Ministry : Ministry of Finance and Company Affairs

Department / Board : Company Affairs

Notification No : GSR686(E)

Date : 08.10.2002

Section, Act No : 209(1) of the Companies Act, 1956

Cost Accounting Records (Petroleum Industry) Rules, 2002

G.S.R 686(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), the Central Government hereby makes the
following rules, namely: -

1. Short Title and Commencement.--

(1) These rules may be called the Cost Accounting Records (Petroleum
Industry) Rules, 2002.

(2) They shall come into force on the date of their publication in the Official
Gazette.

2. Application.--

They shall apply to every company engaged in production, processing and

manufacturing of crude oil, gases (including Compressed Natural Gas or
Liquefied Natural Gas and re-gasification thereof) or any other petroleum
products :

Provided that these rules shall not apply to a company, -

(a) the aggregate value 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 1st 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 relating to utilisation of materials, labour and other
items of cost in so far as they are applicable to such other products or
activities shall not be included in the cost of the product or activities referred
to in rule 2.

(2) The books of accounts referred to in sub-rule (1) shall be kept on a

regular basis in such a manner as to make it possible to calculate the cost of
each product or activity referred to in rule 2 for every financial year from the
particulars entered therein. Every such books of account and the proformae
specified in the said Schedule, shall be completed not later than ninety days
from the close of the financial year of the company to which it relates.

(3) The Satisfaction and other records shall be maintained in accordance with
the provisions of the Schedule to these rules in such a manner 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 cost.
These records shall also provide the necessary data required by the Cost
Auditor to suitably report on all the points referred to in Cost Audit (Report)
Rules, 2001 as amended from time to time.

(4) It shall be the duty of every person, referred to in sub-section (6) and (7)
of section 209 of Companies Act, 1956 (1 of 1956), to take all reasonable
steps to secure compliance by the company with the provisions of sub rules
(1), (2) and (3) of this rule in the same manner as he is liable to maintain
accounts required under sub section (1) of section 209 of the said Act.

4. Penalty.--

If a company contravenes the provisions of rule 3, the company and every

officer thereof who is in default, including the persons referred to in sub-rule
(4) of rule 3 shall, be punishable as provided under sub-section (2) of section
642 read with sub-sections (5) and (7) of section 209 of Companies Act, 1956
(1 of 1956).

"SCHEDULE

[See rule 3]

1. MATERIALS.--

(1) The proper records shall be maintained showing separately all the
receipts, issues and balances, both in quantities and values of each item of
materials, consumable stores, casings and other tubular items, chemicals,
tools, drilling bits, spares etc. required for producing, processing or
manufacturing of the products or activities referred to in rule 2. The cost shall
include all direct charges up to supply base or refinery. The basis on which the
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 department, 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 multi product unit shall be equitable and applied consistently

(3) The proper records shall be maintained indicating the quantity as well as
value of by-products recovered in the different processes having significant
value of the cost of input of materials. In the case of certain by-products
recovered, which cannot be reused in the process and are sold or disposed of
without further processing, the realisation from such sales shall be recorded
and adjusted against the process concerned on a reasonable basis. In case
further processing is necessary to make the by-products usable or saleable,
as the case may be, adequate records of the cost involved for such further
processing shall be maintained. If such processing is done by any outside
agency, proper records to show the quantity sent for processing, quantity
received back after processing and the cost incurred thereon shall be
maintained in detail. The net realisation, if any shall be adjusted against the
major process relatable to such by-product. The cost of by-products shall be
determined on equitable and reasonable basis and applied consistently.

(4) The proper records shall be maintained showing the quantity and value of
wastage, spoilage, rejections and losses of materials, process materials,
consumable stores whether in transit, storage, manufacture or at any other
stage. The method followed for adjusting the above losses as well as the
income derived from the disposal of rejected and waste materials including
spoilage, if any, in determining the cost of product shall be indicated in the
cost records. Any abnormal wastage or spoilage or rejection shall be indicated
distinctly and separately along with reasons thereof.

(5) Where any credit under Central Value Added Tax (CENVAT) under the
Central Excise Act, 1944 (1 of 1944) or any other benefit such as duty
drawbacks or any other similar items of credit, received or receivables on any
item of material and/or consumables stores or spares, the cost of such
material and or consumable stores or spares should be shown after adjusting
such credit or benefits.

