Thursday, October 26, 2006

National Tax Tribunal Act 2005 and Cost Accountant?

13. Appearance before National Tax Tribunal.—(1) A party to an appeal other than Government
may either appear in person or authorise one or more chartered accountants or legal practitioners
or any person duly authorised by him or it to present his or its case before the National Tax
Tribunal.
) The Government may authorise one or more legal practitioners or any of its officers to present its case before the National Tax Tribunal.


Thursday, October 12, 2006

Cost Audit -A paradigm view.

Re: Cost Audit Again in News-Business Line.


--- In CMA_India@yahoogroups.com, "CMA.R.Veeraraghavan" wrote:
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Sir

This has reference to the Article in the opinion section of your daily on 12-10-2006 "Should we bid adieu to cost audit?".by A.R.Ramanathan.

In addition to what the esteemed author has stated- for the government and the industry to re-orient its outlook towards the exercise, I would like to add the following which may kindly be Published.

While questioning the requirement of Cost audit time and again one must analyse in totality why Cost audit is required and for that, one must know the deficiency and focus of related audit systems that have been statutorily sanctified ,specially the Financial Audit:

The focus of financial audit is scrutiny of financial records(Income and expenses)to ascertain and repose faith in the profits projected, Value of assets and liability in a given period, Propriety of the transaction of income and outgo. Simply this is the essence of scrutiny of financial records. Its focus is Shareholders of the company who are supposedly wealth creators of the business.

Financial records fail miserably in speaking out about the internal strength, efficiency, and sustenance aspect of the business ,which a seasoned businessman is interested. Financial records do not also reflect the wealth creation for the society at large(no macro economic outlook).

It doesn't question price-output-cost relation as well, it doesn't also address the competitors strategy and our strength. In essence it is simply a documentation of inflow-outflow data and projection of residue as gain available for distribution.

Financial audit is shortsighted in its approach and Blind towards societal interest.

The focus of Cost-audit is stake-holders at large (every citizen of India is a stakeholder in the economic activity of the country) Cost records basically reflect Cost incurred in the activity and the drivers that enable such incurrence and thus warn the business to moderate the drivers in advance. It speaks amply about utilisation of resources which is vital for managing an economy. It discloses the reasonability or otherwise of the pricing module which is important to bringing an exploitation free society.

Cost records scrutiny is vital for business sustenance as well ,when we talk of demutualisation of management and owners. Management perspective is sustenance and efficiency and these two are amply addressed by cost records, through its methods and techniques which are prescriptive(Like budgeting, standard costing ,variable costing, pricing methods like target pricing etc.)

Do owner-investor benefit from this exercise, yes in the long run an investor is unconcerned with immediate gains but the vision of business to sustain and its data projecting bottomline efficiency is utmost important for a owner-investor,

While a government benefit from the cost data for planning,resource monitoring,Price controls and comparative industry study with authentic cost data.The tax department benefits from the hard work of Cost accountants both inrespect of Direct tax(where the basis is to judge from allowances and disallowances and mapping with cost to business activity)and indirect taxes(where Cost of goods and services is vital).

It is thus unfortunate to see cost audit often being projected in negative perspective by one and all and in a democracy the conflict of interest in sharing such data is just in the maxim"what is good for all is many a times not good for a few who rule". which sans the basic framework of the constitution"Of the people, by the people and for the people".

Improving reporting methodology, switching from becoming just a prescriptive exercise to a value-added and dynamic tool can trigger focus on cost audit. Audit itself is an art of handling data to produce decision tools and cost auditor should now-on be proactive and prove value addition to the management. Cost audit in India is there to stay for long and i am confident about it and the world can learn from us in this regard.

