Page 287 - MANUAL OF SOP

Manual of OP for Trade Remedy Investigations

words, Annexure-III allows the DI to claim R&D costs incurred specifically for the
PUC only in their NIP workings.

9.6.36. The investigation team should ask the DI during verification as to whether
they, as a general rule, treat R&D expenses as recurring or non-recurring expenses.
If the company treats R&D expenses as non-recurring, then it must clarify as to
how they determine allocation period in compliance with applicable accounting
standards/ cost accounting standards. Also, if the regular practice of the company is
to treat R&D expenses as of non-recurring nature and allocate it over a period of time,
Investigation Team may be required to verify the R&D expenses for PUC incurred
prior to the POI. Normally, R&D expenses are treated as part of manufacturing
costs. However, if the DI has been consistently including them in SG&A, the DI
request may be considered. However, in cases where R&D expenses are associated
with more than one product or model, including the product concerned, the share
of R&D costs to PUC may be required to be allocated on a reasonable basis.

PCN WISE COMPUTATION
9.6.37. Wherever PCNs are prescribed, NIP is required to be worked out for each
PCN for fair comparison with landed value of imported goods.

9.6.38. Direct costs or variable expenses such as raw materials cost, utility, and
packing, etc. are generally allocated directly on an actual basis, if possible.
Otherwise, these direct costs are allocated on the basis of standard consumption
norms or standard costs. In other words, wherever PCN wise accounting record
is not maintained by the units, it has to be estimated on the basis of information
furnished for standard raw material costs from Bill of Material and utilities to be
estimated on the basis of technical estimates. In all such cases it must be ensured
that total standard costs are compared with actual costs and variations, if any,are
apportioned in the ratio of standard raw material/ utility cost.

9.6.39. All indirect costs and return (since PCN wise NFA is not available) can be
allocated to different PCNs in the ratio of total direct costs or any other appropriate
basis to arrive at PCN wise NIP. It may be added that component-wise costs of
all PCNs, if added, should match the total component-wise costs allowed in NIP
workings. The veracity or the reasonability of standard norms also needs to be
verified by the Investigation Team during verification and any wide variation in
PCNs should be discussed with the technical persons during verification.

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