AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
MANUFACTURING COST
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....nment, presentation and disclosure of Manufacturing Cost of excisable goods. 4. Definitions The following terms are being used in this standard with the meaning specified. 4.1 Abnormal and non-recurring cost: An unusual or atypical cost whose occurrence is usually irregular and unexpected and/or due to some abnormal situation of the production or operation. 4.2 Administrative Overheads: Cost of all activities relating to general management and administration of an organisation. Administrative overheads need to be analysed in relation to production/manufacturing activities and other activities. Administrative overheads in relation to production/ manufacturing activities shall be included in the manufacturing cost. Administrative overheads in relation to marketing, projects management, corporate office or any other expense not related to the manufacturing activity shall be excluded from manufacturing cost. 4.3 Captive Consumption: Captive Consumption means the consumption of goods manufactured by one division or unit and consumed by another division or unit of the same organization or related undertaking for manufacturing another pro....
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....ees which can be attributed to an excisable good in an economically feasible way. 4.7.2 Indirect Employee Cost: The cost of employees which cannot be directly attributed to a particular excisable good. 4.8 Interest and Finance charges: Interest and Financing Charges are interest and other costs incurred by an entity in connection with the financing arrangements. Examples are: 1. Interest and commitment charges on bank borrowings, other short term and long term borrowings: 2. Financing Charges in respect of finance leases and other similar arrangements: and 3. Exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest costs. The terms Interest and financing charges, finance costs, and borrowing costs are used interchangeably. 4.9 Manufacturing Cost: Manufacturing cost of an excisable good is the aggregate of costs of all resources used in the process of its manufacturing. Manufacturing cost includes cost of Materials (including process materials), Employee Cost, Cost of Utilities, Packing Cost, Direct Expenses, Repairs &Maintenance Cost....
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....urance and other expenditure directly attributable to procurement. Trade discount, rebates and other similar items are deducted for determining the cost of materials. Cenvat credit, credit for Countervailing Customs Duty, Sales Tax set off, VAT, duty draw back and other similar duties subsequently recovered/recoverable by the entity are also deducted. 4.12 Normal Capacity is the production achieved or achievable on an average over a period or season under normal circumstances taking into account the loss of capacity resulting from planned maintenance. Capacity may be determined in terms of units of production or equivalent machine or man hours. 4.13 Packing Material Cost: The cost of material of any nature used for the purpose of packing of excisable good. 4.14 Quality Control Cost: The quality control cost is the expenses incurred relating to quality control activities for adhering to quality standard. These expenses include salaries & wages relating to employees engaged in quality control activity and other related expenses. 4.15 Repairs & Maintenance Cost: Cost of all activities which have the objective of maintaining or restoring an ....
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....g the normal quantity shall be adjusted in the material cost of good production. Realized or realizable value of scrap or waste shall be deducted for determination of manufacturing cost. Material Cost of abnormal scrap /defectives should not be included in material cost but treated as loss after deducting the realisable value of such scrap / defectives. 5.5 Employee Cost for each excisable good shall be measured separately. 5.6. The cost of utilities consumed for manufacturing of excisable good shall be measured for each type of utility. 5.7 Packing material cost used for each type of excisable good shall be measured separately. If excisable goods are transferred/dispatched duly packed, the cost of such packing shall include cost of all types of packing in which the excisable goods are removed from the place of removal. 5.8 The Direct Expenses for manufacturing of excisable goods shall be measured for each excisable good separately. 5.9 Repairs and maintenance cost for manufacturing of excisable goods shall be measured for each excisable good separately. 5.10 Depreciation and Amortisation cost for manufacturing of excis....
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....for production of excisable good. It shall also include cost of rework, reconditioning, retro-fitment, Manufacturing Overheads and other costs allocable to such activity, adjustment for stock of work-in-process and recoveries from sales of scrap and wastages and the like necessary for production of excisable good. In case any input material, whether of direct or indirect nature, including packing material, is supplied free of cost or at concessional value by the buyer of the excisable good, the cost of such material shall be included in the manufacturing cost. For example: Amortisation Cost of Moulds, Tools, Dies & Patterns and Cost of Packing Material etc. received free of cost or at concessional value from the buyer of excisable good shall be included in manufacturing cost. 5.19 Any Subsidy/Grant/Incentive or any such payment received/receivable, from other entity, other than the buyer with respect to any manufacturing cost of excisable good shall be deducted for ascertainment of the manufacturing cost of excisable good to which such amounts are related. 5.20 The manufacturing cost of excisable good shall be determined based on the normal capac....
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....oduction process results in more than one product being produced simultaneously, treatment of joint products and by-products shall be as under: 6.5.1 In case joint products are produced, joint costs are allocated between the products on a rational and consistent basis. 6.5.2 In case by-products are produced, the net realisable value of by-products is credited to the manufacturing cost of the main product. 6.6 Miscellaneous Income relating to production/manufacture shall be adjusted in the determination of manufacturing cost. For example, income from sale of empty containers used for procurement of raw material shall be deducted in determination of manufacturing cost. 7 Presentation 7.1 Cost statement as per Appendix 1 to this standard or as near thereto shall present following information: 7.1.1 Actual capacity utilization in absolute terms and as a percentage of normal capacity. 7.1.2 Cost information relating to various elements of Cost shall be presented separately. 8. Disclosures 8.1 Disclosure shall be made only where material, significant and quantifiable. 8.2 If there is any change in cost....