Thanx

CMA.R.Veeraraghavan

Sunday, October 08, 2006

EXIM Policy and Practising Cost accountants

Click on the heading above to go places.
AAYAAT- NIRYAAT FORM
HANDBOOK OF PROCEDURES VOLUME 1, 2004-09
as amended upto 8 th April 2005
GUIDELINES FOR APPLICANTS
1. Two copies of the application must be submitted unless otherwise mentioned.
2. Each individual page of the application has to be signed by the applicant.
3. a. Part 1 & Part 4 has to be filled in by all applicants. In case of applications submitted
electronically, no hard copies of Part 1 may be submitted. However in cases where
applications are submitted otherwise, hard copy of Part 1 has to be submitted.
b. Only relevant portions of Part 2 & Part 3 need to be filled in.
4. Application must be accompanied by documents as per details given below:
I. For Importer Exporter Code Number (IEC)
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Certificate from the Banker of the applicant firm in the format given in Appendix 18A.
3. Self certified copy of Permanent Account Number (PAN) issued by Income Tax
Authorities.
4. Self certified copy of RBI approval in cases where non resident interest/holding in the
firm/company exists with repatriation benefits.
II. For Import Licence for Restricted Items
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of
application fee in terms of Appendix 21B.
2. Self certified copy of Proforma Invoice from foreign supplier showing CIF value of the
goods.
3. Self certified copy of Registration Certificate issued by concerned authority.
4. Self certified copy of the recommendation letter by the concerned authority.
5. In case of import of gift, Donor's letter in Original.
6. In case of import of Ammunition, a certificate from the Chartered Accountant/Cost and
Works Accountant/Company Secretary showing sales turnover of ammunition
(indigenous and imported) during the preceding three licensing years.
II A. For Import Certificate under Indo – US Memorandum
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Self certified copy of letter from US supplier in support of request for Import Certificate.
III. For Export Licence for Restricted Items
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Self certified copy of Export Order.
III A. For Export Licence for SCOMET Items
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. For Export of Special Chemicals in Categories 1B a nd 1C of Schedule 2 Appendix
3 of ITC (HS) Classification of Export & Import items:
a. Self certified copy of Export Order.
b. End User certificate indicating the end product for which the item of export will be
used by end user in the format given in Appendix 3 6.
3. For Export of all other category items of Schedule 2 Appendix 3 of ITC (HS)
Classification of Export & Import items except those given in serial no 2 above :
a. Self certified copy of Export Order.
b. End User certificate indicating the end product and/or end purpose for which the item
of export will be used by end user in the format given in Appendix 36.
c. Technical Specifications of the items to be exported (not exceeding one page for
each item).
d. Self certified copy of Bill of Lading for items exported earlier under a Licence as per
serial no. 3 of Part B of sub section III A.
IV. For Star Export House Certification
1. Self certified copy of valid RCMC.
2. Statement of exports made in the preceding three licensing years and/or current
licensing year duly certified by a Chartered Accountant/Cost and Works Accountant in
the format given in Appendix 26.
3. Self certified copy of the Balance Sheet filed with Income Tax Authorities for the relevant
year(s).
V. For Advance Licence applications
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Additional documents required in case of issue of Advance Licence for Annual
Requirements:
a. Statement of exports made in the preceding licensing year duly certified by a
Chartered Accountant/Cost and Works Accountant in the format given in Appendix
26.
b. Self certified copy of the manufacturing licence of the applicant firm or his supporting
manufacturer.
3. Additional documents required in case of issue of DFRC:
a. In case of physical exports
i. EP copy of the Shipping Bill or Bill of Export (only in case of exports through
notified land Customs under paragraph 4.19)
ii. Bank Certificate of Exports and Realisation as given in Appendix 22A or
Foreign Inward Remittance Certificate (FIRC) in the case of direct negotiation of
documents or Appendix 22D in the case of offsetting of export proceeds with
approval of RBI. In case of FIRC, a declaration from the exporter that the
remittance is in respect of Shipping Bill(s) No ____________ dtd _________
shall also be furnished.
iii. Statement of exports/supplies giving separately each Shipping Bill number/Bill of
export number and date, FOB/ FOR value in Indian rupees as per Shipping Bill/
Bill of export and description of the resultant product.
b. In case of deemed exports
i. Copy of the invoice duly signed by the unit receiving the material and their
jurisdictional excise authorities certifying the item of supply, its quantity, value
and date of such supply. However incase of supply of items, which are nonexcisable
product(s), a project authority certificate (PAC) certifying quantity,
value and date of such supply would be acceptable in lieu of excise certification.
Not withstanding the above, in respect of supplies to EOU, a copy of ARE-3 duly
signed by the jurisdictional excise authorities certifying the item of supply, its
quantity, value and date of such supply shall be furnished.
