DRAFT
RULES UNDER THE COMPANIES ACT, 2013
COMPANIES (COST RECORDS AND COST AUDIT) RULES, 2013
In exercise of the powers conferred by
sub-sections (1) and (2) of section
469 and section 148 of the Companies Act, 2013 (18 of 103), the Central
Government hereby makes the following
rules, namely:
1. Short title and commencement
(1) These rules may be called the Companies (Cost Records and Cost Audit) Rules, 2013. (2)
They shall come into force on the
date of their publication in the
Official Gazette.
(3) They shall be applicable in respect of financial years
commencing on or after 1st April, 2014.
2. Definitions
In
these rules, unless the context provides otherwise,-
(a)
“Act” means the Companies Act, 2013 (18 of 2013);
(b) “Cost Accountant in practice”
means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959)
and who holds
a valid certificate of practice
under subsection (1) of section 6 of that Act and who is deemed to be in practice under subsection (2) of section 2 of that Act, and includes a firm
of cost accountants;
(c) “cost auditor” means an auditor appointed to conduct audit of cost records under sub-section
(3)
of section 148 of the Act;
(d) “Cost Audit Report” means the report audited and signed by the
cost auditor in accordance
with the proviso to sub-section (5) of section
148 and rule 5 of these rules;
(e) “Cost Records” means books of account
relating to utilisation of materials,
labour and other items of cost as applicable to the production of goods or provision of services under the
provisions of section 148 of the Act
and these rules;
(f) “Institute” means the Institute of Cost Accountants of India constituted under the Cost and
Works
Accountants Act, 1959 (23 of 1959);
(g)
All other words and expressions used in these
rules but not defined, and defined in the Act shall have the same meanings as
assigned to them in the Act.
3. Application
(1)
Applicability for Cost Records: For the purpose
of sub-section (1) of section 148 of the Act, the
following class of
companies, including
Foreign Companies defined in sub-section (42) of
section 2 of the Act, shall be required to include cost records in their books of account:-
Companies engaged in the
production
of
following
goods
or
providing
following
services:-
(a)
Companies engaged in Strategic Sectors
(i) Machinery, mechanical appliances used in defence, space and atomic energy
sectors such as: (A) Nuclear reactors; fuel elements (cartridges), non- irradiated, for nuclear reactors; machinery
and apparatus for isotopic separation
(B) Steam or other vapour generating boilers (other than central
heating hot water boilers capable
also of producing low pressure steam);
super-heated water boilers (C) aircraft, spacecraft and parts thereof (D)
ships, boats and floating structures;
(ii) Turbo jets and turbo propellers;
(iii)
Arms and ammunition;
(iv) Propellant
powders; prepared explosives, (other than propellant powders); safety fuses; detonating
fuses; percussion or detonating caps; igniters; electric detonators;
(v) Radar apparatus, radio
navigational aid apparatus
and radio remote control apparatus;
(vi) Tanks
and other armoured fighting vehicles,
motorised, whether or not fitted with weapons
and parts of such vehicles,
that are funded (investment
made in the company) to the extent of
90% or more by the Government
or Government Agencies;
(b) Companies engaged
in an industry regulated by a Sectoral
Regulator or a
Ministry or Department of Central Government
(vii)
Port
services of stevedoring, pilotage, hauling, mooring, re-mooring,
hooking, measuring, loading
and unloading services rendered
by a Port in relation to a vessel or goods regulated by the Tariff Authority
for Major Ports under Section 111 of the Major Port Trusts
Act, 1963;
(viii)
Aeronautical services of air traffic management, aircraft operations, ground safety
services, ground handling, cargo facilities
and supplying fuel etc. rendered by airports and regulated by Airports Economic Regulatory
Authority (“AERA” aeronautical) under the Airports Economic Regulatory Authority of India Act,
2008;
(ix) Telecommunication services made available to users by means of any
transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature (other than broadcasting services) and regulated by the
Telecom Regulatory Authority of India (“TRAI”) under the Telecom
Regulatory
Authority
of India Act, 1997;
(x) Generation, transmission, distribution and supply of electricity regulated by the Central Electricity Regulatory Commission (“CERC”) under The Electricity Act, 2003, other than for
captive generation (as defined under The
Electricity Rules);
(xi)
Roads and other infrastructure projects
that are recipients of concessions;
(xii) Active pharmaceutical
ingredients or bulk drugs & formulations included in
Chapter
30 of the Central Excise Tariff Act;
(xiii)
Fertilisers under administered price mechanism (Urea) or subsidised,
included in Chapter 31 of the Central
Excise Tariff Act;
(xiv) Sugar and industrial alcohol included in Chapters
17 and 22 of Central
Excise Tariff Act;
(xv) Petroleum
products under administered
price mechanism (Diesel, PDS
Kerosene, Domestic LPG and Cooking Gas) or subsidised;
(c)
Other companies
(xvi)
Railway or Tramway locomotives, rolling stock, railway or tramway fixtures and fittings, mechanical (including electro mechanical) traffic signalling equipment’s of all kind as included in chapter 86 of Central Excise Tariff Act;
(xvii) Mineral
products included in Chapter 25 of the Central Excise Tariff Act;
