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REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART II—Section 3—Sub-section (i)

PUBLISHED BY AUTHORITY

No. 347] NEW DELHI, WEDNESDAY, DECEMBER 31, 1975/PAUSA 10, 1897

Separate paging is given to this Part in order that it may be filed

as a separate compilation.

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS

(Department of Company Affairs)

NOTIFICATION

New Delhi, the 31st December 1975

COST ACCOUNTING RECORDS (PAPER) RULES, 1975

G.S.R. 601(E).—In exercise of the powers conferred by sub-section (1) of section 642, read with clause (d) of subsection (1) of section 209 of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following rules, namely: —

1. Short title and commencement.—(1) These rules may be called the Cost Accounting Records (Paper) Rules, 1975,

(2) They shall come into force on 1st day of January, 1976.

2. Application.—They shall apply to every company engaged in the production, processing or manufacturing of paper used for the purpose of printing, writing and wrapping and Include newsprint, paper board and exercise note books of companies manufacturing paper.

3. Maintenance of records.—(1) Every company to which these rules apply shall, in respect of each of its financial year commencing on or after the com- mencement of these rules, keep proper books of account containing inter alia the particulars specified In Schedules I and II annexed to these rules relating to the utilisation of materials, labour and other Items of cost In so far as these are applicable to the types of paper and paper products referred to in rule 2:

( 2539)

Provided that if the said company is manufacturing any other product or is engaged in other activities in addition to the manufacture of any of the articles referred to in rule 2, the particulars relating to the 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 paper and paper products referred to in rule 2.

(2) The books of account referred to in sub-rule (1) shall ,be kept in such a way as to make it possible to calculate the cost of production and cost of sale of each type of paper and paper products referred to in rule 2 during a financial year (hereinafter referred to as the relevant period) from the particulars entered therein and every such books of account and the proforma specified in schedule II shall be completed within ninety days from the end of the financial year of the company to which they relate.

(3) It shall be the duty of every person referred to in sub-section (6) and sub-section (7) of section 209 of the Companies Act, 1956 (1 of 1956) to take all reasonable steps to secure compliance by the company with the provisions of sub-rule (1) and (2) in the same manner as they are liable to maintain financial accounts required under sub-section (1) of section 209 of the said Act.

4. Penalty.—If a company contravenes the provisions of rule 3, the company and every officer thereof who Is in default including the persons referred to in sub-rule (3) of rule 3, shall be punishable with fitne which may extend to five hundred rupees and where the contravention Is a continuing one, with a further fine which may extend to fifty rupees for every day after the first day during which such contravention continues.

SCHEDULE I

(See rule 3)

I. Materials;

(a) Raw Materials.— (i) Proper records shall be maintained showing separately the quantity and cost of bamboo, wood, Ibagasse, grass, rags, paper cuttings procured from different sources. Where bamboo or wood is grows in forests owned or taken on lease by the company and collection is made by de- partmental operations or by contract, detailed records shall be maintained in a suitable proforma so as to enable computation of the cost of such bamboo or wood As green bamboo or wood contains some moisture, records of receipt shall be maintained both in green weight as well as in Air Dry weight which mav be obtained after deducting standard or average or actual moisture content of such bamboo or wood. Monthly reconciliation of the Ween weight and Air Dry weight or Bone dry weight of bamboo or wood shall be effected. Records regarding issue and balance of bamboo or wood shall be maintained in Air Dry or Bone Dry weight only. Records for the direct charges such as freight, octroi incurred for procurement shall also be maintained.

(ii) Where bagasse and various types of grasses are used as. raw material for tu nmrfuctton of oaper records of quantity shall be maintained taking into

those of bamboo or wood.

(Hi) If any other raw material such as rags or paper cuttings are used for

thereto as practicable.

charges such as freight or octroi, incurred upto works.

(v) Proper records .hall be maintained to show t ^ t o ft and cost ^

s 8

chemical and mechanical ^ TS JU? i ff Ute^clU In the basis of determining, the'weight of pulp ^ °t™c e°r o rti0iV of different kinds of

Ksrs" Snsss: me&i¹S^?AV^""™ "***** *^ of paper.