2. SALARIES AND WAGES.--

(1) The Proper records shall be maintained to show the attendance and
earnings of all employees of the cost centers or departments and the work on
which they are employed. The records shall also indicate the following
separately for each cost or work centre or department in line with the
accepted Standards and Practices.
 (a) piece rate wages (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 or 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 under separate
classified headings indicating the reasons therefor. The method followed for
accounting of such payments in determining the cost of the product or activity
shall be on equitable and reasonable basis and applied consistently. The said
method shall be disclosed in the cost records also.

(4) The cost of termination benefits payable to employees shall be separately

recorded under separate classified heads. The method followed for such cost
in determining the cost of the product or activities referred to in rule 2 shall
be on equitable and reasonable basis, applied consistently and disclosed
separately. Only the termination benefits say in respect of voluntary
retirement scheme, which are payable in addition to the normal retirement
benefits and are likely to provide benefits in terms of savings in cost in future
shall be treated as deferred revenue expenditure over a period not exceeding
five years. These costs shall not form part of salaries and wages and shall be
shown separately. Such costs shall be excluded from valuation of inventories
since these do not result in putting the inventories to their present location
and condition.

3. SERVICE DEPARTMENT EXPENSES.--

The proper records shall be maintained to indicate expenses incurred in

respect of each service department or cost centre like laboratory, transport,
dispensary, township, fire fighting security, etc. These expenses wherever
significant and material shall be apportioned to relevant product or activities
on equitable and reasonable basis and applied consistently. Where these
services are utilised for other products or activities of the company also, the
basis of apportionment of such expenses to the products or activities referred
 to in rule 2 and others shall be equitable and clearly indicated in the records
and applied consistently.

4. UTILITIES.--

The Cost Statements for earn utility shall be maintained separately in

Preforms 'A' Wherever such utility is functionally independent and not forming
part of a composite unit.

(1) Water: - Proper records showing the quantity and cost of treated or
cooling water produced and consumed, if any, for production, processing and
manufacturing of the products or activities referred to in rule 2 in different
cost centres or departments shall be maintained. The cost of treated water
apportioned to the cost centres or departments 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 arid 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 snail 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 centres 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 reference
in different work centres or departments. Records shall also indicate installed
capacity, number of units generated, losses and consumption in each work
centres or departments separately. Where power is generated, and supplied
by any other unit of the company to the plant producing, processing or
manufacturing the products or activities under reference, adequate records
shall be maintained to indicate the quantity and cost of power so supplied.
The cost of power allocated to products or activities referred to in rule 2 shall
be on equitable and reasonable basis and applied consistently. The records
should state clearly the measures taken on conservation of energy and its
corresponding impact on unit cost of production.

(4) Other Utilities: - The proper records showing quantity and cost shall be
maintained in respect of any other utilities produced or purchased or utilised
or installed by the company such as effluent treatment plant etc for
producing, processing and manufacturing the product or activities referred to
in rule 2.

5. WORKSHOP OR REPAIRS AND MAINTENANCE OR TOOL ROOMS.--

(1) The Proper records showing the expenditure incurred by the workshop or
tool room under different heads and on repairs and maintenance in the
 various cost centers or departments or plant wise or oil fields wise shall be
maintained. The records shall also indicate the basis of charging the workshop
or tool room or repairs and maintenance expenses to different cost centers or
departments or plant wise or oil fields wise. Where maintenance work is done
by direct workers of any production cost centre or department, the wages and
salaries of such workers shall be treated as direct expenses of the respective
cost centre or department. If the services are utilised for other products or
activities also, the manner of charging a share to such products or activities
shall be on equitable and reasonable basis and applied consistently.

(2) The records shall indicate the amount and also the proportion of closing
inventory of stores and spare parts representing items, which have not moved
for over 24 months.

(3) The expenditure on major repair works from which benefit is likely to
accrue for more than one financial year shall be deferred over the period
expected to benefit on a reasonable and equitable basis and applied
consistently. Such 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
indicated separately and shall not be included in the cost statement. The basis
of allocation of depreciation on indirect assets to the products or activities
under reference shall be on equitable and reasonable basis and applied
consistently.

