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MINISTRY OF CORPORATE AFFAIRSNotification No. G.S.R. 874 (E) , Dated- 7th December , 2011
G.S.R. 874 (E). – In exercise of the powers conferred by sub-section (1) of section 642, read with clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 (1 of 1956), and in supersession of the Cost Accounting Records (Bulk Drugs) Rules, 1974 vide G.S.R. 130(E), dated the 14th March, 1974 and Cost Accounting Records (Formulations) Rules, 1988 vide G.S.R. 452, dated the 22nd April, 1988, except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules, namely: -1. Short Title and Commencement, – (1) These rules may be called the Cost Accounting Records (Pharmaceutical Industry) Rules, 2011.(2) They shall come into force on the date of their publication in the Official Gazette.
2. Definitions and Interpretations, – In these rules, unless otherwise requires,—(a) “Act” means the Companies Act, 1956 (1 of 1956);
(b) “bulk drugs” means any pharmaceutical, chemical, biological or plant product including its salts, esters, stereo-isomers and derivatives, which are used as such or as an ingredient in any formulation and shall include any bulk drug included in any bona fide Allopathic, Ayurvedic, Homeopathic, Sidha or Unani (Tibb) systems of medicine;
(c) “compliance report” means the compliance report duly authenticated and signed by a cost accountant in the specified form of compliance report;
(d) “Cost Accountant” for the purpose of these rules means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who is either a permanent employee of the company or holds a valid certificate of practice under sub-section (1) of section 6 and who is deemed to be in practice under sub-section (2) of section 2 of that Act and includes a firm of cost accountants;
(e) “Cost Accounting Standards” means the standards of cost accounting, issued by the Institute;
(f) “cost records” means books of account relating to utilisation of materials, labour and other items of cost as applicable to the production, processing, manufacturing or mining activities of the company;
(g) “Form-A” means the form specified in these rules for filing compliance report and other documents with the Central Government in the electronic mode;
(h) “Form-B” means the form of the compliance report and includes Annexure to the compliance report;
(i) “formulations” means any medicine processed out of or containing one or more bulk drugs with or without the use of any pharmaceutical aids for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals and shall include any medicine included in any bona fide Allopathic, Ayurvedic, Homeopathic, Sidha or Unani (Tibb) systems of medicine;
(j) “Generally Accepted Cost Accounting Principles” means the principles of cost accounting issued by the Institute;
(k) “Institute” means the Institute of Cost and Works Accountants of India constituted under the Cost and Works Accountants Act, 1959 (23 of 1959);
(l) “pharmaceutical activities” means production, processing, or manufacturing of bulk drugs or formulations and includes the meaning assigned to them under the Drugs (Prices Control) Order 1995 as amended from time to time, or included under Chapters 29 and 30 of the Central Excise Tariff Act, 1985 (5 of 1986), and further includes the intermediate products and articles or allied products thereof;
(m) “product” means any tangible or intangible good, material, substance, article, idea, know-how, method, information, object, service, etc. that is the result of human, mechanical, industrial, chemical, or natural act, process, procedure, function, operation, technique, or treatment and is intended for use, consumption, sale, transport, store, delivery or disposal;
(n) “product group” in relation to tangible products means a group of homogenous and alike products, produced from same raw materials and by using similar or same production process, having similar physical or chemical characteristics and common unit of measurement, and having same or similar usage or application; and in relation to intangible products means a group of homogenous and alike products or services, produced by using similar or same process or inputs, having similar characteristics and common unit of measurement, and having same or similar usage or application;
(o) “turnover” means total turnover made by the company from the sale or supply of all products or services during the financial year and it includes any turnover from job work or loan license operations and the subsidies or grants or incentives received but does not include any non-operational income;
(p) all other words and expressions used in these rules but not defined, and defined in the Act and rules made under clause (d) of sub-section (1) of section 209 of the Act shall have the same meanings as assigned to them in the Act or rules, as the case may be.
