheads chargeable to capital works shall

be indicated separately in the cost records. The basis of

apportionment or absorption of overheads to the cost centres

or departments and the

products shall be indicated in the

cost records. The records shall be maintained in such a

manner as to indicate the details of works, administration,

selling and distribution overheads.

8.

ROYALTY OR TECHNICAL KNOW-HOW FEE:

The adequate records shall be maintained

showing

royalty

and/or technical know-how fee including other recurring or

non-recurring payments of similar nature, if any, made for

the products under reference 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 royalty

amount, including lump sum payment, to the products, shall be

at the point of incidence in accordance with the royalty

agreement and shall be indicated in the cost records.

9.

RESEARCH AND DEVELOPMENT EXPENSES:

(1) The 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 of development of products, existing and new

41

products

and

processes,

development

of

process

of

manufacture, existing and new, design and development of now

plant facilities and market research for the existing and new

products, shall be maintained separately.

(2) The method of charging these expenses to the cost of

Aluminium products and other products shall be indicated in

the cost records.

Where the utility of such research and

development work extends over more than one financial year,

such expenses shall be treated as deferred revenue expenses

and charged to the cost of production of the Aluminium

products and all other products if any, on equitable and

reasonable

basis

and applied

consistently.

The detailed

criteria on which it has been decided to extend the utility

period of these expenses to more than one financial year

shall be disclosed

m

the cost

records. The

following

criteria, which are only indicative and not exhaustive, mdj-

be adopted m such cases :

(1)

the product or process is clearly defined and tne

costs attributable to the product or process c

be separately identified;

( n )

the technical

feasibility of the product _r

process has been demonstrated;

( m )

the management of the enterprise has indicated

its intension to produce and market or use the

product or process;

d v )

there is a reasonable indication that current an 1

future

research and development

costs

t_, b^

incurred on the project together witn expected

production, selling and administrative cobts art

likely to be more than covered bv related tjture

revenues or benefits; and

(v)

adequate

resources

exist

or

are

reabcndbly

expected to be available to complete the prcjec

and market the product or process

(3) The expenses incurred by the Research ctnd Develot.me it

Department

for providing

technical

know-how to

Dutsiaer-

shall be recorded separately and excluded from the r<~st -

Aluminium

products.

The

amount

recovered

r^r

p^o- i d u

technical

know-how to outsiders

shall

also be

no "d*.? ,

separately and excluded from the income arising from tr- -il

of Aluminium products.

1029GI/2001—6

42

THE GAZETTE OF INDIA : EXTRAORDINARY

[PARTII^SEC. 3(iYI

10. QUALITY CONTROL:

The adequate records shall be maintained to indicate the

expenses incurred in respect of quality control department or

cost

centre

for products

under

reference. Where

these

services are also utilized for other products of the company,

the basis of apportionment to Aluminium products and to other

products shall be on equitable and reasonable basis and

applied consistently.

11. INTEREST:

The proper records shall be maintained for interest charges

paid. The amount of interest shall be allocated or apportioned

to the products covered by these rules and other activities on

equitable and reasonable basis and applied consistently.

The

basis of further charging of the share of interest to the

various types of such pro'ducts shall also be equitable and

reasonable

and applied

consistently.

The basis

of

such

allocation or apportionment shall be spelt out clearly in the

cost records or statements.

12. EXPENSES OR INCENTIVES ON EXPORTS:

The proper records shewing the expenses incurred on the

export sales, if any, of the products under reference shall

be separately maintained so that the cost of export sales can

be determined correctly.

Separate cost statements shall be

prepared for Aluminium products exported giving details of

export expenses incurred or incentive earned. 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

13. PACKING EXPENSES:

(i! The proper records shall be maintained showing the

quantity and cost of various packing materials and other

expenses incurred on packing for marketing of the Aluminium

products. If such expenses are incurred in common for

aluminium products and other products, these expenses shall

be

apportioned

to

relevant

products

on

equitable

and

it-as enable basis and applied consistently.