(3) The basis on which depreciation is calculated and allocated or apportioned

to various cost centers or departments and absorbed on all products shall be
clearly indicated in the cost records. If depreciation charged or chargeable to
the cost centers or departments is in excess or lower than the depreciation
calculated by applying the rates of depreciation prescribed under the
provisions of sub-section (2) of Section 205 of the Companies Act, 1956 (1 of
1956), such amount of excess or lower depreciation, shall be indicated clearly
in the cost records. The cost records shall also show the effect of such excess
or lower depreciation as the case may be, on the per unit cost of each
respective product or activity. The cumulative depreciation charged in the cost
records, against any individual item of asset shall not, however, exceed the
 original cost of the respective asset.

(4) The cost incurred on exploration and development of new oil fields shall
be treated and amortised in accordance with the method of costing followed,
namely, "Full Cost Method" or "Successful Efforts Method" etc. The method of
costing followed shall be disclosed and followed consistently.

7. SURVEY COST.--

The proper records shall be maintained showing basin wise details of survey
cost, if any, incurred by geological field parties, seismic field parties, gravity
magnetic parties, shallow drilling parties, etc. These records shall contain
details of expenses incurred such as salaries and wages, explosives and
detonators, stores and spares, repair and maintenance, contractual payment
if any, depreciation etc so as to enable the company determine the cost of
survey as per respective Proforma. The records shall also indicate the
treatment of survey cost.

8. EXPLORATION AND DEVELOPMENT DRILLING COST.--

(1) The Proper records shall be maintained for the expenses incurred in
exploration and development of area covered by a petroleum exploration
license or a mining lease for exploration for or production of crude oil and
natural gas These details shall be prepared for onshore and offshore
separately. The cost incurred for acquisition of exploration 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 or 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 the properties.

9. OTHER OVERHEADS.--

(1) The proper records shall be maintained for the products or activities under
reference showing the various items of expenses comprising the ether
overheads. These expenses shall be analysed, classified and grouped
according to activities, namely exploration and production of crude oil and
gases, refining and transportation etc. and administration, installation and
 distribution of these products in line with accepted standards and practices.

(2) Where the company is manufacturing products other than the products or
activities under reference, the records shall clearly indicate the basis followed
for apportionment of the common overheads including head office expenses
of the company to such products and to products or activities under reference
including capital works as applicable. Where certain expenses forming part of
overhead can be identified with a particular activity or a product, such
expenses shall be segregated and charged to the relevant activity or product
in the first instance and thereafter the residual expenses under the above
categories of overheads shall be apportioned on a reasonable and equitable
basis and applied consistently. The overheads chargeable to capital works
shall be indicated separately in the cost records. The basis of apportionment
or absorption of overheads to the cost or work centers or departments and
products shall be indicated in the cost records. The records shall be
maintained in such a manner as to indicate the details of other overheads for
exploration, production, transportation, refining, administrative and marketing
and distribution etc, as applicable

10. ROYALTY OR TECHNICAL KNOW-HOW FEE OR LEASING CHARGES.--

(1) The adequate records shall be maintained showing the royalty and/or
technical know-how fee including other recurring or non-recurring payments
of similar nature if any, made for the products or activities under reference to
collaborators or technology suppliers in terms of agreements entered into with
them. Such records shall be kept separately in respect of each such
collaborator or supplier. The basis of charging such amount, including lump
sum payment and its treatment shall be indicated in the cost records.

(2) In the case of leasing arrangements, proper records shall be maintained

showing details of terms and conditions, 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 accepted standards and practices.
The detailed criteria on which it is decided to extend the utility period of these
expenses to more than one financial year shall be disclosed in the cost
 records. The following criteria, which are only indicative and not exhaustive,
may be adopted in such cases:

(i) the output or process is clearly defined and the costs attributable to
the output or process can be separately identified;

(ii) the technical feasibility of the output or process has been

demonstrated;

(iii) the management of the enterprise has indicated its intention to

produce and market or use the output or process;

(iv) there is a reasonable indication that current and future research

and development costs to be incurred on the project together with
expected production, administrative and selling costs are likely to be
more than covered by related future revenues or benefits; and

(v) adequate resources exist or are reasonably expected to be

available to complete the project and market the output or process.

