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ABCAUS Excel for Chartered Accountants

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Chartered Accountants

Under section 148 of Cos Act 2013, Central Government has may provide that companies engaged in the production of such prescribed goods or providing prescribed services shall in their books of account include particulars relating to of utilization of material, labour or other prescribed items of cost. Further the Central Govt may also direct cost audit of cost records for such companies with minimum net-worth or turnover as prescribed. The cost audit shall be conducted by a cost accountant.

MCA has by notification dated 30/06/2014 notified Companies (Cost Records And Audit) Rules, 2014. Which has been further amended by the Companies (Cost Records And Audit) Amendment Rules, 2014 Notification dated 31-12-2014. The Key highlights of the Amended Rules are as under:

1. Application of cost records-(Rule-3)
The class of companies, including foreign companies engaged in the production of the goods or providing services, specified in the Table below, having an overall turnover from all its products and services of rupees thirty five crore or more during the immediately preceding financial year, are required to maintain cost records for such products or services:

(A) Regulated Sectors

Sl. No.

Industry/Sector/Product/Services

CETA Heading (Wherever applicable)

1

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 under the Telecom Regulatory Authority of India Act, 1997 (24 of 1997):

Not Applicable

2

General Transmission, distribution and supply of electricity regulated by the relevant regulatory body or authority under Electricity Act 2003 (36 of 2003) other than for captive generation (referred to in the Electricity Rules, 2005)

 

3

Petroleum products regulated by the Petroleum and Natural Gas Regulatory Board under the Petroleum and Natural Gas Regulatory Board Act 2006 (19 of 2006)

2079 to 2715

4

Drugs and Pharmaceuticals

2901 to 2942; 3001 to 3006

5

Fertilisers

3102 to 3105

6

Sugar and Industrial alcohol

1701; 1703; 2207

(B) Non-regulated Sectors

Sl. No.

Industry/Sector/Product/Services

CETA Heading (Wherever applicable)

1

Machinery and mechanical appliances used in defence, space and atomic energy sectors excluding any ancillary item or items;

Explanation - For the purposes of this sub- clause, ony company which is engaged in any item or items supplied exclusively for use under this clause, shall be deemed to be covered under these rules.

8401  to  8402; 8801  to 8805; 890I to 8908.

2

Turbo jets and turbo propellers ;

8411

3

Arms and ammunitions:

3601 to 3603; 9301 to 9306

4

Propellant  powders; prepared  explosives (other than propellant powders); satety fuses; detonating fuses; percussion or detonating caps; igniters; electric detonators

3601 to 3603

5

Radar apparatus, radio navigational aid apparatus and radio remote control apparatus

8526

6

Tanks and other armoured fighting vehicles, motorized, whether or  not  fitted  with  weapons and parts of such vehicles., that are funded (investment made in the company) to the extent of ninety per cent. or more by the Government or Government agencies

8710

7

Port  services  of stevedoring,  pilotage,  hauling moorng, rc-mooring, hooking, measuring, loading and unloading services rendered by a Port in relation to a vessel or goods regulated by a port in relation to a vessel or goods regulated by the Tariff Authority for Major Port under section Ill of the Major Port Trusts Act, 1963(38 of 1963);

Not Applicable

8

Aeronautical services of air traffic management,  aircraft operations. ground safety services_ ground handling, Cargo facilities and supplying fuel rendered by airports and regulated by the Airports Economic  Regulatory  Authority  under the Airports Economic Regulatory Authority of India  Act, 2008 (27 of2008)

Not Applicable

9

Steel

7201 to 7229; 7301 to 7326

10

Roads and other infrastructure projects, corresponding to para No.(1) (a) as specified in Schedule VI of the Companies Act, 2013;

Not Applicable

11

Rubber and allied products being regulated by the Rubber Board constituted under the Rubber Act, 1947 (XXIV of 1947).

4001 to 4017

12

Coffee and Tea

0901 to 0902

13

Railway or tramway locomotives. rolling stock, railway    or tramway fixtures and fittings, mechanical     (including    electro    mechanical) traffic signaling equipment of al kind

8601 to 8608

14

Cement

2523; 6811 to 6812

15

Ores and Mineral Products

2502  to  2522; 2524  to 2526; 2528 to 2530; 260 I to 2617

16

Mineral fuels (other than Petroleum).mineral oils etc.