(2) The detailed records of expenses incurred on export

packing, if any, shall also be kept separately and exhibited

in

the

relevant

cost

statements

for

exports.

43

14.

WORK-IN-PROGRESS AND FINISHED STOCK:

The method followed for determining the cost of work-in-

progress, wherever relevant, and finished

stock of the

Aluminium

products

shall

be

appropriate

and

shall

be

indicated in the cost records so as to reveal the 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. The method adopted for determining the cost of

work-in-progress

and

finished

goods

shall

be

followed

consistently.

15. COST STATEMENTS:

(1) The cost statement showing details of installed capacity,

production, wastage, issues and sales and all elements of

cost of the current financial year and previous year shall re

prepared for each process adopted in the production of

Aluminium products in Proformae A,B,C,D,E,F and G.

\2> The product emerging from a process, which forms rav«

material or an input material for a subsequent process, shaJ +

be valued at the cost-of production up to the previous stage.

(3) If the company is operating more than one plant or

factory, separate cost statements as specified above shall be

prepared in respect of each plant or factory.

16. PRODUCTION RECORDS:

Quantitative records of all finished goods, whether

packed

or unpacked,

showing production,

issues

for

sales

and

balances of different type of the products under reference

snail be maintained.

17. RECONCILIATION OF COST AND FINANCIAL ACCOUNTS:

(1,

The

cost

statements

shall be

reconciled

with

tne

financial statements for the financial year specifically

indicating the expenses or incomes not considered in the o: st

records or statements so as to ensure accuracy and to adiuoue

the profit of the product under reference with the overall

profit of the company. The variations, if any, shall

K^

^ iearly indicated and explained.

44

THE GAZETTE OF INDIA: EXTRAORDINARY

IPARTII—SEC. 3(i)\

'2

A statement

showing the total

expenses

incurred ami

J n T>me received by the company

under

different

heads ^f

accounts and the share applicable to other products and the

products under reference shall be prepared and reconciled

with the financial statement.

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 under such system. The cost variances

shall be shown against the separate heads and analyzed into

material, labour, overheads

and

further segregated into

quantity, price and efficiency variances. The method followed

for adjusting the cost variances in determining the actual

cost of the product shall be indicated clearly in the cost

records.

The reasons

for

the variances

shall be duly

explained in the cost records or statements.

19

STATISTICAL RECORDS:

1) The records regarding available machine hours or direct

labour hours in different production departments and actually

atiⁿized shall be maintained for production of Aluminium

products under reference and shortfall suitably analyzed.

Suitable records for computation of idle time of machines

shall also be maintained and analyzed.

(?) The adequate records shall be maintained to enable the

company to identify the capital employed, net fixed assets

•ni

working

capital

separately

for

the

production

or

manufacture of products under reference and other products

^uiri other activities. Fresh investments on fixed assets for

prodi. .'tion of aluminium products that have not contributed to

rhe production during the year shall be disclosed separately

in the cost records. The records shall, in addition, show

assets added as replacement and those added for increasing

e"noting capacity. Also such records as will enable to

identify and/ur allocate gross fixed assets, accumulated

depreciation upto the year and net fixed assets under the

headr; land and building, plant and machinery, j_urniture and

fi.xi.ares etc. employed for the production of products under

reference alongwith the method and rate of depreciation shall

b . maintained. The basis of 'apportionment of common assets t ,

the product(s) under reference shall also be indicated. In

case of revaluation of assets, the same shall be m^^catf

45

separately. The basis of allocation of indirect assets to the

products under reference shall be on equitable and reasonable

basis and applied consistently.

(3) Whenever WTO provisions are attracted, proper records

shall be maintained to identify the competitiveness of the

product in the domestic as well as global market and the

expenses, if any, incurred to combat the competition arising

out of WTO provisions.