(3) The expenses incurred by the Research and Development Department for
providing technical know-how to outsiders shall be recorded separately and
excluded from the cost of products or activities under reference. The amount
recovered for providing technical know-how to outsiders shall also be
indicated separately and excluded from the income arising from the sale of
output under reference.

12. QUALITY CONTROL.--

The adequate records shall be maintained to indicate the expenses incurred in

respect of quality control department or cost centre for products or activities
under reference. Where these services are also utilised for other products of
the company, the basis of apportionment to products or activities under
reference and to other products shall be equitable and clearly indicated in the
records and applied consistently.

13.TRANSPORTATION EXPENSES.--

The proper records shall be maintained showing quantity transported,

distance covered and cost incurred for transporting of crude oil and gas
referred to in rule 2 by any of the modes of transport such as pipeline, ocean
tankers and rail or road from the Central Tank Farm, Oil Collecting Stations
and oil dispatch points, Gas Collecting Stations and gas dispatch points, or
Process Platforms etc., as the case may be. The record shall also indicate the
capacity 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 and 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 INCENTIVES ON EXPORTS.--

The proper records showing the expenses incurred on the export sales, if any,
of the product under reference shall be separately maintained so that the cost
of export sales can be determined correctly. Separate cost statement shall be
prepared for product exported giving details of export expenses incurred and
incentive earned. In case, duty free imports of input materials are made, the
cost statements should reflect this fact.

17. INTEREST AND OTHER BORROWING COSTS.--

The proper records shall be maintained for money borrowed for each project
and/or working capital and interest charge thereon. The amount of interest
and other borrowing costs shall be allocated or apportioned to the products or
activities under reference and other products or activities on a reasonable and
equitable basis, and applied consistently. The basis of further charging of the
share of the interest and other borrowing costs to the various types of such
products shall also be reasonable and equitable and the same shall be
followed consistently. The basis of such allocation or apportionment shall be
spelt out clearly in the cost records and statements. Net interest and other
borrowing costs incurred for Project under execution shall be capitalised for
the period up to the date the project is ready to commence commercial
activities. However, capitalisation of borrowing costs should be suspended
during extended periods in which active development is Interrupted.

18. WORK IN PROGRESS AND FINISHED STOCK.--

The method followed for determining the cost of work in progress and finished
stock of the outputs shall be indicated in the cost records so as to reveal the
cost element that have been taken into account in such computation. The
appropriate share of conversion cost up to the stage of completion shall be
taken into account white computing the cost of work in progress. The method
adopted for determining the cost of work in progress and finished goods shall
be followed consistently.

19. COST STATEMENTS.--

(1) The Cost statement showing details of exploration, finding, production,

 refining and transportation etc. and all elements of cost of current financial
year and previous year shall be prepared for the process and adopted for
producing, processing and manufacturing of the products or activities referred
under 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 against the separate heads and
analysed into material, labour, and overheads and further segregated into
quantity, price and efficiency variances. The method followed for adjusting the
cost variances in determining the actual cost of the product shall be indicated
clearly in the cost records. The reasons for the variances shall be duly
explained in the cost records and statements.

22.STATISTICAL RECORDS.--

(1) The records regarding available rig days, operation hours or plant hours
and actual utilisation, as may be applicable shall be maintained for products
or activities under reference. Suitable records for computation of idle time of
rig, plants, American Petroleum Institute (API) gravity of crude oil, its Sulpher
contents, storage capacity at various marketing installations etc. as may be
applicable shall also be maintained and analysed.

(2) The adequate records shall be maintained to enable the company to

identify the capital employed, net fixed assets and working capital separately
for different products, activities and other products and other activities to the
extent such elements are separately identifiable. Non-identifiable items shall
be allocated on a suitable and reasonable basis to different products, activities
and other products and other activities. Fresh investments on fixed assets
that have not contributed to the production or processing of products or
activities under reference during the relevant period shall be indicated in the
cost records. The records shall, in addition, show assets added as
replacement and those added for increasing existing capacity.
 (3) In the case of new major projects for product or activity referred to under
rule 2, proper records shall be maintained indicating the funds raised from
different sources, their utilisation, stage-wise cost incurred and progress of
the project as per the project report. Cost and time over run shall also be
analysed with reference to the cost of services or activity and profitability of
the company.

