CMA Harshad Deshpande
Ministry of Corporate affairs (MCA) on 3rd December released Companies (Cost Records and Audit) Amendment Rules, 2018. MCA has released draft rules earlier for public comments. However the rules published are very much different than what was being offered for public comments. The changes which are proposed in the amendment are as under :
| Sr | Rule | Pre-Amendment | Post Amendment | Change | Impact |
| 1 | Rule 3, Table (B) Non Regulated Sector, Srl No. 7 | 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 (38 of 1963)” | Port services of stevedoring, pilotage, hauling, mooring, re-mooring, hooking, measuring, loading and unloading services rendered for a port in relation to a vessel regulated by tariff authority for Major Ports under the Major Port Trusts Act, 1963 (38 of 1963)” | for the words ‘by a port’ words “for a port” are substituted | It will include Companies who are providing Port services of stevedoring, pilotage, hauling, mooring, re-mooring, hooking, measuring, loading and unloading services rendered to a port. |
| 2 | Rule 3, Table (B) Non Regulated Sector, Srl No. 8 | Aeronautical services of air traffic management, aircraft 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 of 2008) | Aeronautical services of air traffic management, aircraft 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) | for the words ‘by airports’ words “at the airports” is substituted | It will include Companies who are providing Aeronautical services of air traffic management, aircraft Aeronautical services of air traffic management, aircraft operations, ground safety services, ground handling, cargo facilities and supplying fuel rendered rendered “at the airport”, |
| 3 | Rule 3, Table (B) Non Regulated Sector, Srl No. 13 | Railway or tramway locomotives, rolling stock, railway or tramway fixtures and fittings, mechanical (including electro mechanical) traffic signalling equipment’s of all kind CETA HEADING : 8601 TO 8608 | Railway or tramway locomotives, rolling stock, railway or tramway fixtures and fittings, mechanical (including electro mechanical) traffic signalling equipment’s of all kind CETA HEADING : 8601 TO 8609 | CETA 8609 is added | No major change as the companies are being covered under other CTH headings.
CTH 8609- CONTAINERS (INCLUDING CONTAINERS FOR THE u 12.5% TRANSPORT OF FLUIDS) SPECIALLY DESIGNED AND EQUIPPED FOR CARRIAGE BY ONE OR MORE MODES OF TRANSPORT shall be covered for Cost Accounting Records and Audit. |
| 4 | Rule 3, Table (B) Non Regulated Sector, Srl No. 19 | Jute and Jute Products CETA HEADING : 5303, 5310 | Jute and Jute Products CETA HEADING : 5303, 5307, 5310 | CETA 5307 is added | No major change as the companies are being covered under other CTH headings.
CETA 5307- YARN OF JUTE OR OF OTHER TEXTILE BAST FIBRES OF HEADING 5303 covering the following items: 5307 10 – Single : 5307 10 10 — Of jute Fibre 5307 10 90 — Other Fibres 5307 20 00 – Multiple (folded) or cabled shall be additionally covered for Cost Accounting Records and Audit. |
| 5 | Rule 3, Table (B) Non Regulated Sector, Srl No. 28 | Paper CETA HEADING : 4801 to 4802 | Pulp & Paper CETA HEADING : 4701 to 4704, 4801 to 4802 | “Pulp” & CETA 4701 to 4704 are added | The Companies Manufacturing only Pulp will also get covered |
| 6 | Rule 3, Table (B) Non Regulated Sector, Srl No. 29 | Textiles CETA HEADING: 5004 to 5007; 5106 to 5113; 5205 to 5212; 5303; 5310; 5401 to 5408; 5501 to 5516 | Textiles CETA HEADING: 5004 to 5007; 5106 to 5113; 5205 to 5212; 5303; 5307; 5310; 5401 to 5408; 5501 to 5516 | CETA 5307 is added | No major change as the companies are being covered under other CTH headings. |
| 7 | Rule 3, Table (B) Non Regulated Sector, Srl No. 33 point no. (XIII) | (xiii) Automatic impalpable cardiac deflobillator | (xiii) Automatic impalpable cardiac defibrillator | The word Deflobillator is replaced with Defibrillator | No impact on coverage, just correction in the technical name of the medical apparatus used to support cardiac ailments. |
Other Amendments
Rule 6 , sub Rule (6)
Provided that the companies which have got the extension of time of holding Annual General Meeting under section 96(1) of the Companies Act, 2013, may file Form CRA-4 within resultant extended period of filing of financial statements under section 137 of the Companies Act, 2013
Impact : It will allow time extension of last date of filing of Cost Audit Reports by companies getting extension of time for holding Annual General meeting. However the amendment is not extended to form CRA-3 which is Cost Audit Report. Hence there is confusion in revision as it is allowing the time extension for efilling however no time extension for Cost Auditor.
FORM CRA-3, Note , Note (3)
The unit of measurement for each Customs Tariff Act Heading, wherever applicable, shall be the same as provided for in the Customs Tariff Act, 1975 (51 of 1975) corresponding to that particular Customs Tariff Act Heading.
Impact : The idea is to bring uniformity in reporting the unit of measurement in respect of products and thereby helping the authorities to assimilate the information for other regulatory uses including matters concerning pricing, WTO and anti-dumping. However it may also create problem for Cost Auditor as many companies follow different UOM for invoicing. E.g. CTH UOM is for many Chapter heading under chapter 84 is Kgs whereas the product is being sold in Nos or Sets. In such cases it will be mandatory to follow same UOM as per CTH.
Summary :
In short following CETA (CTH) heading are being added 8609, 5307, 4701-4704 and companies providing the Port Services and Aeronautical services to Ports / Airports will get added.
Much more was expected from MCA, especially the amendment in the annexures to Cost Audit Report in the light of advent of GST. It is also important to note that these amendments will be in force from date of publication in official gazette and last 2 amendments in Companies (Cost Records and Audit) Rules s are yet to be gazettised.
(The author can be reached at harshad_de@hotmail.com)
Author Bio
Much more expected as Service quality from the practising cost accountants.
Cost audit certificates for companies with turnover of 1oo crores + are issued at Rs 25,000 on a average.
Is this the price of a quality audit?
Cost audit report has Cost & margin reporting at HSN level. How does it help the government from a compliance perspective ?
Of course Cost and Margin reporting holds good for Listed companies, companies with bank borrowings and industry with regulators in place.
Are the Cost auditors failing the profession?
Key industry like Automobile, Packaged food etc are left out from the scope of cost records and audit.
There is no scope of compliance certification with respect to internal audit risk for the class of companies covered above.
Lot is expected from the professional representatives which doesn’t seems to be working out so far.