Page 286 - Manual Of SOP

Determination of Non Injurious Price

or unit of the same organization for manufacturing of another product. In other
words, intermediate products manufactured in the same company and used for the
manufacture of PUC in the same company are called captive inputs.

9.6.30. The captive input can be transferred to the next process either at cost or at
market value. While computing the costs of such captive inputs, principles prescribed
under Annexure-III must be followed i.e., optimization needs to be done for such
captive inputs as well before allowing the return. Similarly, expenses disallowed
under Annexure-III should not be included.

9.6.31. If captive inputs are transferred at market rates, no return is allowed on
assets used for the manufacture of captive inputs. Otherwise, proportionate NFA
attributable to that input is apportioned to PUC for return purpose. Working Capital
(WC) being allocated to different products / PUC on the turnover basis takes care of
the portion of working capital allocable to captive input. If the DI accounts for the
captively produced inputs at the cost of production, an additional return @ 22% on
capital employed for assets utilized for producing such inputs is also allowed. In case
the company transfers the captively produced inputs at market value consistently
and shows it as such in the books of accounts, then such market value of captively
produced inputs may be is adopted for determination of NIP.

9.6.32. It may be added here that the cost details need to be collected for all major
captive inputs used in the production of PUC, irrespective of the basis of pricing.

9.5.33. When the petitioner insists to value the captively manufactured goods at
a market price and doesn’t claim a return on capital employed for the captively
manufactured product, the reasonability of market price in all such cases be
preferably confirmed from the sale price of such goods to the independent buyers.

TREATMENT OF R&D EXPENSES
9.6.34. R&D expenses form part of costs that benefit the future as well as current
production. If products under anti-dumping are not very high tech, R&D costs will
normally form a small portion of total costs in NIP workings based on the actual
amount booked under the head during POI.

9.6.35. Para (4)(vii)(a) of Annexure-III provides that research and development
expenses unless claimed and substantiated as relating to the product-specific
research, shall not be considered while assessing non-injurious price. In other

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