TMI BlogThe Cost Accounting Records (Petroleum Industry) Rules, 2002X X X X Extracts X X X X X X X X Extracts X X X X ..... of the machinery and plant installed wherein, as on the last date of the preceding financial year, does not exceed the limits as specified for a small scale industrial undertakings under the provisions of Industries (Development and Regulation) Act, 1951 (65 of 1951); and (b) the aggregate value of the turnover made by the company from the sale or supply of all its products during the preceding financial year does not exceed ten crore rupees. 3. Maintenance of records. - (1) Every company to which these rules apply shall, in respect of each of its financial year commencing on or after the 1 st day of April, 2003 keep proper books of accounts relating to the utilisation of materials, labour and other items of cost in so far as they are applicable to any of the products or activities referred to in rule 2. The books of account, so maintained shall contain, inter-alia, the particulars specified in Schedule annexed to these rules and Proformae A to I mentioned in the said schedule: Provided that if the said company is manufacturing any other product(s)or is engaged in other activities in addition to the products or activities referred to in rule 2, the particulars relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost of issue and consumption has been calculated shall be indicated in cost records and followed consistently. In the case of consumable stores and small tools the cost of which are insignificant, the company may, if it so desires, maintain such records for the group of such consumable stores and tools. The cost of materials, consumable stores, casings and other tubular items, chemicals, drilling bits, tools and spares etc. shall be properly identified and charged to the relevant departments, cost centres or activities, on equitable and reasonable basis and applied consistently. (2) Where joint products or more than one product of equal economic importance arises from a process, the cost up to the point of separation of products shall be apportioned to such joint products on reasonable and equitable basis and shall be applied consistently. The basis on which such joint costs are apportioned to different products arising from the process or processes shall be indicated in the cost records. The basis of the apportionment of common selling and distribution expenses to the product in the case of multiproduct unit shall be equitable and applied consistently (3) The proper record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (wherever applicable); (b) incentive wages, either individually or collectively as production bonus or under any other scheme based on output; (c) overtime wages; (d) earnings of casual or contractual labour; (e) bonus or gratuity, statutory as well as other; (f) contribution to superannuation scheme; and (g) any other earning of the nature specified in (a) to (f) above. (2) The records shall be maintained in such a manner as to enable the company to furnish necessary particulars under this head in Proformae A to I of Schedule annexed to these rules. Where the employees work in such a manner that it is not possible to identify them with any specific cost or work centre or department, the labour charges shall be apportioned to the cost or work centers or departments on equitable basis and applied consistently. (3) Any wages and salaries allocable to capital works, such as, additions to plant and machinery, buildings or other fixed assets of any activity etc. shall be accounted for under the relevant heads. Similarly, payments in the nature of deferred revenue expenditure shall be separately recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned shall be on equitable and reasonable basis and applied consistently. (2) Steam: - Where steam is raised by the company, proper records showing the quantity and cost of steam raised and consumed for the production, processing or manufacturing of the products or activities referred to in rule 2 shall be maintained. The cost of steam consumed by various units like the petroleum, refining etc., and by other units of the company shall be apportioned on equitable and reasonable basis and applied consistently. Where steam is raised and supplied by any other unit of the company to the referred plant, the cost of steam so supplied shall be charged to the referred Plant on equitable and reasonable basis and applied consistently. (3) Power: - Proper records shall be maintained for the quantity and cost of power purchased for the production, processing or manufacturing of the products or the activities referred to in rule 2 in different cost centers or departments. Where power is generated by the company itself, adequate records, showing all elements of cost shall be maintained to show the cost of power generated and consumed for the products or activities under ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost shall be shown separately and the method of accounting along with the basis of allocation of such costs shall also be clearly indicated in cost records. 