(b) Process Materials.-—Proper records shall be maintained to show the receipts, issues and balances both in quantities and cost of each item of the pro- cess materials such as Sulphur, Sodium Sulphate, Chlorine, Caustic Solid, Caus- tic Liquid, Alum and Dyes. The costs shall include all direct charges upto the works wherever specifically incurred The issues shall be properly identified with the departments, cost centres and product's manufactured as tor as practi- cable. Where these process materials are produced bv the company, separate records showing the cost of manufacture of such materials indicating the break-up of raw materials consumed for their production and conversion cost shall be maintained in such details as rnav enable the company to determine the cost of such process materials produced. In case, Caustic Soda is manufactured proper records as prescribed in the Cost Accounting Records (Caustic Soda) Rules, 1967 shall be maintained to arrive at the cost of the caustic soda.

(c) Recoveries of Process Chemicals,—Proper records shall be maintained^ indicating the quantity of the chemicals recovered in the different processes. In the case of certain chemicals thus recovered which cannot be used back in the process or disposed of without further processing, adequate records of cost involved for such further processing ?hall be maintained,

(d) Consumable Stores, Small Tools. Machinery Sv^res. etc.— (i) Proper records shall be maintained to show the receipts, issues and balances both In quantities and cost of each item of consumable stores, small tools and machinery spares, The costs shown shall Include all direct charges upto works, wherever specifically incurred.

(ii) In the case of consumable stores and small tools the costs of which are insignificant, the company may, if it so desires, maintain such records for the main groups of such items.

fin) The cost of issues, of consumable stores, small tools and machinery spares, shall be charged to the relevant heads of account such as repairs to plant and machinery, repairs to buildings. Materials consumed on capital works such as addition to buildings, plant and machinery and other assets shall be shown under the relevant capital heads.

(e) Wastages, spoilages, rejections, losses, etc. 0/ materials,—Proper recordg shall be maintained showing the quantity and cost of wastages, spoilages, rejec- tions and losses of raw materials, process materials, consumable stores, small tools and machinery spares, whether in transit, storage, manufacture or for any cither reason. The methods followed for adjusting the above losses as well as the income derived from the disposal of rejected and waste materials including scrap, if any, shall be indicated in the cost records.

II. Salaries and Wapes:

(a) Proper records shall

(1) Overtime wages earned;

(ii) piece-rate wages earned;

(iii) incentive wageg earned, either individually or collectively as produc- tion bonus or under any other scheme based on output;

(iv) earnings of casual labour.

(b) Idle time shall be separately recorded under classified headings indicat- ing the reasons therefor. The method followed tor accounting of idle time pay- ments in determining the cost of the products shall be disclosed in the cost records.

(c) Any wages and salaries allocable to capital works such as additions or heavy repair works to plant and machinery, buildings or other fixed assets shall be accounted for under the relevant capital heads.

III. Service Department Expenses;

Detailed records shall toe maintained to indicate expenses incurred for each service department of cost centre. These expenses shall be apportioned to other services and production departments on an equitable basis and applied consis- tently.

IV. Power, Fuel and other services;

(a) Waters-Proper records showing the quantity and cost of water treated ami consumed for the manufacture of paper in different departments or cost centr.es shall be maintained in such detail as may enable the company to furnish the necessary particulars in Annexure I to this Schedule, The cost of water allocated shall be on a reasonable basis and applied consistently.

L ™ Src " to th.ls Schedule. Proper records shall be maintained to show thr £ IvmiBr%? \£* Btea-?¹ p h a s e d. The cost of the steam consumed by 1PS i fd/ *h er u n l,ts °f the company shall be calculated on a reason- able basis and applied consistently. Where steam is generated and supplied by any other unit of the company to the paper mill, the cost of the steam so supplied shall be charged on a reasonable basis and applied consistently.

(c) Power—When power is generated by the paper mill of the company, proper records showing the quantity and cost of power generated and consumed lor the production of paper in different department or Cost Centres shall be maintained in such detail as may enable the company to furnish the necessary particulars in Annexure III to this Schedule. Proper records shall also be maintained to show the quantity and cost of power purchased.

Where power is generated and supnlicd by anv other unit of the company to the paper mill, adequate records shall be maintained for the quantity and cost of power so supplied. The rate charged by that unit shall be on a reason- able basis. Necessary records shall alsn be maintained to show the consumption of power toy various departments or cost centres, ThP cost of power allocated to production shall be on a reasonable basis and applied consistently.