(xviii) Ores included in Chapter
26 of the Central Excise Tariff Act;
(xix) Mineral Fuels, mineral oils etc. included in Chapter 27 of the Central Excise
Tariff
Act (such as coal, lignite, peat,
coke, coal gas etc.);
(xx) Base metals included in Chapters 72, 73, 74, 75, 76, 78, 79, 80 and 81 of the
Central
Excise Tariff Act;
(xxi)
Inorganic chemicals, organic or inorganic compounds of precious metals,
of rare-earth metals, of radioactive elements or
of isotopes included
in Chapter 28 of
the Central Excise Tariff Act , Organic Chemicals included in Chapter
29 of the Central Excise Tariff Act;
(xxii)
Aircraft, spacecraft, that are funded (investment made in the company) to the extent of 90% or more by the Government or Government Agencies;
(xxiii)
Vehicles, aircraft,
vessels and
associated transport equipment, that are funded (investment made in the company) to the extent of
90% or more by the Government or Government Agencies;
(xxiv)
Jute and Jute Products;
(xxv)
Edible Oil under Administrative Price Mechanism;
(xxvi) Construction Industry where there
is any government concession or grant
in any form;
(xxvii)
Provision of healthcare services
including check-up and preventive services, diagnostic services, disease management
and patient care services including
in corporate hospitals;
(xxviii)
Provision of education services,
other than such similar services falling under philanthropy or as part of social spend and do not form part of any business.
Provided that in the case of a multi-product or a multi services
company (i.e. a company producing more than one product or service) the requirement under these rules shall apply to a
product
or a service for which the individual turnover (from such specific
product or such specific service) is rupees one hundred crore or more:
Provided further that in case of a company producing any one specific product or service covered above, the requirement under these rules shall be applicable if the net worth of the
company is rupees five hundred crore
or more, or the turnover from such
product or such service is rupees one hundred crore or more, whichever is less:
Provided also that in the case of a company engaged in a Strategic Industry under this rule, the requirement under these
rules shall be applicable if the turnover of the company is
rupees five hundred crore or more:
Provided also that in case of companies engaged in an industry regulated by a
sectoral regulator, the requirements
of sectoral regulator regarding cost
records and cost audit shall be taken into account.
(2) Applicability for Cost Audit:- The companies required to include cost records in their books of
account in accordance with sub-rule (1), shall be required to get such cost records audited
by a cost auditor.
4. Maintenance of records-
(1) Every company to which
these rules apply, including
all units and branches thereof
shall, in respect of each of its financial year commencing on or after the 1st day of April,
2014, keep cost records in Form “I”
specified in Annexure to these rules.
(2) The cost records
referred to in sub-rule (1) shall be kept on
regular basis in such manner so as to make it possible to calculate
per unit cost of production or cost of operations, cost of sales and margin for each of its products
and activities for every
financial year on monthly or quarterly
or half-yearly or annual basis.
(3) The cost records shall be maintained in such
manner so 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 utilization of resources. These records shall also provide
necessary data which is required to be furnished under these
rules.
5. Cost Audit :-
(1) Every
company covered under
sub-rule (2) of rule 3 shall within
one hundred and eight days of the commencement
of every financial year appoint a
cost auditor at a remuneration to be determined in accordance
with provisions of sub-section (3) of section
148 and rules made thereunder.
(2) Every cost auditor,
who conducts an audit of the cost records
of the company, shall submit the cost audit report alongwith his or
its reservations or qualifications or observations or suggestions in the Form II specified in Annexure to these rules.
(3)
Every cost auditor shall forward his
report to the Board within one
hundred and eighty days from the close of the company’s financial
year to which the report relates.
(4) The provisions of sub-section (12) of section 143 of the Act and the relevant rules made thereunder shall apply
mutatis mutandis to a cost auditor during performance of his functions under section 148 of the Act and these
rules.
6. Rules not to apply
in certain cases:- These Rules shall not apply to companies which are export oriented
having more than seventy five per cent of their revenue
in the form of earnings in
foreign exchange or if such units are operating
out of Special Economic Zones.
7. Savings:-
(1)
The following rules are repealed:-
(a) Companies (Cost Accounting Records) Rules, 2011 (b) Companies (Cost Audit Report) Rules, 2011.
(c) Cost Accounting Records (Telecommunication Industry) Rules 2011; (d)
Cost Accounting Records (Petroleum Industry)
Rules 2011;
(e) Cost Accounting Records (Electricity Industry) Rules; 2011; (f) Cost
Accounting Records (Sugar Industry)
Rules; 2011;
(g) Cost Accounting Records (Fertilizer Industry) Rules 2011; (h)Cost
Accounting Records (Pharmaceutical Industry) Rules 2011;
(2) The supersession of such rules shall not affect things done or omitted to be done before such repeal.
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