Dear Professional Collegues :
If default ismade by the cost auditor in
complying with the aforesaid provisions, he shall be punishable with fine,
which may extend to five thousand rupees
compiled by :
CMA Krishna Dasan.A
Mob: 98711-28831
Email: aknair2002@cmaglobal.net.in
Website: www.cmaglobal.net.in
Companies are required to disclose full particulars of the cost auditor along with the due date and actual date of filing of the Cost Audit Report by the cost auditor, in its Annual Report for each relevant financial year. Since the notification has made effective from April 1, 2011, companies under cost audit are required to furnish the details in its Annual Report from the financial year 2011-12.
But still there is confusion in the minds of professional whether their company is covered under cost audit or not and many of them has shown in their report that the company is not coming under cost audit though it is not that . To Here is a list of industries covered under cost audit which are
INDUSTRIES
COVERED UNDER COST AUDIT for FY 2011-12
& 2012-13
List of Industry/Activity
under Cost Audit as on date
Criteria
: Effective on all Companies
having
turnover of Rs. 20 crores or more
or
having net
worth of Rs. 5 crore
or
listed or
getting listed in any Stock Exchange
(MCA Order No. F.No.52/26/CAB-2010 dtd 2nd May 2011)
|
|||
S.No.
|
Name of
the Industry
|
Description
of Activity and Relevant Chapter Heading of the Central Excise Tariff Act,
1985
|
Effective
from Financial Year commencing
|
1.
|
Telecommunication
Industry
|
Act, process,
procedure, function, operation, technique, treatment or method employed in
relation to telecasting, broadcasting, telecommunicating voice, text,
picture, information, data or knowledge through any mode or medium
|
1st April
2011
|
2.
|
Petroleum
Industry
|
Chapter 27 of
CETA 1985 or
Production,
processing, manufacturing or mining of crude oil, gases [including Natural
Gas, Compressed Natural Gas, Liquefied Petroleum Gas and regasified gases,
etc. as defined in the Petroleum and Natural Gas Regulatory Board Act, 2006
(19 of 2006)] or Biogas or any other petroleum products
|
1st April
2011
|
3.
|
Electricity
Industry
|
Generation of
electricity from any source of energy, and includes transformation,
transmission, distribution, and/or supply of electricity by any mode, or
medium
|
1st April
2011
|
4.
|
Sugar
Industry
|
Chapters 17
and 22 of CETA 1985 or
Production,
processing, or manufacturing of any form or grade of sugar, molasses, or
alcohol (including ethyl alcohol, rectified spirit, absolute alcohol,
denatured alcohol, power alcohol, or solvent blends etc. but excluding
potable alcohol) by using any raw materials
|
1st April
2011
|
5.
|
Fertilizer
Industry
|
Chapter 31 of
CETA 1985 or
Fertilizers
as defined in clause (h) of Section 2 of the Fertilizer (Control) Order, 1985
made under Section 3 of the Essential Commodities Act, 1955 (10 of 1955)
|
1st April
2011
|
6.
|
Pharmaceutical
Industry
|
Chapters 29
and 30 of CETA 1985 or
Production,
processing, or manufacturing of bulk drugs or formulations and includes the
meaning assigned to them under the Drugs (Prices Control) Order 1995
|
1st April
2011
|
List of Industry/Activity
under Cost Audit as on date
Criteria :Effective on all
Companies
having
turnover of Rs. 100 crores or more
or
listed or
getting listed in any Stock Exchange
(MCA Order No. F.No.52/26/CAB-2010 dtd 3rd May 2011)
|
|||
SNo.
|
Name of the Industry
|
Description of Activity
and Relevant Chapter Heading of the Central Excise Tariff Act, 1985
|
Effective from Financial
Year commencing
|
7.
|
Cement
|
Chapter 25, 38 and 68 of CETA
1985
|
1st April 2011
|
8.
