The Ministry of Corporate Affairs on 15.10.2019 notified the Companies (Cost Records and Audit) Amendment Rules, 2019 due to the implementation of GST, other procedural changes and consequent revision of connected forms i.e. CRA-1 and CRA-3 as per the Companies Act 2013.
Correlation of Central Excise, Cost Records and Cost Audit Reports
Recently on 30th March CBEC has issued one notification with regard to the documents to be produced during Excise audit and this article is a step towards explaining co-relation of costing and Excise Returns.
With the issue of Cost Audit order on 30th June 2011, the Ministry of Corporate Affairs aligned the cost audit with central excise. The issue of cost audit orders on industries covered under specific Central Excise Tariff Headings started a new era wherein the due weightage was given to the excise. After that issue of Exposure draft of Product group classifications based on HSN 4 digit codes further attempted to align excise with costing in a much better way.
The issue of cost audit order on 24th Jan 2012 specifically based on CETA chapter codes further strengthened the concept of integration of Excise with costing.
The new amendment in Central Excise rules have paved the way for production of Cost Audit Reports before the officer empowered under sub-rule (1) of Rule 22 of Central Excise Rule 2002 or the audit party deputed by the Commissioner or the Comptroller and Auditor- General of India, or a cost accountant or chartered accountant nominated under section 14 A or section 14 AA of the Act.
Earlier the same provisions were not there and only Audit Teams deputed by the Central Excise used to look at the numbers reported in the cost audit reports. But now the figures reported in the cost audit reports may have to pass the scrutiny of the qualified professionals either chartered Accountants or cost accountants appointed as special auditor under Section 14A or 14AA of Central Excise Act or CAG Officials.
One more point to note here is that the assessee is required to produce the records within the time limit specified by the said officer or the audit party or the cost accountant or chartered accountant, as the case may be.
The extract of the notification is given hereunder for reference:
iii) in rule 22 of the principal rules, for sub-rule (3), the following sub-rule shall be substituted, namely:-
“(3) Every assessee, and first stage and second stage dealer shall, on demand make available to the officer empowered under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor- General of India, or a cost accountant or chartered accountant nominated under section 14 A or section 14 AA of the Act,-
(i) the records maintained or prepared by him in terms of sub-rule (2);
(ii) the cost audit reports, if any, under section 233B of the Companies Act, 1956(1 of 1956); and
(iii) the income-tax audit report, if any, under section 44 AB of the Income-tax Act, 1961 (43 of 1961),
|
Return |
Assessee |
Relevance with Cost Records |
DATE OF FILING/PERIODICITY |
|
ER-1 |
Monthly Return |
Monthly Production/Sales of FG |
10TH |
|
ER-2 |
Return By EOU |
Production/Sales of FG |
10TH |
|
ER-3 |
Quarterly By SSI |
Production/Sales of FG |
20TH |
|
ER-4 |
Annual Financial Return |
Plant wise expenses for the Excise Registration Code and annual Production, sales. Details of RMC consumption etc.annually |
30TH NOV ANNUALLY |
|
ER-5 |
Information Relating To Principal Inputs |
Details of major raw materials |
30TH APRIL ANNUALLY |
|
ER-6 |
Monthly Return Of Receipt And Consumption Of Principal Inputs |
Monthly procurement and consumption of Raw materials |
10TH |
|
ER-7 |
Annual Installed Capacity Statement |
May be an indicator for compliance with Cost Accounting Standard 2 |
30TH APRIL ANNUALLY |
for the scrutiny of the officer or the audit party or the cost accountant or chartered accountant, within the time limit specified by the said officer or the audit party or the cost accountant or chartered accountant, as the case may be”.
Now the summary of the Excise Returns is given along with their relevance with costing:
In case of any clarifications, please feel free to contact us at navneetic@yahoo.com.
Navneet Kumar Jain
N.K. Jain And Associates
Cost Accountants
FCMA, MBA., LL.B.,M.COM., PGDTL, AIIISLA., LIII
Empanelled Special Auditor under Section 14A and 14AA of Central Excise Act
Empanelled Special Auditor under Section 58A of Delhi VAT Act
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