Adequate statistical records shall

also be maintained to identify the market share of the

oroduct manufactured and the likely impact thereon on account

of competitive goods imported in to the country.

These

records shall indicate, inter alia,, the total volume of

imports, names of importers, countries of origin and contain

such empirical evidence as to show whether such imports can

be construed as dumping and affecting the market share of the

product. Proper records shall also be maintained, containing

such details as may be necessary to show that the export

price of the product is not such as to be construed as

dumping in the importing country, by applying the provisions

of WTO regarding anti dumping measures under Article VI of

GATT 94.

20. CAPTIVE CONSUMPTION:

If any of the Aluminium product

is used

for captive

consumption, proper records shall be maintained showing the

quantity

and

cost

of

each

item

of Aluminium

product

transferred to other departments or units of the company for

self-consumption and sold to outside parties. The rates at

which the transfers are effected shall be at cost only.

21. 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.

22. HUMAN RESOURCES DEVELOPMENT:

Expenditure incurred by the company on the human resources

development activity shall be recorded separately,

23. 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

46

THE GAZETTE OF INDIA: EXTRAORDINARY

TPART II—SEC. 3 (1)1

relationship" as defined below and vice-a-versa, records

shall

be maintained

showing

contracts

entered

into,

agreements or understanding reached in respect of:

(a)

purchase and sale of raw materials, finished products,

process

materials,

chemicals

and

rejected

goods

including scraps, etc;

(b)

utilisation of plant facilities and technical know-how;

(c)

supply of utilities and any other services;

(d)

administrative,

technical,

managerial

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, or

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

venturer

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.

47

However, tne r o l i o w m g snail not be aeemea 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

relationships" means

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

48

THE GAZETTE OF INDIA . EXTRAORDINARY

[PART II—SEC. 3(i)l

(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;

KJ¹

"Joint control" means the contractually agreed sharing

of power to govern the financial and operating policies

of an economic activity so as to obtain benefits

from

it;

(h)

"Key management personnel" means those persons who have

the authority and responsibility for planning, directing

and

controlling

the

activities

of

the

reporting

enterprise;

(1)

"Relative" - in relation to an individual, means the

spouse,

son, daughter,

brother,

sister,

father

and

mother who may connected by blood relationship;

(3)

"Holding company" means a holding

company within the

meaning of Section 4 of the Companies Act, 1956(1 of

] 9f.f.) ;

(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.

49

24. RELINING OF POTS:

The

proper

records

shall

be

maintained

showing

the

expenditure incurred in the relining or patching up of pots.

The records shall indicate the cost of pot relining mix, pot

lining coke, side and bottom lining blocks, collector bars,

insulating

bricks,

wages,

sundry

supplies

and

outside

services, if any. The records shall also indicate the number

of pots relined during the relevant period. Such expenses

shall be charged to the cost of aluminium on equitable and

reasonable basis and applied consistently which shall be

clearly indicated in the cost records. The details of cost

incurred for initial pot lining and starting at the time of

commissioning a new smelter or a new set of pots shall be

maintained. The cost incurred for re-starting of pots shall

also be maintained separately. The treatment of such expenses

in costs shall be clearly indicated in the cost records.

25. SCRAP LOSS AND MELTING LOSS

The proper records showing the quantify of scrap generated in

the cast house while making ingot, billet, etc. and materials

scrapped on account of sales returns, deterioration due to

storage and handling or for any other reasons shall be

maintained. The basis of ascertaining the loss on account of

such materials and method of treat.ng the same in determining

the cost of products shall be indicated in the cost records

and applied consistently. Adequate records shall also be

maintained showing the melting loss in the remelting furnace.

Adjustment for realisation from dross shall also be clearly

indicated in the cost records.

3029GI/2001—7

50

THE GAZETTE OF INDIA: EXTRAORDINARY

FPABT TT—.W. VIM

PROFORMA.