(h) “Form-B” means the form of the compliance report and includes Annexure to the compliance report;
(i) “formulations” means any medicine processed out of or containing one or more bulk drugs with or without the use of any pharmaceutical aids for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals and shall include any medicine included in any bona fide Allopathic, Ayurvedic, Homeopathic, Sidha or Unani (Tibb) systems of medicine;
(j) “Generally Accepted Cost Accounting Principles” means the principles of cost accounting issued by the Institute;
(k) “Institute” means the Institute of Cost and Works Accountants of India constituted under the Cost and Works Accountants Act, 1959 (23 of 1959);
(l) “pharmaceutical activities” means production, processing, or manufacturing of bulk drugs or formulations and includes the meaning assigned to them under the Drugs (Prices Control) Order 1995 as amended from time to time, or included under Chapters 29 and 30 of the Central Excise Tariff Act, 1985 (5 of 1986), and further includes the intermediate products and articles or allied products thereof;
(m) “product” means any tangible or intangible good, material, substance, article, idea, know-how, method, information, object, service, etc. that is the result of human, mechanical, industrial, chemical, or natural act, process, procedure, function, operation, technique, or treatment and is intended for use, consumption, sale, transport, store, delivery or disposal;
(n) “product group” in relation to tangible products means a group of homogenous and alike products, produced from same raw materials and by using similar or same production process, having similar physical or chemical characteristics and common unit of measurement, and having same or similar usage or application; and in relation to intangible products means a group of homogenous and alike products or services, produced by using similar or same process or inputs, having similar characteristics and common unit of measurement, and having same or similar usage or application;
(o) “turnover” means total turnover made by the company from the sale or supply of all products or services during the financial year and it includes any turnover from job work or loan license operations and the subsidies or grants or incentives received but does not include any non-operational income;
(p) all other words and expressions used in these rules but not defined, and defined in the Act and rules made under clause (d) of sub-section (1) of section 209 of the Act shall have the same meanings as assigned to them in the Act or rules, as the case may be.
3. Application, – These rules shall apply to every company, including a foreign company as defined under section 591 of the Act, which is engaged in the production, processing, or manufacturing of pharmaceutical activities and wherein, the aggregate value of net worth as on the last date of the immediately preceding financial year exceeds five crores of rupees; or wherein the aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year exceeds twenty crores of rupees; or wherein the company’s equity or debt securities are listed or are in the process of listing on any stock exchange, whether in India or outside India:Provided that these rules shall not apply to a body corporate governed by any special Act.
4. Maintenance of records, – (1) Every company to which these rules apply, including all units and branches thereof shall, in respect of each of its financial year commencing on or after the date of this notification, keep cost records and the books of account so maintained shall contain, inter‐alia, the particulars specified in Proformae A to I mentioned in the Schedule annexed to these rules.(2) The cost records referred to in sub‐rule (1) shall be kept on regular basis in such manner so as to make it possible to calculate per unit cost of production or cost of operations, cost of sales and margin for each of its products and activities for every financial year on monthly or quarterly or half‐yearly or annual basis.
(3) The cost records shall be maintained in accordance with the generally accepted cost accounting principles and cost accounting standards issued by the Institute; to the extent these are found to be relevant and applicable and the variations, if any, shall be clearly indicated and explained.
(4) The cost records shall be maintained in such manner so as to enable the company to exercise, as far as possible, control over the various operations and costs with a view to achieve optimum economies in utilization of resources and these records shall also provide necessary data which is required to be furnished under these rules.
(5) All such cost records and cost statements, maintained under these rules shall be reconciled with the audited financial statements for the financial year specifically indicating expenses or incomes not considered in the cost records or statements so as to ensure accuracy and to reconcile the profit of all product groups with the overall profit of the company and the variations, if any, shall be clearly indicated and explained.
4. Maintenance of records, – (1) Every company to which these rules apply, including all units and branches thereof shall, in respect of each of its financial year commencing on or after the date of this notification, keep cost records and the books of account so maintained shall contain, inter‐alia, the particulars specified in Proformae A to I mentioned in the Schedule annexed to these rules.(2) The cost records referred to in sub‐rule (1) shall be kept on regular basis in such manner so as to make it possible to calculate per unit cost of production or cost of operations, cost of sales and margin for each of its products and activities for every financial year on monthly or quarterly or half‐yearly or annual basis.
(3) The cost records shall be maintained in accordance with the generally accepted cost accounting principles and cost accounting standards issued by the Institute; to the extent these are found to be relevant and applicable and the variations, if any, shall be clearly indicated and explained.