(4) Whenever WTO provisions are attracted, proper records shall be

maintained to identify the competitiveness of the product in the domestic as
well as global market. Adequate statistical records shall also be maintained to
identify the market share of the product manufactured and the likely impact
thereon on account of competitive goods imported into the country.

23. CAPTIVE 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, chemicals and rejected goods including scraps, etc;

(b) utilisation of plant facilities and technical know-how;

(c) supply of utilities and any other services;

(d) administrative, technical, managerial and/or any other consultancy

services;

(e) purchase and sale of capital goods including plant and machinery;

(f) any other payment related to production, processing or

 manufacturing of product under reference.

These records shall also indicate the basis followed for arriving at the rates
charged or paid for such products or services so as to enable determination of
the reasonableness of such rates in so far as they are in any way related to
product under reference.

(2) The transactions by the following "related party relationships" shall be

covered under sub rule (1) -

(a) enterprises that directly, or indirectly through one or more

intermediaries, control, or are controlled by, or are under common
control with, the reporting enterprise (this includes holding companies,
subsidiaries and fellow subsidiaries);

(b) associates and joint ventures of the reporting enterprise and the
investing party or venturer in respect of which the reporting enterprise
is an associate or a joint venture;

(c) individuals owning, directly or indirectly, an interest in the voting

power of the reporting enterprise that gives them control or significant
influence over the enterprise, and relatives of any such individual (d)
key management personnel and relatives of such personnel; and (e)
enterprises over which any person described in (c) or (d) is able to
exercise significant influence. This includes enterprises owned by
directors or major shareholders of the reporting enterprise and
enterprises that have a member of key management in common with
the reporting enterprise.

However, the following shall not be deemed as "related party relationships": -

(a) Two companies simply because they have a Director in common,

notwithstanding paragraph (d) or (e) above (unless the Director is able
to affect the policies of both companies in their mutual dealings);

(b) a single customer supplier, franchiser, distributor, or general agent

with whom an enterprise transacts a significant volume of business
merely by virtue of the resulting economic dependence; and

(c) the parties listed below, in the course 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) "contral" 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 body in case of any other enterprise; or

(iii) a substantial interest in voting power and the power to

direct, by statute or agreement, the financial and/or operating
policies of the enterprise;

(d) "significant influence" means participation in the financial and/or

operating policy decisions of an enterprise, but not control of those
policies;

(e) "an Associate" means an enterprise in which an investing reporting

party has significant influence and which is neither s subsidiary nor a
joint venture of that party;

(f) "a Joint venture" means a contractual arrangement whereby two or

more parties undertake on economic activity, which is subject to joint
controi;

(g) "joint control" means the contractually agreed sharing of power to

govern the financial and operating policies of an economic activity so
as to obtain benefits from ii;

(h) "key management personnel" means those persons who have the
authority and responsibility for planning, directing and controlling the
activities of the reporting enterprise;

(i) "relative" means in relation to an individual, means the spouse,

son, daughter, brother, sister, father and mother who may be
connected by blood relationships;

(J) "holding company" means a company having one or more

subsidiaries;

(k) "subsidiary" means a subsidiary within the meaning of Section 4 of

the companies Act, 1956(1 of 1956):
 (I) "fellow subsidiary" means a company is said to be a fellow
subsidiary of another company if both are subsidiaries of the same
holding company;

(j) "state-controlled enterprise" means an enterprise, which is under

the control of the Central Government or State Government.

PROFORMA 'A'

Name of the Company:..………………………………….

Statement showing the cost of Utilities like (1) Water (2) Power etc. produced
or consumed during the year/period:...…………………………………………………………..

I Quantitative Information:

Serial Particulars Unit Current year Previous year

Number

1. Installed capacity

2. Quantity produced

3. Capacity utilisation (%)

4. Quantity re-circulated

5. Quantity purchased, if any

6. Self consumption including

losses (to be specified)

7. Net units available

II Cost Information

Serial Particulars Quantity Rate per Amount Cost per Unit

Number unit (Rupees in
(Rs.) lacs)
Current Previous
Year Year
(Rupees) (Rupees)
A1. 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: Credit, if any

11. Net Total

B. Apportioned to
cost centre or
activity

1.