|
Tyres & Tubes
|
Chapter 40 of CETA 1985
|
1st April 2011
|
9.
|
Steel
|
Chapter 72 and 73 of CETA
1985
|
1st April 2011
|
10.
|
Paper
|
Chapter 47 and 48 of CETA
1985
|
1st April 2011
|
11.
|
Insecticides
|
Chapter 38 (includes all
classes of Insecticides as defined under clause (e) of section 3 of the
Insecticides Act, 1986 (46 of 1968) and included in the schedule annexed to
the said Act and as amended from time to time.
|
1st April 2011
|
12.
|
Glass
|
Chapter 70 of CETA 1985
|
1st April 2011
|
13.
|
Paints & Varnishes
|
Chapter 32 of CETA 1985
|
1st April 2011
|
14.
|
Aluminum
|
Chapter 76 of CETA 1985
|
1st April 2011
|
Procedure for Appointment of
Cost Auditor:
Step
1:Certificate from Cost Auditor
Obtain Certificate
from Cost Auditor regarding compliance of section
224 (1- B) of the Companies Act, 1956.
Step 2: Board
Resolution
Pass Board Resolution proposing appointment of cost auditor
Step 3:File Form 23C and Due date of filing Form
23C
The Company shall e-file its application with the Central
Government on www.mca.gov.in portal, in the prescribed Form 23C within ninety
(90) days from the date of commencement of each financial year, along with the
prescribed fee as per the Companies (Fees on Application) Rules, 1999 as
amended from time to time and other documents as per existing practice i.e.
(i)
certified copy of the Board Resolution proposing appointment of cost
auditor;
and
(ii)
copy of the certificate obtained from the cost
auditor regarding compliance of section 224 (1- B) of the Companies Act, 1956
However where a company is covered under cost audit for the first
time vide cost audit order dated 2nd may 2011 , 3rd may
2011 , 30th june 2011 or 24th jan 2012 , the period of 90
days shall be counted from the date of concerned order. Every company has to
follow the procedure prescribed vide MCA Circular No.15/2011 dated April 11 ,
2011.
Step 4 : Approval by Central Govt.
Prior approval would
be deemed to have been granted if the Central Government does not raise any
query within 30 days of filing of Form 23C.
In case the Central
Government raises any query within the said period of 30 days, the company
would be required to clarify the issues and re-submit the Form 23C. The period
of 30 days, in this case, would run from the date of resubmission of Form 23C.
Step 5
Formal letter of appointment to the Cost Auditor
After obtaining
approval of the Central Government (deemed or otherwise),the Company will be
required to issue a formal letter of appointment to the cost auditor.
Step 6 File Form 23D by Cost Auditor
The Cost Auditor is
required to inform the Central Government within thirty days of receipt of
formal letter of appointment from the Company. Such intimation is required to
be done in prescribed e-Form 23 D along with a copy of such appointment.
Other Points
(a) Competent Authority :
As per provisions of
section 233B(2), the Board of Directors of a Company can appoint a cost auditor
after obtaining prior approval of the Central Government. Under the revised
procedure, the first point of reference will be the Audit Committee to ensure
that the cost auditor is free from any disqualification as specified under
section 233B (5) read with section 224 and sub-section (3) or sub-section (4)
of section 226 of the Companies Act, 1956. The Audit Committee should also
ensure that the cost auditor is independent and is at arm's length relationship
with the company. After ascertaining the eligibility, the Audit Committee will
recommend to the Board of Directors for appointment of the Cost Auditor.
In
those companies where constitution of an Audit Committee is not required by
law, the functions of the "Audit Committee" as per the procedure will
be discharged by the "Board of Directors".
(b) Disclosure
to be made by Company in Annual Report:
The Company is required to disclose full particulars of the cost
auditor along with the due date and actual date of filing of the Cost Audit
Report by the cost auditor, in its Annual Report for each relevant financial
year. Since the notification has made effective from April 1, 2011, companies
under cost audit are required to furnish the details in its Annual Report from
the financial year 2010-11.
