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Determination of average (Equalized) cost of Transportation

CAS - 05 - Rule - Companies Law - CAS - 05 - CAS - 5 The following is the text of the Cost Accounting Standard-5 (CAS-5) issued by the Council of the Institute of Cost & Works Accountants of India on "". This standard deals with the determination of average transportation cost of a product. In this standard the standard portions have been set in bold italic type. These are to be read in the context of the background material which has been set in the normal type. 1. Introduction: 1 .....

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on requirement of transportation cost for claiming deduction while arriving at the assessable value of excisable goods cleared for home consumption/export. There is a need to standardize the record keeping of expenses relating to transportation and computation of transportation cost. 2. Objective 2.1 To bring uniformity in the application of principles and methods used in the determination of averaged/equalized transportation cost. 2.2 To prescribe the system to be followed for maintenance of re .....

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egulations or for any other purpose. For example, this standard can be used for: (a) determination of average transportation cost for claiming the deduction for arriving at the assessable value of excisable goods (b) Insurance claim valuation (c) Working out claim for freight subsidy under Fertilizer Industry Coordination Committee (d) Administered price mechanism of freight cost element (e) Determination of inward freight costs included or to be included in the cost of purchases attributable to .....

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ods but does not include detention and demurrage charges. Explanation : Cost of transportation is classified as inward transportation cost and outward transportation Cost. 4.2 Inward Transportation cost is the transportation expenses incurred in connection with materials/goods received at factory or place of use or sale/removal. 4.3 Outward Transportation cost is the transportation expenses incurred in connection with the sale or delivery of materials or goods from factory or depot or any other .....

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by an agent, including consignment agent and C&F agent, franchisee for storing of materials/goods for further dispatch including the premises of Consignment Agent and C&F Agent for the purpose. Depot includes warehouses, go-downs, storage yards, stock yards etc. 4.8 Equalized transportation cost means average transportation cost incurred during a specified period. 4.9 Equalized freight means average freight. 5. Maintenance of records for ascertaining Transportation Cost 5.1 Proper record .....

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s showing details of various elements of cost, such as salaries and wages of driver, cleaners and others, cost of fuel, lubricant grease, amortized cost of tyres and battery, repairs and maintenance, depreciation of the vehicles, distance covered and trips made, goods hauled and transported to the depot. 5.3 In case of hired transport charges incurred for despatch of goods, complete details shall be recorded as to date of despatch, type of transport used, description of the goods, destination of .....

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goods removed/sold for both home consumption and export. 5.6 Records for transportation cost from factory to depot and thereafter shall be maintained separately. 5.7 Records for transportation cost for carrying any material /product to job-workers place and back should be maintained separately so as include the same in the transaction value of the product. 5.8 Records for transportation cost for goods involved exclusively for trading activities shall be maintained separately and the same will n .....

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eared for export shall be maintained separately. 5.12 Separate records of cost for mode of transportation other than road like ship, air etc. are to be maintained in appendix -2 which will be included in total cost of transportation. 6. Treatment of cost: 6.1 Inward transportation costs shall form the part of the cost of procurement of materials which are to be identified for proper allocation/ apportionment to the materials/products. 6.2 Outward transportation cost shall form the part of the co .....

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s (iii) Tonne-Km (iv) Unit/Equivalent unit (v) Value of goods (vi) Percentage of usage of space Once a basis of apportionment is adopted, the same should be followed consistently. 6.4 For determining the transportation cost per unit, distance shall be factored in to arrive at weighted average cost. 6.5 Abnormal and non-recurring cost shall not be a part of transportation cost. Explanation : Penalty, detention charges, demurrage and cost related to abnormal break down will not be included in tran .....

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n in Appendix 3 and same shall be indicated there. Similarly, total common cost of own fleet (outward) shall be apportioned to different categories of products as shown in Appendix 3 on a basis which should be specified. The basis of apportionment may be adopted depending on the nature of product as indicated in para 6.3. Similar approach shall also be applied for hired outward transport charges. More columns may be required to be shown in Appendix 3 specifying different types of transactions. F .....

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cost records and other books of account in a manner which would facilitate preparation and verification of cost of transportation and other related charges and its apportioning to various products. Transaction value 8. 'Transaction value' shall have the meaning assigned to it in section 4 of The Central Excise Act, 1944 or section 14 of The Customs Act, 1962 or as defined in any other Act or Regulations as the case may be. 9. The standard will be operative from the date of issue. Finaliz .....

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d - outward - Km A7. Total Goods transported inward - basis of apportionment (Specify) A8. Total Goods transported outward - basis of apportionment (Specify) A9 Total (A7+A8) B COST INFORMATION Rs. Cost of Operation Variable Cost B1. Salaries & Wages of Drivers, Cleaners and others B2. Fuel & Lubricants B3. Consumables B4. Amortized cost of Tyre, Tube & Battery B5. Spares B6. Repair & Maintenance B7. Other Variable Cost (specify) B8. Total Variable Cost (B1 to B7) Fixed Cost B9. .....

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te: 1. Cost of Battery, and Tyres and Tubes shall to be amortised over its useful life. 2. Asset Register shall be maintained for determination of depreciation and amortization cost. 3. Separate Cost Sheet shall be prepared for different types of vehicles. Appendix 2 Name of the Manufacturer: Address of the Manufacturer: Statement of Hired Outward Transportation Cost for the period ending…… A Quantitative Information A1 Quantity of goods transported - outward (UM) B COST INFORMATIO .....

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