6. FIXED ASSETS AND DEPRECIATION. - (1) The proper and adequate records shall be maintained for assets used for exploration for and production, processing and manufacturing of the products or activities referred under rule 2 in respect of which depreciation has to be provided for. These records shall inter alia, indicate grouping of assets under each product or activity referred under rule 2, the cost of each item of assets including installation charges, date of acquisition and rate of depreciation. (2) Also such records as will enable to identify and/or allocate gross fixed assets, accumulated depreciation up to the year and net fixed assets under the heads; land and buildings, plant and machinery, furniture and fixtures etc. employed for products or activities referred under rule 2 along with the method and rate of depreciation shall be maintained. The basis of apportionment of common assets to the products or activities under reference shall also be indicated. In case of revaluation of assets, the same shall be indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loration license or mining lease and acquisition of properties shall be treated as deferred revenue expenditure and charged off on a reasonable and equitable basis. Adequate records shall also be maintained as per respective Proforma showing details of exploratory drilling/development expenses incurred on preparatory cost, rig operation cost, transport, well maintenance, other services and depreciation etc. The records shall indicate details of successful or undecided exploratory wells carried as wells-in-progress and successful wells after commercial production created as 'producing properties'. The producing properties shall be depleted applying unit of production method considering the proved developed hydrocarbon reserves or any other methods as per the accepted standards and practices. (2) The proper records shall be maintained showing details of expenses incurred or provision made in respect of dismantling, abandoning and restoring of on-shore or off shore well sites abandoned during the year and basis followed for charging the abandonment and restoration cost to the product. (3) The proper records shall be maintained in respect of provision made towards impairment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, leasing charges paid or payable as well as received or receivable. 11. RESEARCH AND DEVELOPMENT EXPENSES. - (1) The Proper records showing the details of expenses, if any, incurred by the company for the research and development work on the products or activities covered under these rules according to the nature of development of products i.e. existing or new product or processes, development of process of manufacture, existing and new, design and development of new plant facilities and market research for the existing and new products etc., shall be maintained separately. The records shall also indicate the payments made to outside parties for the research and development work. (2) The method of charging these expenses to the cost of products or activities under reference and all other products shall be indicated in the cost records. Where the utility of such research and development work extends over more than one financial year, such expenses shall be treated as deferred revenue expenses and charged to the cost of production of the product or activities under reference and all other products if any, on a reasonable basis and applied consistently in line with the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of pipeline, throughput handled, its maintenance and security personnel cost etc. The record shall also indicate the cost of flow improver, chemicals used, if any, to enable the company to determine cost of transportation as per respective Proforma and quantity of additional petroleum products pumped through pipelines to meet higher seasonal demand. 14. PACKING EXPENSES. - In case of packing of products under reference for retail sales or retail marketing, the proper records shall be maintained showing the quantity and cost of various packing materials and other expenses incurred on packing for marketing of petroleum products. Where such expenses are incurred in common for other products also the basis of apportioning the expenses between the relevant products shall be clearly indicated in the cost records and applied consistently. 15. MARKETING DISTRIBUTION EXPENSES. - The proper record shall be maintained for the quantity handled, stock loss, if any, and expenses incurred on marketing under various heads such as main installation, distribution and administration etc. The cost of marketing and distribution shall be indicated in respective Proforma. 16. EXPENSES OR IN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 2 in Proformae A to I. (2) The output emerging from a process, which forms input for a subsequent process shall be valued at the cost of production up to the previous stage. 20. RECONCILIATION OF COST AND FINANCIAL ACCOUNTS. - (1) The Cost statements shall be reconciled with the financial statements for the financial year specifically indicating the expenses or incomes not considered in the cost records or statements so as to ensure accuracy and to adjudge the profit of the products or activities under reference with the overall profit of the company. The variations, if any, shall be clearly indicated and explained. (2) A statement showing the total expenses incurred and income received by the company under different heads of accounts and the share applicable to the other activities or products shall be prepared and reconciled with the financial statement. 