Since the cost audit report of a particular financial year may not
have been submitted before publication of the Annual Report, relevant details
of due and actual date of filing for the last financial year and the due date
of filing for the current year may be published in the Annual Report.
© Additional Fee for Late filing of Form 23C
Till 6th August 2012 , there were no penal provisions in
the companies ( Fees on Applications) Rules, 1999 for delay in filing of Forms
but as per MCA notification dated 7th
August 2012 , the penal provisions have been made applicable which are given
below.
Period of Delay Fee Payable
with the Application
Up to 30 days
|
Two times of normal fee
|
More than 30 days and up to 60 days
|
Four times of normal fee
|
More than 60 days and up to 90 days
|
Six times of normal fee
|
More than 90 days
|
Nine times of normal fee
|
(d) Normal Fee as per the Companies (Fees on
applications ) Rules , 1999 :
Application
made by : Amount
of Fees to be paid(Rs.)
1
A Company having an Authorised Share Capital of
(a) Less than Rs.25
Lakh 500.00
(b) Rs.25 Lakh or more but less than Rs.5 Cr 1000.00
(c) Rs. 5 Cr or
More 2000.00
2. A company limited by Guarantee but not
having a share capital 500.00
3. By an Association or proposed company for
issue of licence
under section 25
of the Act
500.00
4. By a company having a valid licence issued
under section 25 of the Act 500.00
5. By a Foreign Company 1000.00
PENAL PROVISIONS FOR NON-COMPLIANCE:
NON-COMPLIANCE BY COMPANY
If a Company contravenes any provision
of this circular, the company and 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-section (2) of Section642 read with
sub-section (5) and (7) of Section 209 and sub-section (11) of Section 233B of
Companies Act, 1956.
Relevant provisions of Section 209 of the Companies Act,
1956 are as follows:
Sub-section (5) of Section 209
provides that if any of the persons referred to in sub-section (6) fails to
take all reasonable steps to secure compliance by the company with the
requirements of this section, or has by his own wilful act been the cause of any
default by the company there under, he shall, in respect of each offence, be
punishable with imprisonment for a term which may extend to six months, or with
fine which may extend to ten thousand rupees, or with both:
Provided that in any proceedings against
a person in respect of an offence under this section consisting of a failure to
take reasonable steps to secure compliance by the company with the requirements
of this section, it shall be a defence to prove that a competent and reliable
person was charged with the duty of seeking that those requirements were
complied with and was in a position to discharge that duty:
Provided further that no
person shall be sentenced to imprisonment for any such offence unless it was
committed wilfully.
Sub-section (6) of
Section 209 provides that the persons referred to in sub-section (5) are the
following, namely:—
(a) where the company has a managing director or
manager, such managing director or manager and all officers and other employees
of the company; and
(d)
where the company has neither a managing director nor manager, every director
of the company;
Sub-section
(7) of Section 209 provides that if any
person, not being a person referred to in sub-section (6), having been charged
by the managing director, manager or Board of directors, as the case may be,
with the duty of seeing that the requirements of this section are complied with
makes default in doing so, he shall, in respect of each offence, be punishable
with imprisonment for a term which my extend to six months, or with fine which
may extend to ten thousand rupees, or with both.
Relevant provision
of Section 642 of the Companies Act 1956
is as under:
Sub-section
(2) of Section 642 provides that any rule made under sub-section (1) may
provide that a contravention thereof shall be punishable with fine which may
extend to five thousand rupees and where the contravention is a continuing one,
with a further fine which may extend to five hundred rupees for every day after
the first during which such contravention continues.
Non
compliance by Cost Auditor:
compiled by :
CMA Krishna Dasan.A
Mob: 98711-28831
Email: aknair2002@cmaglobal.net.in
Website: www.cmaglobal.net.in
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