2.
 3.

4. etc.

Notes: -

1. Separate cost sheet is to be prepared for each major utility having

significant impact on cost, whenever such utility is functionally
independent and not forming part of composite unit.

2. If any of the utilities, which are manufactured by the company, is

sold to outside parties, proper credit should be given in the cost of
production of the respective utility.

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.

Delete items not applicable.

Proforma 'B'

Name of the company: ...…………………………………………………………

Statement showing the details of Survey Cost during the year ending:..…………
………………………………….

Cost Information:

Serial Particulars Brought Current year Total Amount

Number Forward Amount (Rupees in
(Rupees in (Rupees in lacs)
lacs) lacs)

1. Materials

a) Explosives and
Detonators

b) Others(to be specified)

2. Salaries and Wages

3. Contractual Services

(a) Shot Hole Drilling

(b) Other Contractual

Payments

(c) Others (to be specified)

4. Other direct Expenses

(a) Data Processing cost

(b) Data Interpretation Cost

(c) Others (to be specified)

5. Repairs and Maintenance

6. Depreciation

7. Royalty or Technical Know-How

or Lease Rent

8, Administration. Overheads

9. Others (to be specified)

10 Total Survey Cost

II Status

SI. Particulars Total

No.

1. Cost of Survey transferred to Producing

Properties.

2. Cost of Survey directly charged 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 or development: Offshore of Onshore...………………………

………………..

Statement showing Cost of Exploratory drilling or Development drilling during

the year...………………………..

Quantitative Information

Sl. Particulars Unit Current Previous Year

No. Yeas

2. Meter drilled Status of Welts

(a) Under Drilling

(b) Under Testing

(c) Dry

(d) Hydrocarbon Bearing

(e) Service Welis

II Cost Information
SI. Particulars Amount (Rs.)
No.

Brought Current Year Total

forward

1. Preparatory Cost

(a) Land

(b) Approach Road

(c) Civil Work

(d) Others (To be specified)

(e) Total Preparatory Cost

2. Drilling - cost of Rigbr Drill ship

Operation

(a) Material Cost

(i) (to be specified)

(ii)

(iii) Total

(b) Salaries and Wages

(c) Administrative Overhead

(d) Repair and Maintenance

(e) Others (to be specified)

Total

3. Production Testing Cost

4. Other direct expenses

(a) Cementing

(b) Logging
 (c) Others (to be specified)

5. Well Materials

6. Depreciation

(a) Rigs

(b) Casing

(c) Tubing

(d) Drill Pipes

(e) Well Head

(f) Others (to be specified)

7. Royalty or Technical know-how

8. Lease rent, if any

9. Research and Development

10. Others (to be specified)

11- Administration Overhead

12. Total Cost

III Status

SI. No. Particulars Exploration Drilling Development Total

Drilling

1. Cost of successful wells transferred to producing

property.
2. Service Wells transferred to Producing
Properties.

3. Cost of abandoned or dry wells charged off

4. Cost of wells in progress carried forward

5. Others (to be specified) Total ------

Note:

(1) Separate proforma to be prepared for Exploratory Drilling and

Development Drilling.

(2) 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.

(3) The column for "Brought forward" under the head "Amounts (Rs)"
stands for amount charged towards wells-in-progress during the
previous year.

(4) Separate details shall be maintained for the 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 Particulars Unit Current Previous Year

Number 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 Oilequivalent

II Cost Information:

Serial Particulars Amount Cost per Unit

Number

Current Previous Current Year Previous Year

Year Year (Rupees (Rupees) (Rupees)
(Rupees in in lacs)
lacs)

1. Survey Cost (From

Proforma B)

2. Exploration Drilling
Cost (From
Proforma C)

3. Development
Drilling cost (From
Proforma C)

4. Others (to be
specified)

5, Total Finding 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 'E'

Name of the company: ...……………………………………………………………………………………

 Statement showing the Cost of intermediate-activities like Lifting, Conveying,
Treating and Transportation of Crude Oil and Natural Gas during the year
ending:..……………………………………………………………………………..

