TaxTMI 
TaxTMI 
TaxTMI 
Packing Material Cost
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....termination of the cost of product, and the presentation and disclosure in cost statements. 1.3 Packing Materials for the purpose of this standard are classified into primary and secondary packing materials. Objective 2. The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the packing material cost with reasonable accuracy. Scope 3. This standard should be applied to cost statements, which require classification, measurement, assignment, presentation and disclosure of Packing Material Cost including those requiring attestation. Definitions 4. The following terms are being used in this standard with the meaning specified. 1[4.1 Abnormal cost: An unusual or atypical cost wh....
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....: Distribution overheads, also known as Distribution Cost, are the costs incurred in handling a product from the time it is ready for despatch until it reaches the ultimate consumer.] For example: u Secondary packing u Transportation cost u Warehousing cost u Cost of delivering the products to customers etc. u Clearing and forwarding charges u Cost of mending or replacing packing materials at distribution point. 4.8 Finance Costs: Costs incurred by an enterprise in connection with the borrowing of funds. This will include interest and commitment charges on bank borrowings, other short term and long term borrowings, amortisation of discounts or premium related to borrowings, amortisation of ancillary cost incurred in connection with ....
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....which it can be used by or sold to a customer. For example: u Pharmaceutical industry: Insertions related to product, Foils for strips of tablets/capsules, vials. u Industrial gases: Cylinders/ bottles used for filling the gaseous products u Confectionary Industry: Butter paper and wrappers. 4.11.4 REUSABLE PACKING MATERIAL: Packing materials that are used more than once to pack the product. 12[4.11.5 SCRAP: Discarded packing material having some value in a few cases and which is usually either disposed of without further treatment or reintroduced into the production of packing material.] 4.11.6 SECONDARY PACKING MATERIAL: Packing material that enables to store, transport, inform the customer, promote and otherwise make the product m....
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....stimation. 5. Principles of Measurement 5.1 Principle of valuation of receipts of packing material: 5.1.1 The packing material receipts should be valued at purchase price including duties and taxes, freight inwards, insurance, and other expenditure directly attributable to procurement (net of trade discounts, rebates, taxes and duties refundable or to be credited) that can be quantified at the time of acquisition. Examples of taxes and duties to be deducted from cost are CENVAT credits, credit for countervailing customs duty, sales tax set off/VAT credits and other similar items of credit recovered/ recoverable. 5.1.2 Finance costs directly incurred in connection with the acquisition of Packing Material shall not form part of Packing Ma....
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....2 Principle of valuation of issue of packing material Issues shall be valued using appropriate assumptions on cost flow. For example: First In First Out, Last In First Out, Weighted Average Rate. The method of valuation shall be followed on a consistent basis. 5.3 Wherever, packing material costs include transportation costs, determination of costs of transportation shall be governed by CAS 5 - Cost Accounting Standard on determination of average (equalized) cost of transportation. 5.4 Packing Material Costs shall not include imputed costs. However in case of Cost of Production of Excisable Goods for Captive Consumption the computation of cost shall be as per CAS 4. 5.5 Where packing materials are accounted at standard cost, the price ....
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....sified as primary and secondary and within this classification as purchased - indigenous, imported and self-manufactured. 7.2 Where separate cost statements are prepared for packing costs, the cost of packing materials consumed shall be presented in terms of type of packing in which the materials are used (For example: Bale, Bag, Carton, Pallet). Such statements shall also include cost and quantitative information, wherever it is found material and quantifiable. 8. Disclosures 8.1 The cost statements shall disclose the following: 1. The basis of valuation of Packing Materials. 2. Where Packing Materials Cost is disclosed at standard cost, the price and usage variances. 16[3. The cost and price of Packing Materials received from/suppli....