V. Workshop/Repairs and Maintenance;

Proper records showing the expenditure incurred by the workshop under different heads and on repairs and maintenance by the various departments and: cost centres shall be maintained. The records shall also indicate the basis of charging the workshop expenses to different departments and cost centres. 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 indi- cating the method of its accounting in determining the cost of paper manufac- tured during the relevant period. Expenditure incurred on works of capital nature shall (be capitalised. The cost of such iobs sMll include the expenditure on material, labour and a share of the overheads, The jobs carried out by the workshop of any other unit of the company for the paper mill and Trice versa shall be charged or credited on a reasonable basis and applied consistently.

VI. Depreciation:

(a) Proper records shall be maintained showing the cost and other particulars of fixed assets in respect of which depreciation is to be provided. These records shall inter alia Indicate the cost of each item of asset including installation charges if any the date of its acquisition, the date of installation and the rate of depre- ciation In respect of the?*' assets, the original cost of acquisition of which can- not be ascertained without an unreasonable expenditure or delay, the valuation shown in the books on the first flw of the financial vear beginning on or after the commencement of these rules shall be taken as the opening balance.

(b> The basis on which depreciation is calculated an£ allocated to th* vwHLoua departments and cost centres and to the products shall be clearly indicated m the records Depreciation chargeable to the different departments and cost centres shall not be less than the amount of depreciation chargeable in accord- ^ cl with the provision of sub-section (2) of section 205 of the Company Act.

rf- 4 ?f £]) a nd s h a ¹¹ relate to plant and machinery and other fixed assets J

utilised in such departments and cost centres. In cases the amount of deprecia- tion charged in the cost records in any financial year is higher than the amount of depreciation chargeable under aforesaid provisions of the Companies Act the amount so charged in excess shall be indicated clearly in the cost records' The cumulative depreciation charged in the cost records against any individual item of the assets shall not, however, exceed the original cost of the respective asset.

VII. Overheads:

Proper records shall be maintained showing the various items of expenses comprising overheads. These expenses shall be analysed, classified and grouped into works, administration and selling and distribution overheads. Where the company is engaged in the manufacture of any other products in addition to paper, the records shall clearly indicate the basis followed for apportionment of the common overheads including head office expenses of the company to the production of paper and other activities. Overheads allocable to capital works •shall be Indicated separately in the cost records.. The methods followed for the levy and absorption of the above categories of overheads to the products shall be indicated in the cost records, The basis followed for levy and absorp- tion of the overheads shall be equitable and applied consistently,

VIII. Expenses on Export;

Records showing the expenses incurred on export of paper, if any. shall ha separately maintained, so that the cost of export sales can be determined cor- rectly. The expenses incurred on export, as well as any export incentive earned shall be reflected in the cost statements relating to export sales.

IX. By-Prodiicts:

Proper records shall be maintained for each item of by-products produced showing the receipts, issues and balances both in quantity and value. The basis adopted for valuation of the by-products shall be equitable and consistent, Re- cods indicating the actual sales realisation of by-products shall be maintained.

X. Paper products transferred for Self-consumption

Proper records shall be maintained showing the quantity and cost of each item of paper products transferred to another department or unit of the company for self-consumption. The rates at which such transfers ana effected shall be disclosed in the cost records.

XI. Packing

Proper records shall be maintained showing the quantities and cost of various packing materials such as wrapper, wire, jutc strings, gum tapes, wooden plugs, paper rewinder core, kraft paper wrapper, card board boxes and wooden boxes and for wages and other expenses incurred in respect of different types of paper and paper products. Where the expenses are incurred in common the basis of "apportioning such expenses amongst different types of paper and paper products shall be equitable and clearly indicated in the cost records and applied consis- tently.

Detailed records of the expenses incurred on export packing shall also be Ttept separately and exhibited in the relevant cost statements for exports.

XII. Work-in-progress and Finished Goods:

The method followed for determining the cost of work-in-progress and finish- ed goods stock shall be indicated in the cost records so as to reveal the cost elements that have been taken into account in such computation. The method adopted shall be followed consistently.

XIII. Cost Statements:

(a) Cost of Chips.—The cost of chips manufactured from bamboo and wood by the company shall be separately calculated and shown m Proforma 0 or in a proforma as near thereto as may be possible under the relevant items of cost.

If the cost of such chips is calculated otherwise than on the basig of actuals, the method by which such costg are calculated as well as the method of reconciling Such costs with actuals and the method of dealing with variations, if any, shall be disclosed in the cost records or indicated by way of footnotes, explanatory notes or in any other suitable manner.

