Excise in Subcontracting Process

[Former Member]

Dear All,

In Sub-Contracting Process I think Excise comes into picture if the subcontracting vendor returns the material after a period of 180 days. Is this correct??

Now as I understand we use a zero tax code in the subcontracting orders. When we create a Subcontracting Challan using J1IF01, we can see excise duty fields such as BED,ECS etc. So from where system will determine the excise values when we create a SubContracting Challan.

In help.sap for Subcontracting with full payment of excise duty it is mentioned that we have to create an excise invoice when we send the materials to the sub-contractor. When we do this & how?

Also its mentioned that when the subcontractor returns the goods he sends a separate excise invoice which have to captured & posted?

whats the difference between the 2 excise invoices above & how is the impact on the books of A/C?

I mean the CENVAT credit taking/reversal etc??

Kindly provide valuable inputs.

Regards,

[pankaj_singh9 · Accepted solution]

Hi,

Subcontracting Process

Subcontracting without Payment of Duty

- Creation of Subcontracting PO (ME21N)

- Transfer Posting of Components to Subcontractor (Mvmt Type - 541) (MB1B/ME2O/MIGO)

- Creation of Subcontracting Challan w.r.t. Transfer Posting Doc (J1IF01)

- Goods Receipt w.r.t. Subcontracting PO and Refer Subcontracting Challan at the time of GR (MIGO) {GR with 101 and auto consumption of components with 543 movement}

- Reconciliation of Subcontracting Challan (J1IFQ)

- Completion of Subcontracting Challan (J1IF13)

- Generation of Annexure IV (J1IFR)

Note: - In this case, you have to maintain the Assessable Value for the Components to be supplied to Vendor in J1ID and also Excise Tax rates for the Chapter IDs linked with these components. So during J1IF01, system will take the Assessable Value as Excise base Value and calculates the Excise Duties by taking Excise Tax Rates.

Subcontracting under Full Payment of Duty

- Creation of Subcontracting PO (ME21N)

- Transfer Posting of Components to Subcontractor (MB1B/ME2O/MIGO)

- Creation of Outgoing Excise Invoice w.r.t. Transfer Posting Document (J1IS) - Used to send the components to Subcontractor's. Here 57F4 Challan is not created.

Accounting Entry: -
CENVAT Input BED - Cr
CENVAT Input ECS - Cr
CENVAT Input ECS - Cr
CENVAT Suspense A/c - Dr

- Capture Vendor Excise Invoice at the time of GR of Finished Goods w.r.t. Subcontracting PO (MIGO)

- Post Excise Invoice for FG received from Subcontractor (J1IEX)

Accounting Entry: -
CENVAT Input BED - Dr
CENVAT Input ECS - Dr
CENVAT Input ECS - Dr
CENVAT Clearing A/c - Cr

Master Data

- MM01- Material Masters for Components and FG

- XK01 - Vendor Master (Subcontractor)

- CS01 - BOM for FG

- ME11 - Purchase Inforecord for Subcontracting

[Former Member · Accepted solution]

Dear Pankaj,

Thanks a lot for the quick response.

Now as per your reply.

For Subcontracting without Excise Duty

why system is calculating the excise rates incase of subcontracting without excise duty in J1IF01

Regards,

[pankaj_singh9 · Accepted solution]

This is only the calculation, it will not get posted.

This can be used for printing purpose and also in case of Challan Reversal or Recredit, this duty will be the reference.

[Former Member · Accepted solution]

Thanks a lot.

Regards,