21. ADJUSTMENT OF COST VARIANCES. - Where the company maintains cost records on any basis other than actual such as standard costing, the records shall indicate the procedure followed by the company in working out the cost of the activities and services under such system. The cost variances shall be shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... APTIVE CONSUMPTION. - If the products under reference are used for captive consumption, proper records shall be maintained showing the quantity and cost of each item of output transferred to other department or work centers of the company for self-consumption and sold to outside parties separately. The rates at which the transfers are affected shall be at cost only. 24. POLLUTION CONTROL. - Expenditure incurred by the company on various measures to protect the environment like effluent treatment, control of pollution of air, water, etc., should be properly recorded. 25. HUMAN RESOURCES DEVELOPMENT. - Expenditure incurred by the company on the human resources development activity shall be recorded separately. 26. INTER COMPANY TRANSACTIONS. - (1) In respect of related party transactions or supplies made or services rendered by a company to its holding company or subsidiary or a company termed "related party relationship" as defined below and vice-a-versa, records shall be maintained showing contracts entered into, agreements or understanding reached in respect of: (a) purchase and sale of raw materials, finished products, process materials, chemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their normal dealings with an enterprise by virtue only of those dealings (although they may circumscribe the freedom of action of the enterprise or participate in its decision-making process); i. providers of finance; ii. trade unions; iii public utilities; iv Government departments and Government agencies including Government sponsored bodies. Explanations : - for the purpose of these rules,- (a) "related party relationships" means parties who are considered to be related if at any time during the reporting period one party has the ability to control the other party or exercise significant influence over the other party in making financial and/or operating decisions; (b) "related party transaction" means a transfer of resources or obligations between related parties, regardless of whether or not a price is charged; (c) "control" means (i) ownership, directly or indirectly, of more than one-half of the voting power of an enterprise; or (ii) control of the composition of the Board of Directors in the case of a company or of the composition of the corresponding governing bod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Self consumption including losses (to be specified) 7. Net units available II Cost Information: Serial Number Particulars Quantity Rate per unit (Rs.) Amount (Rupees in lacs) Cost per Unit Current Year (Rupees) Previous Year (Rupees) A 1. Materials or Chemical (specify) (a) (b) (c) 2. Utilities (specify) (a) (b) (c) 3. Wages and Salaries 4. Consumable Stores and Spares 5. Repairs and Maintenance 6. Depreciation 7. Other Direct Expenses, if any 8. Other Overheads 9. TOTAL 10. Less: Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed off to Cost of production 3. Cost of Survey carried forward 4. Others (to be specified) Total Survey Cost Notes: - 1. The Proforma may be modified suitably including for method of accounting followed e.g. successful effort method or full cost method to incorporate unit specific features, if any, indicating reasons thereof. 2. Delete items not applicable. PROFORMA 'C' Name of the Company ............................. Area under Exploration/development: Offshore or Onshore............ Statement showing Cost of Exploratory drilling or Development drilling during the year.................................... I Quantitative Information Sl.No. Particulars Unit Current Year Previous Year 1. Meter drilled 2. Status of Wells (a) Under Drilling (b) Under Testing (c) Dry (d) Hydrocarbon Bearing (e) Service Wells II Cost Information Sl.No. Particulars Amount (Rs.) Brought forward Current Ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses incurred for offshore and onshore activities. (5) Delete items not applicable. PROFORMA 'D' Name of the company:......................... Statement showing the Cost of Finding Proved Reserves Established during the year ending:.............................. I Quantitative Information: Serial Number Particulars Unit Current Year Previous Year 1. Number of wells for exploratory drilling 2. Number of wells for development drilling 3. Total Meterage drilled 4. Proved Reserves Established/Proved in terms of Oil equivalent II Cost Information: Serial Number Particulars Amount Cost per Unit Current. Year (Rupees in lacs) Previous. Year (Rupees in lacs) Current. Year (Rupees) Previous. Year (Rupees) 1. Survey Cost (From Proforma B) 2. Exploration Drilling Cost (From Proforma C) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or chemicals 4. Logistic