(b) Cost of Pulp.—The cost of different kinds of pulp required for the various types of paper shall be calculated separately and shown in Proformao 'C\ C-l, 'D' or in proforma as near thereto as may be possible under the relevant items of cost. If the cost of each of the different kinds of pulp manufactured is determined otherwise than on the basis of actuals, the method by which such costs are calculated as well as the method of reconciling such costs with actuals and the method of dealing with variations, if any, shall be disclosed in the cost records or indicated by way of footnotes, explanatory notes or in other suitable manner.

(c) Cost of Paper.—The cost of different type of paper manufactured by the company shall be calculated separately and shown in Proforma 'E' of Schedule II or in proforma as near thereto as may be possible under the relevant items of cost. If the costs under the different items are determined otherwise than on the basis of actuals, the method by which such costs¹ are calculated as well as the method of reconciling such costs with actuals and the method of dealing with variations, if any, shall be disclosed in the cost records or Indicated by way of footnotes, explanatory notes or in other suitable manner, The cost of different types of paper, packed and sold, shall be calculated separately and shown in Proforma 'F' or in a proforma as near thereto as may be possible, Exports of paper, if any, shall be exhibited in separate cost statements and the same excluded from the cost statements of paper sold in the internal market.

(d) In the case of companies where the paper produced is further processed to manufacture exercise note books by the printing and binding presses be- longing to the companies, the cost of different kinds of note books thus manu- factured by the company shall be calculated separately and shown in Proforma 'G' of Schedule II or in a proforma as near thereto as practicable.

XIV. Production Records:

Quantitative records of all finished and packed production, Issues for sale and balances of different types of paper and paper products produced by the company shall be maintained.. The cost of all finished and packed production, issues and balances may be kept in detail or in the form of control accounts for each product group, provided the value of the balances according to such control accounts are reconciled periodically, at least once in a year, with the values the quantities shown in the quantitative account of each type of paper or paper product.

XV. Reconciliation of cost and financial accounts;

The cost records shall be reconciled periodically with the financial books of accounts so as to ensure accuracy. Variations, if any, shall be clearly indi- cated and explained. The period for which such reconciliation is effected shall not exceed the period of the financial year of the company. The reconciliation shall be done in such a manner that the profitability of the production nf paper can be correctly adjudged and reconciled with the over-all profits of the com- pany. A statement showing the total expenses incurred and the incomes received by the company and the share applicable to production of paper shall be maintained in Proforma 'H' duly reconciled with the financial accounts.

XVI. Acljustmeat of Cost Varances:

Where the company maintains cost r'eeords on any basis other than actuals, such as standard costing, the records shall indicate the procedures followed by

the company In working out the cost of the product under such procedures. The method followed for adjusting the cost variances, between the actuals and the figures adopted by the company for determining the actual cost of the product shall be indicated clearly in the cost records. The cost variances shall be shown against item 9 of Proforma 'E' of Schedule II. The reasons for the variances shall be indicated in detail in the cost records.

XVII. Records of physical verification:

Records of physical verification shall be maintained in respect of all items held in stock such as raw materials, process materials, chemicals, consumable stores, machinery spares, fuels,, packing materials, finished good_s _ and nxed assets. Reasons for shortages or surpluses arising out of such verification and the method followed for adjusting the same in the cost of product shall be indicated in the records.

XVIII. Inter-company transactions:

In respect of supplies made or services rendered by the company or a subsi- diary or a company in the same group or a company in which a. director or the company is also a director in such companies and vice versa, records shall be maintained showing contracts entered into, agreements or understandings reached, in respect of: —

(a) purchase and sale of raw materials, process materials and by-

products;

(b) utilisation of plant facilities;

(c) supply of utilities (Power, Fuel and other services); and

(d) administrative, technical managerial and any other consultancy services. These records shall also indicate the basis followed for arriving at the rates charged between them so as to enable deter- mination of the reasonableness of the rates changed or paid for such services.

XIX. Statistical Records:

Statistical data such as available machine hours, actual machine hours worked with reasons for stoppages under classified headings, yield percentage of pulp for the various raw material input, yield percentage of poper to the input of various pulps, production per machine hour, efficiency of caustic soda recovery plant, consumption of chemicals per tonne of output of paper, losses in cutting and finishing of paper, consumption of bleaching liquid per tonne of paper, consumption of loading and sizing materials per tonne of paper shall be main- tained at least on a monthly basis. Such records will enable the company to identify as far as possible, the capital employed for the production of paper shall also be maintained. The records shall also show fresh investments on fixed assets that have not contributed to the production during the relevant period.

