Rules governing maintenance of cost accounting records and cost audit as per Section 148 of the Companies Act, 2013:
MAINTENANCE OF COST RECORDS:
The Rule 3 has classified sectors under Regulated and Non-Regulated sectors.
The sectors covered under Table A are under the Regulated Sector and sectors covered under Table B are under the Non-Regulated Sector.
Every company engaged in the production of the goods or providing services, specified in Tables (Table A – Regulated sectors and Table B – Non-regulated Sectors), having an overall turnover from all its products and services of Rupees thirty five crore or more during the immediately preceding financial year, shall include cost records for such products or services in their books of account.
This means that applicability of maintenance of Cost Records shall be for those sectors which are mentioned in the tables (Table A – Regulated sectors and Table B – Non-regulated Sectors) to the Companies (Cost Record and Audit) Amendment Rules 2019 dated 15-10-2019.
For any company to fall under the applicability of maintenance of Cost records:
Company’s product / services shall fall under one or more categories given under Table A and / or Table B. AND the respective Central Excise Tariff Act (CETA) headings (wherever applicable).
Company’s overall turnover from all its products and / or services (from the products / services as mentioned above) shall be Rupees thirty five crore or more during the immediately preceding financial year.
If both of the above tests are passed by the Company, provisions for maintenance of cost records apply.
Provided that nothing contained above shall apply to a company which is classified as micro enterprise or a small enterprise including as per the turnover criteria under sub-section (9) of section 7 of the Micro, Small and Medium Enterprises Act, 2006.
Table (A) Regulated Sectors
| S No. | Industry /Sector/ Product/Service | 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 and regulated by the Telecom Regulatory Authority of India under the Telecom Regulatory Authority of India Act, 1997 (24 of 1997); including activities that requires authorisation or license issued by the Department of Telecommunications, Government of India under Indian Telegraph Act, 1885 (13 of 1885); | Not applicable |
| 2. | Generation, transmission, distribution and supply of electricity regulated by the relevant regulatory body or authority under the Electricity Act, 2003 (36 of 2003); | Generation – 2016; Other Activity – Not Applicable |
| 3. | Petroleum products; including activities regulated by the Petroleum and Natural Gas Regulatory Board under the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006); | 2709 to 2715; Other Activity – Not Applicable |
| 4. | Drugs and pharmaceuticals; | 2901 to 2942; 3001 to 3006. |
| 5. | Fertilisers; | 3102 to 3105. |
| 6. | Sugar and industrial alcohol; | 1701; 1703; 2207. |
Table (B) Non-regulated Sectors
| S No. | Industry /Sector/ Product/Service | CETA Heading (wherever applicable) |
|---|---|---|
| 1. | Machinery and mechanical appliances used in defence,
space and atomic energy sectors excluding and ancillary item or items; Explanation – For the purposes of this sub- clause any 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; 8801 to 8805; 8901 to 8908 |
| 2. | Turbo jets and turbo propellers; | 8411 |
| 3. | Arms and ammunitions and Explosives; | 3601 to 3603; 9301 to 9306. |
| 4. | Propellant powders; prepared explosives (other than propellant powders); safety 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, mooring, re-mooring, hooking, measuring, loading and unloading services rendered for9 a Port in relation to a vessel or goods regulated by the Tariff Authority for Major Ports under the Major Ports 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 at the airports and regulated by the Airports Economic Regulatory Authority under the Airports Economic Regulatory Authority of India Act, 2008 (27 of 2008); | Not applicable. |
| 9. | Iron and 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’s of all kind; | 8601 to 8608; 8609 |
| 14. | Cement; | 2523; 6811 to 6812 |
| 15. | Ores and Mineral Products; | 2502 to 2522; 2524 to 2526; 2528 to 2530; 2601 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, 5307, 5310 |
| 20. | Edible Oil; | 1507 to 1518 |
| 21. | Construction Industry as per para 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. | Pulp and Paper; | 4701 to 4704; 4801 to 4802 |
| 29. | Textiles; | 5004 to 5007; 5106 to 5113; 5205 to 5212; 5303; 5307; 5310; 5401 to 5408; 5501 to 5516 |
| 30. | Glass; | 7003 to 7008; 7011; 7016 |
| 31. | Other machinery and Mechanical Appliances; | 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) Ventricular peripheral shud; (xii) Spinal implants; (xiii) Automatic impalpable cardiac defibrillators; (xiv) Pacemaker (temporary and permanent); (xv) Patent ductusarteriosus, atrial septal defect and ventricular septal defect closure device; (xvi) Cardiac re-synchronize therapy; (xvii) Urethra spinicture devices (xviii) Sling male or female; (xix) Prostate occlusion device; and (xx) Urethral stents; |
9018 to 9022 |
Provided that nothing contained in serial number 33 shall apply to foreign companies having onlyliaison offices.
Provided further that nothing contained in this rule shall apply to a company which is classified as amicro enterprise or a small enterprise including as per the turnover criteria under sub-section (9) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).
Disclaimer:
The entire contents of this article have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts made to provide authentic information, it is suggested to cross-check the relevant sections, rules under the Companies Act, 2013 for better understanding.
Download Material:
Companies Cost Audit & Record Rules 2019
Leave a Reply