MCA vide notification dated 31st December 2014 has made amendment in the Companies (cost records and audit) Rules, 2014 through Companies (Cost Records and Audit) Amendment Rules, 2014. The details of amendment is reproduced as below:-

1. In rule 2

   After clause (a) the following clause shall be inserted:-
   
   
   (aa) Central Excise Tariff Act Heading means the heading as referred in the Additional Notes in the First schedule of the central Excise Tariff Act, 1985 [5 of 1986]

2. Rule 3 shall be substituted by the following rule:-

Position under existing rule 3:
The existing rule 3 provides for applicability of the requirement of maintaining the cost records on the following class of companies:

• Companies engaged in production of prescribed goods under strategic sector
• Prescribed classes of company regulated by sectoral regulator or a ministry or department of central government
• Companies operating in areas involving public interest
• Company including foreign company (other than liaison offices) engaged in the production, import, supply or trading of prescribed category of medical devices.

  For each of the aforesaid classes of companies, a separate limits were prescribed for the compliance of the rule

Rule 3 after amendment:
“3. Application of Cost Record - For the purposes of sub-section (I) of section 148 of the Act. the class of companies, including foreign companies defined in clause (42) of section 2 of the Act, engaged in the production of the goods or providing services, specified in the fable below, having an overall turnover from all its products and services of rupees thirty five crore or more during the immediately preceding financial year, shall include cost records for such products or services in their books of account, namely:-
Table
               (A) Regulated Sectors

Sl.  No.	Industry/ Sector/ Product/ Service	CETA Heading (wherever applicable)
1.	Telecommunication services made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature (other than broadcasting services) and regulated by the Telecom Regulatory Authority of India under the Telecom Regulatory Authority of India Act, 1997 (24 of 1997);	Not applicable.
2.	Generation, transmission, distribution and supply of electricity regulated by the relevant regulatory body or authority under the Electricity Act, 2003 (36 of 2003), other than for captive generation (referred to in the Electricity Rules, 2005);	-------------
3.	Petroleum products regulated by the Petroleum and Natural Gas Regulatory Board under the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006)*	2709 to 2715;
4.	Drugs and pharmaceuticals;	2901 to 2942; 3001 to 3006.
5.	Fertilisers;	3102 to 3105.
6.	Sugar and industrial alcohol;	1701; 1703; 2207.

              (B) Non-regulated Sectors



Sl. No.	Industry/ Sector/ Product/ Service	CETA Heading (wherever applicable)
1.	Machinery and mechanical appliances used in defence, space and atomic energy sectors excluding any ancillary item or items;  Explanation - For the purposes of this sub­clause. any company which is engaged in any item or items supplied exclusively for use under this clause, shall be deemed to be covered under these rules.	8401 to 8402; 8801 to 8805; 8901 to 8908.
2.	Turbo jets and turbo propellers;	8411
3.	Arms and ammunitions:	3601 to 3603; 9301 to 9306.
4.	Propellant powders; prepared explosives (other than propellant powders); safety fuses detonating fuses; percussion or detonating caps igniters; electric detonators ;	3601 to 3603
5.	Radar apparatus, radio navigational aid apparatus and radio remote control apparatus;	8526
6.	Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons and parts of such vehicles, that are funded (investment made in the company) to the extent of ninety per cent, or more by the Government or Government agencies;	8710
7.	Port services of stevedoring, pilotage, hauling, mooring, re-mooring, hooking, measuring, loading and unloading services rendered by a Port in relation to a vessel or goods regulated by the Tariff Authority for Major Ports under section 111 of the Major Port Trusts Act, 1963(38 of 1963)^	Not applicable.
8.	Aeronautical services of air traffic management, aircraft operations, ground safety services, ground handling, cargo facilities and supplying fuel rendered by airports and regulated by the Airports Economic Regulatory Authority under the Airports Economic Regulatory Authority of India Act, 2008 (27 of 2008);	Not applicable.
9.	Steel;	7201 to 7229; 7301 to 7326
10.	Roads and other infrastructure projects corresponding to para No. (I) (a) as specified in Schedule VI of the Companies Act, 2013;	Not applicable.
11.	Rubber and allied products being regulated by the Rubber Board constituted under the Rubber Act, 1947 (XXIV of 1947).	4001 to 4017
12.	Coffee and tea;	0901 to 0902
13.	Railway or tramway locomotives, rolling stock, railway or tramway fixtures and fittings, mechanical (including electro mechanical) traffic signalling equipment’s of all kind;	8601 to 8608.
14.	Cement;	2523; 6811 to 6812
15.	Ores and Mineral products;	2502 to 2522; 2524 to 2526; 2528 to 2530; 2601 to 2617
16.	Mineral fuels (other than Petroleum), mineral | oils etc.;	2701 to 2708
17.	Base metals;	7401 to 7403; 7405 to 7413; 7419; 7501 to 7508; 7601 to 7614; 7801 to 7802; 7804; 7806; 7901 to 7905; 7907; 8001; 8003; 8007; 8101 to 8113.
18.	Inorganic chemicals, organic or inorganic compounds of precious metals, rare-earth metals of radioactive elements or isotopes, and Organic Chemicals;	2801 to 2853; 2901 to 2942; 3801 to 3807; 3402 to 3403; 3809 to 3824.
19.	Jute and Jute Products;	5303, 5310
20.	Edible Oil;	1507 to 1518
21.	Construction Industry as per para No. (5) (a) as specified in Schedule VI of the Companies Act 2013 (18 of 2013)	Not applicable.
22.	Health services, namely functioning as or running hospitals, diagnostic centres, clinical centres or test laboratories;	Not applicable.
23.	Education services, other than such similar services falling under philanthropy or as part of social spend which do not form part of any business.	Not applicable.
24.	Milk powder;	0402
25.	Insecticides;	3808
26.	Plastics and polymers;	3901 to 3914; 3916 to 3921; 3925
27.	Tyres and tubes;	4011 to 4013
28.	Paper;	4801 to 4802.
29.	Textiles;	5004 to 5007; 5106 to 5113; 5205 to 5212; 5303; 5310; 5401 to 5408; 5501 to 5516
30.	Glass;	7003 to 7008; 7011; 7016
31.	Other machinery;	8403 to 8487
32.	Electricals or electronic machinery;	8501 to 8507; 8511 to 8512; 8514 to 8515; 8517; 8525 to 8536; 8538 to 8547.
33.	Production, import and supply or trading of following medical devices, namely:- Cardiac stents; Drug eluting stents; Catheters; Intra ocular lenses; Bone cements; Heart valves; Orthopaedic implants; Internal prosthetic replacements; Scalp vein set; Deep brain stimulator; Ventricular peripheral shud; Spinal implants; Automatic impalpable cardiac deflobillator, Pacemaker (temporary and permanent); Patent ductus arteriosus, atrial septal defect and ventricular septal defect closure device; Cardiac re-synchronize therapy ; Urethra spinicture devices; Sling male or female; Prostate occlusion device; and       Urethral stents:	9018 to 9022