Statistical and other records maintained in compliance with the provisions of this Schedule and Schedule II shall be such as to enable the company to exercise, as far as possible, control over operations and costs and to provide the necessary data required by the cost auditor to suitably report on all the points referred to in the Cost Audit (Report) Rules, 1988 as amended from time to time.

The data maintained in the cost records shall be reconciled with the periodi- cal returns submitted by the company to the excise and other authorities.

ANNBXURE I

Name of the Company- Name and address of Paper Mill Statement showing the cost of water treated/consumed during the year ending

Quantity oi W?ter treated ———>-,

Cost p;r kilo litre of water treated

• —

Particulars

Unit

Rate

Quantity

(Rs.)

Amount (Rs.) SI. No.

( 2)

(3)

(4)

(6)

15)

1. Water Royalty

2. ChemicaU :

(a) Chlorine (b) Calcium HypocHonte (cl Alum (d) Bleachirg Powder (e) Sodium Alumir)ate (f) Lime Stores

3-

4- Power Salaries) & Wages Repairs and Maintenance

5- 6.

Overhends Depreciation

7- 8.

TOTAL

Less : Credits, if any

9-

Net Total

10

nption for

Consur,

No. of Units Amount (JRs.)

            (i) Steam
           (")   Power
           (iii) Digester  Plant
           fiV; ,  Recovery  Plant
            (v) Unbleached  Chemical pulp
           (vi)  Mechanical Pulp
           (vii) 1  Bleaching Plant
           (viii )  Paper Plant
           (ixj Caustic  soda and
                Chlorine  Plant
            (X)
           (xi)
NOTES :  (1)  If treated water is supplie  d to wy other            p : t ty  r.£Cessary  credits for  reco-
               veries ma ic chall be givcn  against item 9.
          ^2)  Where  meters are not installed,  consumption  of treated  water  shall be assessed on
               reasonable  basis  and applied   consistently.
          (3)  Bonus to employee;, other  than  incentive  bonus, provision for statutory  gratuity and

interest charges shall be shown in Proformee F, G and H only.

ANNEXTURE II

Kame of the Company •

. .

Name and address of the Paper Mill 1

.

Statement showing the cost of steam raised or consumed during the year ending.

.

Quantity of Steam raised— — Tonnes.

Cost per tonne of steam raised..

.

Particulars

Quantity (Units)

Rate (Us.)

Amount (Rs.) SI. No.

( 2)

(3)

(4)

(5)

1 Water (As per Annexure I)

2. Fuels :

(a) Coal (b) Fuel Oil (c) Electricity (d) Other fuels3 if any (to be specified)

Other Direct Expenses

3-

(Such BS Boiler Inspection fees)

Consumable Stores Salaries and Wages Repairs & Maintenance

Other Overheads Depreciation

4- 5. <5. 7. 8.

Total

Less ;

•9-

(a) Cost of live steam used by Power

House for generating electricity

(b1 Other units of the company—

TO. Quantity and cost of live Steam

Units Amount (/is.) onsurmd in

C

E.B. Plant Pulp Mill

0) (") (iii) (iv)

Size Preparation Stock Preparation Paper Mills

Cv) (vi) ) (vii;

NOTES : (i^i If steam is supplied to auy other o Jtsidc party, ncc:ssary credit fo.- recoveries m"de shall be given against item 9.

(2) Where meters are not installed, consumption of steam shall b: assessed 0.1 teaso.i- able basis and applied consistently.

(3) Bonus to employees other than incentive bo.ius, provision for statutory gratuity and interest charges shall b: shown in Proformae ' F ', 'G* and ' H\

ANNEXURE III

Name of the Company

,

Name and address of the Paper Mill —

, _ __

Statement showirg the cost of power generated/purchased and corsvmtd during the year

NO- of Unit generated : KWh No. of Units; purchased : KWH Consumption in power house including other iosses : KWH Net unit consumed : KWH

Particulars

Quantity (Units)

Rate CRs. ) SI. No.

Amount. CRs. )

(2)

Ci)

(3)

(4)

(5)

(a) Steam (as per Annexure

A.i.

Il/pvrchased)

(b) Other materials (if any, to be specified)

2. Consumable Stores Other direct charges (such as Electricity dutyj

3.

etc.)

4-

5-

6.

Salaries and Wages Repairs and Maintenance Overheads Depreciation

7-

Le

S. 9-