(4) The cost records shall be maintained in such manner so as to enable the company to exercise, as far as possible, control over the various operations and costs with a view to achieve optimum economies in utilization of resources and these records shall also provide necessary data which is required to be furnished under these rules.
(5) All such cost records and cost statements, maintained under these rules shall be reconciled with the audited financial statements for the financial year specifically indicating expenses or incomes not considered in the cost records or statements so as to ensure accuracy and to reconcile the profit of all product groups with the overall profit of the company and the variations, if any, shall be clearly indicated and explained.
(6) All such cost records, cost statements and reconciliation statements, maintained under these rules, relating to a period of not less than eight financial years immediately preceding a financial year or where the company had been in existence for a period less than eight years, in respect of all the preceding years shall be kept in good order.
(7) Every person, referred to in sub-section (6) and (7) of section 209 of the Companies Act, 1956 (1 of 1956), shall take all reasonable steps to secure compliance by the company with the provisions of these rules in the same manner as he is liable to maintain accounts required under sub-section (1) of section 209 of the said Act.
5. Form of the Compliance Report – Every company to which these rules apply shall submit a compliance report, in respect of each of its financial year commencing on or after the date of this notification, duly certified by a Cost Accountant, along with the Annexure to the Central Government, in the specified form.
6. Time limit for submission of Compliance Report – Every company shall submit the compliance report referred to in rule 5 to the Central Government within a period of one hundred and eighty days from the close of the company’s financial year to which the compliance report relates.
7. Authentication of Annexure to the Compliance Report – The Annexure to the compliance report shall be approved by the Board of Directors and certified by the Cost Accountant before submitting the same to the Central Government by the company.
8. Penalties – (1) If default is made by the Cost Accountant in complying with the provisions of these rules, he shall be punishable with fine, which may extend to five thousand rupees.
(2) For contravention of these rules, -
(a) the company shall be punishable as provided under sub-section (2) of section 642 of the Act; and
(b) every officer thereof who is in default, including the persons referred to in sub-section (6) of section 209 of the Act, shall be punishable as provided under sub-sections (5) and (7) of section 209 of Companies Act, 1956 (1 of 1956).
9. Savings, – The supersession of the Cost Accounting Records (Bulk Drugs) Rules, 1974 and Cost Accounting Records (Formulations) Rules, 1988, shall not in any way affect‑
(a) any right, obligation or liabilities acquired, accrued or incurred thereunder;
(7) Every person, referred to in sub-section (6) and (7) of section 209 of the Companies Act, 1956 (1 of 1956), shall take all reasonable steps to secure compliance by the company with the provisions of these rules in the same manner as he is liable to maintain accounts required under sub-section (1) of section 209 of the said Act.
5. Form of the Compliance Report – Every company to which these rules apply shall submit a compliance report, in respect of each of its financial year commencing on or after the date of this notification, duly certified by a Cost Accountant, along with the Annexure to the Central Government, in the specified form.
6. Time limit for submission of Compliance Report – Every company shall submit the compliance report referred to in rule 5 to the Central Government within a period of one hundred and eighty days from the close of the company’s financial year to which the compliance report relates.
7. Authentication of Annexure to the Compliance Report – The Annexure to the compliance report shall be approved by the Board of Directors and certified by the Cost Accountant before submitting the same to the Central Government by the company.
8. Penalties – (1) If default is made by the Cost Accountant in complying with the provisions of these rules, he shall be punishable with fine, which may extend to five thousand rupees.
(2) For contravention of these rules, -
(a) the company shall be punishable as provided under sub-section (2) of section 642 of the Act; and
(b) every officer thereof who is in default, including the persons referred to in sub-section (6) of section 209 of the Act, shall be punishable as provided under sub-sections (5) and (7) of section 209 of Companies Act, 1956 (1 of 1956).
9. Savings, – The supersession of the Cost Accounting Records (Bulk Drugs) Rules, 1974 and Cost Accounting Records (Formulations) Rules, 1988, shall not in any way affect‑
(a) any right, obligation or liabilities acquired, accrued or incurred thereunder;
(b) any penalty, forfeiture or punishment incurred in respect of any contravention committed thereunder; and
(c)any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and; any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if those rules had not been superseded.
(c)any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and; any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if those rules had not been superseded.
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