ii. Payment certificates from the project authority as per Appendix-22C or
payment certificate or bank certificate of payment for domestic supplies as per
Appendix 22B which ever is applicable.
iii. Statement of supplies giving separately each supply invoice number and date,
FOR value in Indian rupees as per invoice and description of th e resultant
product.
4. In cases where import of fuel has been sought for the grant of Advance Licence/
Advance Licence for Annual Requirements/ DFRC (excluding Advance licence
applications for ad-hoc norms and those under Para 4.7 of Handbook)
a. Self certified copy of the permission issued to the manufacturer exporter by the
competent authority (concerned State Electricity Board or Power Corporation or
Regulatory Commission of the State) under Section 44 of the Electricity (Supply) Act,
1948 for the installation of captive power plant based on the specified fuel unless the
permission is specifically waived by the State Electricity Board; and
b. Self certified copy of the letter intimating the date of commissioning of the captive
power plant from the concerned authority which issued the permission letter is to be
submitted.
Note: The import of only such fuel(s) shall be allowed which have/ has been specified in
the said permission.
5. Additional documents required in case of supplies under deemed
export/intermediate supplies under Advance Licence Scheme:
a. Invalidation letter in case of supplies to
i. an EPCG licence holder;
ii. an Advance Licence holder;
b. Project Authority certificate in case of supplies other than (a) (i) & (ii) above and to
EOU/ EHTP/ STP/BTP units;
6. Additional documents required in case of issue of Advance Licence under Para
4.7 of Handbook
a. Information as per Appendix-11A.
b. 1. Technical Details of the export product as per the details given in Appendix 33
2. Chartered Engineer certificate certifying the import requirements of raw materials
in the format given in Appendix 32B
3. Production and Consumption data of the manufacturer/supporting manufacturer
of the preceding three licensing years, duly certified by the Chartered accountant/
Cost & Works Accountant/ Jurisdictional Excise Authority.
V A. For GEM REP applications
1. Bank Receipt (in duplicate)/Demand Draft evidencing payment of application fee in
terms of Appendix 21B.
2. Bank certificate of export and realisation in the format given in Appendix 22A evidencing
realisation of exports proceeds/sales proceeds.
3. Export Promotion (EP) copy of Shipping Bill(s) in Original. (Photocopy of the EP copy of
Shipping Bill duly endorsed may be returned for utilization/re-import purposes when the
exports are made on consignment basis).
4. Customs attested invoice.
5. In case of application for Replenishment licence under paragraph 4A.28 of this
Handbook, an applicant will be required to submit documents as given at S.No.1 above
and Statement of Exports made during the preceding licensing year duly certified by
Chartered Accountant/Cost & Works Accountant in the format given in Appendix 26.
V B. For Diamond Imprest applications
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Self certified copy of valid RCMC.
3. Self certified copy of Export Order.
4. Statement of exports of cut and polished diamonds made during the preceding three
licensing years duly certified by Chartered Accountant/Cost & Works Accountant in the
format given in Appendix 26. The value of exports made towards fulfillment of export
obligation under Diamond Imprest Licence shall be shown separately.
V C. For DEPB applications
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Export Promotion (EP) copy of Shipping Bill(s). In case of exports through notified land
Customs under paragraph 4.40, Bill of Export may be accepted in lieu of Shipping Bill.
3. Bank Certificate of Exports and Realisation as given in Appendix 22A or Foreign Inward
Remittance Certificate (FIRC) in the case of direct negotiation of documents or Appendix
22 D in the case of offsetting of export proceeds with the approval of RBI. In case of
FIRC, a declaration from the exporter that the remittance is in respect of Shipping Bill(s)
No ____________ dtd _________ shall also be furnished
VI. For EPCG Licence applications
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Self certified copy of Drug Manufacturing License in case of export of Pharmaceutical
product or self certified copy of IEM/SSI Registration Number in case of other products
or a self certified copy of Service Tax Registration in case of Service Providers.
3. Certificate from a Chartered Engineer in the format given in Appendix 32A certifying:
a. the end use/nexus of machinery sought for import under EPCG Scheme in the pre
production/production/post production activity of the exported goods/services
(explaining the end use of machinery in detail); and/or
b. the essentiality of spare parts sought for import and its required quantity for existing
machinery manufacturing the goods to be exported/ machinery sought for import;
and/or
c. complete usage of equipments/goods sought for import under the EPCG Scheme for
supply of service to overseas customers/ service consumers of any other country in
India to earn free foreign exchange/supply of service in India relating to export paid
in free foreign exchange.
4. Statement of exports made/services rendered by the applicant firm in respect of the
same/similar export product/services rendered during the preceding three licensing
years duly certified by a Chartered Accountant/Cost and Works Accountant in the format
given in Appendix 26.
5.