2701 to 2708

17

Base Metals

7401 to 7403; 7405 to 7413; 7419; 7501 to 7508; 7601 to 7614;   7801   to   7802;  7804; 7806;  7901  to  7905;  7907; 8001,  8003; 8007;8101 to 8113

18

Inorganic  chemicals,  organic  or  inorganic   compounds of precious metals, rare-earth metals of radioactive elements or isotopes, and  Organic Chemicals     

2801 to 2853;  2901 to  2942; 3801  to  3807;  3402 to 3403; 3809 to 3824

19

Jute and Jute Products

5303 to 5310

20

Edible Oil

1507 to 1518

21

Construction Industry as per paa No. (5) (a) as specified in Schedule VI of the Companies Act, 2013 (18 of 2013)

Not  applicable

22

Health services, namely  functioning as or running   hospitals,  diagnostic   centres,  clinical centres or test laboratories ;

Not Applicable

23

Education services, other than such similar services falling under philanthropy or as part of social  spend  which  do  not  form  part  of  any business.

Not Applicable

24

Milk Powder

0402

25

Insecticides

3808

26

Plastics and Polymers

3901 to 3914, 3916 to 3921; 3925

27

Tyres and Tubes

4011 to 4013

28

Paper

4801 to 4802

29

Textiles

5004  to 5007;  5106  to 5113; 5205  to  5212;  5303;  5310; 5401 to 5408·5501 to 5516

30

Glass

7003 to 7008; 7011; 7016

31

Other machinery

8403 to 8487

32

Electricals or electronic machinery;

8501  to  8507; 8511  to 8512; 8514 to 8515; 8517; 8525 to 8536; 8538 to 8547.

33

Production, import and supply or trading of following medical devices, namely; (i) Cardiac stents; (ii) Drug eluting stents; (iii) Catheters; (iv) Intra ocular lenses; (v) Bone Cements; (vi) Heart valves; (vii) Orthopaedic implants (viii) Internal prosthetic replacements; (ix) Scalp vein set (x) Deep brain stimulator; (xi) (xi) Ventricular peripheral shud; (xii) spinal implants (xiii) Automatic impalpable cardiac deflobillator; (xiv) Pacemaker (temporary and pem1anent): (xv) Patent ductus arteriosus, atrial septal defect and ventricular septal defect closure device; (xvi) Cardiac re-synchronize therapy (xvii) Uretha spinicture devices; (xviii) Sling male or female; (xix) prostate occlusion device; and (xx) Urethal Stents .

9018 to 9022

Clause 33 above shall not apply to foreign companies having only liaison office

Also these rules shall not apply to a company classified as micro or a small enterprise as per turnover criteria u/s 7(9) of MEMED Act, 2006

2. Application for cost audit: (Rule-4)

Category

Criteria

Companies in Regulated Sectors as specified in Part-A

Overall annual turnover from all product/services in immediately preceding FY is Rs. 50 crores or more and the aggregate turnover for the individual product/services for which cost records are required is Rs. 25 crores or more.

Companies in Non-regulated Sectors as specified in Part-B

Overall annual turnover from all product/services in immediately preceding FY is Rs. 100 crores or more and the aggregate turnover for the individual product/services for which cost records are required is Rs. 35 crores or more.

 

 

The requirement of cost audit as per rule-4 does not apply to a company which is covered under rule-3, and;
(i) whose revenue from exports, in foreign exchange, exceeds seventy five per cent of its total revenue,  or
(ii) which is operating from a specialeconomic zone  

Download Companies (Cost Records and Audit Rules) 2014 Click Here >>
Download Companies (Cost Records and Audit) Amendment Rules 2014
Click Here >>
Details of Cost Records to be maintained in Form CRA-1
Click Here >>
Cost Auditors Appointment and Audit Report
Click Here >>

Companies Cost Records Audit Amendment Rules 2014 – Revised Applicability of Cost Records and Cost Audit to Companies in Regulated or Non-regulated Sectors in Part-A Part-B on Turnover Criteria

MCA Circular 42/2014 dated 12-11-2014. Due to delay in availability of Cost Auditors Appointment Notice Form CRA-2 on MCA website, Date of filing Extended to 31-01-2015 without penalty/late fee Click Here to read >>
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