India is a country which introduced the concept of Cost Audits for the corporates. Till 2011, the cost audit report formats were never aligned with any of other statutory documents primarily. Now after realizing the need for the availability of production, capacity and costing data for policy decision making, in 2011 MCA brought in the concept of submission of Cost Audit Report containing costing at Product group level. Product Groups comprised of various CETA[1] codes at 4digit level. The CETA code is of Eight digits. For the first time, the submission of Cost Audit Reports at Tariff code has been mandated via issue of CRA-2 form. The “Instruction_Kit_eForm_CRA-2_v0.4” available at MCA website http://www.mca.gov.in/MinistryV2/Download_eForm_choose.html contains Annexure C.
Annexure C of the Instruction Kit has demonstrated an example regarding the filling of the Form CRA-2 field No. 3 requiring products to be covered.
In CRA 2, the company is required to provide the details of CETA heading and No. of Tariff Items.
Illustration on how to fill the details in field no. 3 of the Form
If a company produces/provides the following products/services:
– Products covered in 10 tariff items for petroleum sector ( 4 for 2709 and 6 for 2710)
– Products covered in 9 tariff items for Fertiliser sector ( 4 for 3102 and 5 for 3105)
– 5 services covered in Telecommunication services
| Then the number to be entered in field 3(a) would be 5 (2+2+1) and accordingly 5 rows would be generated under same block. Further details should be filled in as below industries/sectors/products/services | CETA heading (wherever Applicable) | No. of tariff items/ products/services |
| Petroleum | 2709 | 4 |
| Petroleum | 2710 | 6 |
| Fertilisers | 3102 | 4 |
| Fertilisers | 3105 | 5 |
| Telecommunication | – | 5 |
| Total | 24 |
Based on the above table, at the time of submitting Cost Audit Report, 24 cost statements need to be submitted, (i.e. one for each product/service) unless there are any changes in the product/services during the year.
Presently, in India, costing data at Eight digit CETA code is not available in India at all for any policy decision making.
MCA needs to be congratulated for designing the CRA-2 and giving the clarifications for submission of the costing data at Eight Digit Level for manufacturing concerns
The collection of Costing Data at Eight Digit CETA code is going to help our policy makers for decisions making, our industries for raising any issues with relation to high tax rates, unutilized capacity, dumping of products at cheaper rates etc..
Finally, once again, we should note that Cost Audit Reports for 2014-15 onward is required to be submitted for Eight Digit CETA code (hopefully) level not at Product group code or four digit CETA Code. It means that cost sheets for Eight Digit CETA codes will be required to be prepared for onward submission to MCA in case of manufacturing concerns.
[1] CETA: Central Excise Tariff Code
(Author may be contacted at 9810175020 or on cmanavneetjain@gmail.com in case of any query)
today, we are proceeding towards a unified GST which contemplates a single unified rate across goods & services, when there will be little or no significance of all these tariif codes. So what is purpose of CAR alignment with 8 digit CETC at this juncture ? is it not a short term effort ?
A welcome step for better governance.