A'

Name of the company :

Name and address of the factory :

Statement showing the cost of Utilities like Power, Steam,

Water, etc., produced and consumed during the year/period :

A.

Quantitative Information:

Serial

number

1.

2.

3.

4.

5.

6.

7.

Particulars

Installed capacity

Quantity produced

Capacity utilisation

Quantity recirculated

Quantity purchased

Self-consumption

including other losses

Net units consumed

Current Year

(unit)

Previous Year

(unit)

B.

Cost Information :

Serial

number

A 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Particulars

Materials(specify)

(a)

(b)

(c)

Utilities (specify)

(a)

(b)

(c)

Consumable stores

and spares

Salaries and wages

Repairs and

maintenance

Other overheads

Depreciation

Total

Less:Credit(if any)

Net Total

Quan-

tity

Rate

(RupQQJ)

(. ni unit

Amount

Cost Per Unit

(Rupees)

Current

Year

Previous

Year

51

B.

Apportioned to

production/cost

centre :

1.

2.

3.

4.

•

n.

Note 1.- Separate cost sheet is to be prepared for each

utility as well as effluent treatment.

Note 2.- If any of the utilities or services, which are

manufactured by the

company and transferred to any

other unit of the company or is sold to outside

parties, the cost of sales and sales of realisation

shall be worked out in detail showing all expenses

as illustrated against serial number 27 to 32 in

Proforma * C .

Proforma "B'

Name of the company :

Name and address of the factory :

Statement

showing

the

cost

of

Bauxite

raised

and

transported to Alumina plant during the year/period :

A,

Quantitative Information:

Serial

number

1.

2.

3.

4.

5.

Particulars

Quantity raised

Quantity rejected, if any

Net Quantity raised

Quantity transported to Alumina

plant

Quantity of over-burdened removed

In MTs

Current

Year

Previous

Year

52

THE GAZETTE OF INDIA: EXTRAORDINARY

FPART II—SEC. 3(i\\

B.

Cost Information:

Serial

number

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

Particulars

Direct wages and salaries

Utilities

(a)Power

(b)Others(specify)

Total

Consumable stores and

spares

Depreciation

Repairs and Maintenance

Royalty

Other works overhead

Administrative Overhead

(a)Salaries and wages

(b)Others(specify)

(c) Total(a+b)

Total cost of raising

Freight and Transport

charges

Handling expenses

Cost of Bauxite at

Alumina plant

Adjustment for difference

in the value of opening

and closing stock

Cost of Bauxite

transferred to Proforma

XC

Amount

(Rupees)

Per MT

Out Lent Year

(RUf e«as)

Previ. us Y ^ r

(Rupees)

Note 1.- Quantity of rejected Bauxite sold and the amount

realized shall

be indicated separately and be

deducted from the cost of raising.

53

Proforma ^V C

Name of the company :

Name and address of the factory :

Statement showing the cost of Alumina produced and sold during

the year/period :

A.

Quantitative Information:

Serial

number

1.

2.

3.

4.

5.

6.

7.

Particulars

Installed capacity

Quantity produced

Capacity utilization

Quantity sold

(a)Domestic

(b)Export

Quantity transferred to Smelter

plant for captive consumption

Closing stock (Alumina)

Opening stock (Alumina)

In MTs

Current

Year

Previous

Year

B.

Cost Information:

Serial

number

I.

1.

3.

4.

Particulars

Alumina Hydrate

Material cost:

(itemwise covering 80% of

value)

(a)Bauxite

(b)Caustic Soda

(c)Lime

(d)Fuel Oil

(e)-Other process material

or chemicals(specify)

(f)Total(a to e)

Direct wages and salaries

Utilities :

(a)Power

(b)Steam

(c)Others(specify)

(d)Total (a to c)

Consumable stores and

spares

Quan-

tity

Rate

Rupees

r-er

unit

Amount

(Fn.iE.ees I

Per MT

Current

Year

(Rupees)

I r'.'vi .us

•isar

(Rupee?)