Provided that nothing contained in serial number 33 shall apply to foreign companies having only liaison offices.


Provided further that nothing contained in this rule shall apply to a company which is classified as a micro enterprise or a small enterprise including as per the turnover criteria under sub-section (9) of section 7 of the Micro Small and Medium Enterprises Development Act, 2006 (27 of 2006).

3. Rule 4 shall be substituted by the following rule:-

   Position under existing rule

   Companies which are covered under rule 3 those who are required to maintain the cost records were also required to get the cost audit done, in case they meet the prescribed criteria.

   4.  Applicability for cost audit:

   • Every company specified in item (A) of rule 3 shall get its cost records audited in accordance with these rules if the overall annual turnover of the company from all its products and services during the immediately preceding financial year is rupees fifty crore or more and the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under rule 3 is rupees twenty five crore or more.
   • Every company specified in item (B) of rule 3 shall get its cost records audited in accordance with these rules if the overall annual turnover of the company from all its products and services during the Immediately preceding financial year is rupees one hundred crore or more and the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under rule 3 is rupees thirty five crore or more.
   • The Requirement for cost audit under these rules shall not apply to a company which is covered rule 3, and-
     1. whose revenue from exports, in foreign exchange, exceeds seventy five per cent of its total revenue; or
     2. which is operating from a special economic zone.
4. In Rule 5

   After sub rule (3) the following proviso shall be inserted:-
   
   Provided that in case of Company covered in serial number 12 and serial number 24 to 32 of item (B) of rule 3, the requirement under this rule shall apply in respect of each of its financial year commencing on or after 1st day of April, 2015

   Positing under existing rule

   Earlier, the requirement to maintain the cost records for all classes of companies was from 1st April 2014 and no exemption was provided.

5. In Rule 6 of Companies (Cost Records and Audit) Rules, 2014

After sub rule (3) the following clause shall be inserted:-
(3A) Any casual vacancy in the office of a cost auditor, whether due to resignation, death or removal, shall be filled by the Board of Directors within 30 days of occurrence  of such vacancy and the company shall inform the Central Government in form CRA-2 within 30 days  of such appointment o Cost Auditor.

Position under existing rule
No provision was provided for casual vacancy.

6. Rule 7 shall be omitted

Existing position under the law

7. Rules not to apply in certain cases: - The requirement for cost audit under these rules shall not be applicable to a company which is covered under rule 3, and,

• whose revenue from exports, in foreign exchange, exceeds seventy five per cent of its total revenue or
• which is operating from a special economic zone.

Observation
The said rules is now covered under the amended Rule .

7. Particulars of Form CRA-1 and CRA-3  stands substituted