Page 282 - MANUAL OF SOP

Determination of Non Injurious Price

(w) In case, there are more than one constituent of DI, the weighted average
NIP should be computed based on the NIP of each constituent of the DI. The
weight shall be the domestic production i.e., production volume less export
volume;

(x) Interest is allowed as an item of cost of sales. After deducting the interest,
the balance amount of return is to be allowed as pre-tax profit to arrive at
the non-injurious price;
(y) The ‘Raw Material cost per unit allowed’ in NIP as per Format-L for POI is
the optimum raw material cost per unit as per Format-B and optimum utility
cost per unit as per Format-D is allowed as the utility cost per unit in NIP;

(z) Change in NIP at shop floor is considered as part of the Raw Material cost
and adjusted in Format-A. Packing Material Cost is part of the raw material
cost and is allowed accordingly. Since NIP is computed for the production
during POI, any change in finished goods is ignored as it is not a part of
the cost of production during POI. Hence, impact due to change in finished
goods is not considered in the calculation of NIP;
(aa) Raw Materials, Utilities, Direct Labour, and consumables are generally
considered as variable costs. However, if proper justification is given along
with supporting documents, the investigation team may appropriately deal
with other heads of expenditure also;

(bb) Any part of salary and wages which is paid as a share of profit should be
disallowed as that is not an expense required for the production of PUC. All
per unit costs of fixed costs are worked out based on optimum production
only;
(cc) Other expenses such as salary and wages, depreciation, repair and
maintenance, factory overhead, administrative overhead, financial expenses,
and fixed selling expenses are considered fixed and treated in a similar
manner. Similarly, ‘Other Income’ is treated as income and per unit impact
based on the nature of income is reduced from the cost of production for
NIP purposes. For example, if other income consists of scrap sale etc., then
per unit income is worked out based on actual production. However, if it
relates to interest earned on short-term deposits out of surplus cash/bank
balance during the period, then per unit income may be worked out based
on optimum production;

259