I Quantitative Information:

Serial Particulars Unit Current Previous

Number Year Year

1. Gross Production Crude Oil Natural Gas

2. Used for Mining Operation Crude Oil

Natural Gas

3. Transit Loss Crude Oil Natural Gas

4. Unavoidable loss or flaring

5. Bottom Sediment and Water

6. Net production Crude Oil Natural Gas

7. Net Production in appropriate oil

equivalent terms Crude oil Natural Gas
Total in appropriate oil equivalent
terms

8. Transferred to Refinery or Extraction

plant Crude Oil Natural Gas,

9. Sales Crude Oil Natural Gas

10. Trunk pipeline capacity for

transportation to delivery point

11. Quantity throughput by pipeline

II Cost Information:
 A. Lifting

Serial Particulars Amount Cost per Unit

Number

Current Previous Current Previous

Year Year Year Year
(Rupees) Rupees (Rupees) (Rupees)

1. Salary and Wages

2. Power, Fuel and Water

3. Stores and snares 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 Particulars Amount Cost per Unit

Number

Currant Year Previous Year Current Year Previo

(Rupees) (Rupee*) (Rupees) (Rupe

1. Salary and Wages

2. Consumables Demulsifier and

Desalter

3. Other Stores and spares or

chemicals

4. Logistic Services or Transport

Allocation

5. Repairs and Maintenance

6. Power and Fuel

7. Allocation

8. General Administration Overheads

9. Depreciation

10. Others to be specified

11. TOTAL COST OF CONVEYING and

TREATING

C. Cost of Transportation of Crude Oil or Natural Gas

Serial Particulars Amount Cost per Unit

Number

Current Year Previous Year Current Year Previou

(Rupees) (Rupees) (Rupees) (Rupee

1. Salary and Wages

2. Consumables

(a) Pour Point Depressant

(PPD) or Flow Improver

(b) Others

3. Crude Oil Conditioning Plant

(COCP) Charges

4. Stores and spares or chemicals

5. Logistic Services or Transport

Allocation

6. Repairs and Maintenance

7. Power and Fuel

8. General Administrative Overheads

9. Depreciation

10. Others to be specified

11. TOTAL COST OF

TRANSPORTATION

2. Less: Amount received separately

from customers, if any.

13. Net Cost

Notes: -

1. Separate Proforma shall be prepared separately for onshore and

offshore production.

2. The administration overheads shall be included in the cost of crude

oil or gas only to the extent they contribute in putting the goods or
services produced at the present location 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,

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:.....………………………………………………………..

1. Quantitative Information:
Serial Particulars Unit Current Previous
Number Year Year

1. Gross Production

2. Used for Mining Operation

3. Transit Loss

4. Net Production

2. Cost Information

Serial Particulars Amount Cost per Cost per

Number Unit Unit

Currant Previous Current Previous

Year Year Year Year
(Rupees in (Rupees) in (Rupees) (Rupees)
lacs lacs)

1. Finding Cost (From

Proforma D)

2. Lifting Cost (From

Proforma E)

3. Cost of Conveying and

Treatment (From
Proforma E)

4. Cost of Exploratory or
Development Drilling
-Charged off, if any.

5 Cost of transportation,
if any (from Proforma
E)
6. Cost of Survey charged
off, if any

7. Provision for
Impairment

8. Provision for
Abandonment

9. Overhead:

(a) Project

(b) Regional

(c) Headquarter

10. Royalty on production,

if any

11. Statutory levies on

production, if any

12. Other Expenses (to be

specified)

13. Total Cost of Production ':

B Transferred to:

SI. Products Basis of Actual Equivalent Value (Rs.

No. apportionment quantity quantity in Lakhs)
of cost

Transferred to

1) Refinery or Extraction
plant:

Crude oil Natural Gas

 2) Sales:

Crude oil Natural

Gas

3) Related Party transfer:

Crude oil Natural

Gas

Notes: -

(1) Separate cost statement shall be maintained in respect of Crude

Oil and Natural Gas.

(2) 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.

(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 Particulars UNIT Current Year Previous Year

Number

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 Particulars Quantity Rate Amount Costs Per Unit

Number (Rupees (Rupees in
per tonne) lacs)

Current Previous
Year Year

A1. Material

(a) Cost of captive

crude oil or gas
power transferred,

i) (Oil field to be
specified)

ii)

iii)

(b) Transportation
Cost, if any.