Services or Transport Allocation 5. Repairs and Maintenance 6. Well Services (a) Work over (b) Water Injection (c) Gas Injection 7. Other Indirect Cost including Overhead (a) Service Overheads (b) Administration Overheads (c) Others (to be specified) 8. Depreciation 9. Depletion 10. Other costs (to be specified) 11. TOTAL LIFTING COST B. Cost of Conveying and Treating Serial Number Particulars Amount Cost per Unit Current. Year (Rupees) Previous. Year (Rupees) Current. Year (Rupees) Previous. Year (Rupees) 1. Salary and Wages 2. Consumables Demulsifier and Desalter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and condition. The balance of administrative overheads, if any, shall be included in the cost of goods or services sold. The proforma may be amended accordingly, if required. 3. The Proforma may be modified suitably including for method of accounting followed e.g. successful effort method or full cost method to incorporate unit specific features, if any, indicating reasons thereof. 4. Wherever any company is engaged in transporting of crude oil or natural gas or other petroleum products, separate details as per C above shall be filled in respect of such transportation activity with suitable modifications, wherever required. 5. Delete items not applicable. PROFORMA 'F' Name of the company:......................... Name and address of the crude producing unit:.............. Statement showing the Cost of Production of Crude Oil and Natural Gas during the year ending:.................... I. Quantitative Information: Serial Number Particulars Unit Current Year Previous Year 1. Gross Production 2. Used for Mining Operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it specific features, if any, indicating reasons thereof. (3) If separate charges are levied from customers for transporting of Crude Oil or Natural Gas from CTF to delivery point, only the net cost shall be shown in point 5 above. (4) Delete items not applicable. PROFORMA 'G' Name of the company:........................... Name and address of the Fuel refining unit: ................. Statement showing the summary Cost of Refining for the year ending:.... Name of the Product:............................. I Quantitative Information: Serial Number Particulars UNIT Current Year Previous Year 1. Installed capacity MMTPA* 2. Crude or Gas refined MMTPA* 3. Capacity utilisation %AGE 4. Fuel and loss (quantity) MT 5. Fuel loss (%) %AGE *MMTPA: - Million Metric Tone Per Annum II Cost Information: Serial Number Particulars Quantity Rate (Rupees per tonne) Amount (Rupees in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost statement of production under this proforma (suitably modified, if neccessary) shall be maintained for each process or products such as manufacture of base oils. (2) In case a joint product is sold without further processing details in regard to quantity sold, cost of sales and average sales realization etc shall be indicated in appropriate statement. If these are further processed, separate cost statement as per this proforma or any other form as thereof shall be prepared. (3) The basis on which cost is apportioned to joint products shall be indicated in this proforma. (4) The Proforma may be modified suitably including for method of accounting followed e.g. successful effort method or full cost method to incorporate unit specific features, if any, indicating reasons thereof. (5) Delete items not applicable. PROFORMA 'H' Name of the company:........................... Name and address of Refinery or Plant:.................. Statement showing the Cost of Sales of (Name of the product): ..................... I QUANTITATIVE INFORMATION Serial Number Particulars Unit Current year Previous year 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort Benefits and incentives, if any 16. Total Margin (including export benefits) 17. Ex-factory price (excluding sales tax etc.) 18. Maximum retail price (excluding sales tax etc.) 19. Maximum retail price, if any, prescribed by the Government/statutory regulatory body etc. Notes: - 1. Separate statement shall be maintained in respect of each major product. 2. Sales realization for quantity sold at price notified or fixed by Government if any and at the price fixed by company shall be indicated separately. 3. Separate proforma shall be prepared for the quantity sold with in the country and the quantity exported. Expenses incurred on export and the incentive earned thereon shall be indicated in the proforma applicable for the quantity produced and exported. 4 . The Proforma may be modified suitably including for method of accounting followed e.g. successf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. Less self consumption, if any, 21. Adjustment in difference between opening and closing stock of finished goods 22. Total 23. Packing Expenses 24. Borrowing charges 25. Selling and Distribution expenses 26. Any other expenses not included in cost 27. Any other income not considered in cost 28. Total cost excluding Excise duty 29. Excise duty 30. Total cost including Excise duty 31. Total Sales realization including Excise Duty Add: Export Benefit, if any 32. Margin (31-30) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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