(c) Others
(specify)

(d) Total

2. Crude oil or gas

Purchased

(i) Indigenous

(ii) Imported
3. Process material,
Consumable stores and
spares

4. Utilities

(a) Water

(b) Steam

(c) Power

(d) Others (specify)

(e) Total

5. Wages and Salaries

6. Repair and
Maintenance

7. Depreciation

8. Royalty or technical
Know-how or Lease
rent

9. Quality Control

10. Research and

development

11. Other direct expenses

(to be specified)

12. Administrative
Overhead

(a) Salahes and

wages

(b)Others
 (specify)

(c)Total (a+b)

13. Total (1 to 12)

14. Stock Adjustment

15. Less Credit for

wastage or by
products

(a) (Specify)

(b)

(c)

16. Total Cost

B. Cost Apportioned to joint products

Serial Products Basis of Actual Equivalent Value Rs.

Number apportionment quantity Quantity or Lakhs
of cost

Total cost Apportioned

to:

i) Related Party
Transfer

a) (to be
specified)

b)

c)
 ii) Sales

a)(to be
specified)

b)

c)

iii) Others

a) (to be
specified)

b)

c)

Notes:--

(1) If a product emerging from one-process forms the raw material for
subsequent process or other products coverted under rule 2, separate
cost statement of production under this proforma (suitably modified, if
necessary) 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 Particulars Unit Current year Previous

Number year

1. Opening Stock

2. Gross Quantity Produced

3. Quantity purchased

4. Loss

5. Net availability

6. Used for mining operation

7. Captive Consumption

8. Quantity sold

9. Closing Stock

II COST INFORMATION

Sl. Particulars Unit Qty Rate Total cost Cost per unit
No. Rs
(Lakhs)
Current Previous
Year (Rs) Year (Rs)
1. Cost of captive Production

2. Cost of purchases

3. Stock Adjustment Add:

Opening stock Less: Closing
stock

4. Packing cost, if any

5. Statutory Levies

a) Royalties on sales

b) Cess

c) Excise duty

d) Sales tax

e) Octroi

f) Port Trust charges

g) Others Total

6. Other Expenses (to be

specified)

7. Selling and Distribution

Expenses

(a) Salaries and wages

(b) Freight and Transport

Charges

(c) Commission to selling

agents

(d) Advertisement
expenses

(e) Others Total

8. Total Cost of Sales

9. Borrowing charges

a) For manufacturing
activity referred to in
Rule 2

b) Others

c) Total

10. Total cost

11. Sales Realization

12 Less: Excise duty

13. Net sales Realisation

14. Margin

15. Add: Export 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 or 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. successful effort method or full cost method
to incorporate unit specific features, if any, indicating reasons thereof.

5. Delete items not applicable.

PROFORMA 'I'

Name of the company:...……………………………………………………………………

Statement showing the allocation or apportionment of total expenses or

income of the company between service or activities covered under rule 2 and
other activities during the year ending....…………………………………………………………

Serial Particulars Total expenses Share applicable to Share Bas

Number as per audited activities covered under applicable allo
financial rule2 to other
accounts. activities

Exploration Refining

1. Direct Material

2. Process materials

3. Utilities

(a) Power

(b) Fuel

(c) Steam

(d) Effluent Treatment

(e) Other (specify)

4. Salaries and wages

5. Consumable Stores and Spares)

6. Repairs and Maintenance

7. Depreciation or Depletion etc.

8. Transportation Charges

9. Quality Control

10. Cess

11. Royalty or Technical Know-how

12. Other Statutory Levies

13. Lease rent

14. Research and development

15. Works overhead

16. Administrative overhead

17. Other direct expenses (to be

specified)

18. Adjustment in difference

between opening and closing
work in progress

19. Less credit for recoveries

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)

Notes: -

1) Cost centers are illustrative only.

2) All items of income and expenditure in this Proforma shall be
reconciled with the financial accounts for the relevant period/year.

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) Delete items not applicable."

[F No. 52/15/CAB-200I]

RAJIV MEHRISHI. Jt. Secy.