Consignment Process Doubts

[Former Member]

Hi All,

Kindly clarify my following doubts. We are moving our goods to our consignment vendor, he is selling the goods from there; we are billing him whenever he consumes our material.

1. In India, we need to pay excise during Consignment fill up process itself. Does it mean that, we need to maintain pricing at Consignment fill up level itself for creating Excise Invoice?.

2. During Consignment issue, we need to avoid the sales tax since we are sending our goods to Consignee only. Is form F enough to cover sales tax? Please confirm?

3. During Consignment issue, consignee will issue the form F, similarly when the goods are returned or picked, do we need to give form F to the consignee?

4. Is it mandatory to create Consignment issue order with reference to the Proforma invoice that we created during Consignment fill up?

Kindly clarify.

Regards,

Raja Durai

Message was edited by: Durai Raja

[former_member184065]

Hi,

1. In India, we need to pay excise during Consignment fill up process itself. Does it mean that, we need to maintain pricing at Consignment fill up level itself.

Donno. lets wait to get answer on this from experts

2. During Consignment issue, we need to avoid the sales tax. Is form F enough to cover sales tax? Please confirm?

Yes,F-form is enough to cover the tax.

3. During Consignment issue, consignee will issue the form F, similay when the goods are returned or picked, do we need to give form F to the consignee?

Yes,we have to give it back to consignee.

4. Is it mandatory to create Consignment issue order with reference to the Proforma invoice that we created during Consignment fill up?

I didn't get your query. you please explain little bit more to understand on this.

Thanks,

Naren

[former_member186385]

Hi Raja,

1. Yes, you have to put Pricing relevance in the Item category

4. Consignment Fill Up can be created with reference to Consignment Fill up . It depends on how you set your reference  Mandatory in Document type Configuration VOV8

In standard Consignment Issue is created with reference to Consignment Fill up

regards,

santosh

[Lakshmipathi]

We are moving our goods to our consignment vendor

Can you please let me know how you are doing this in SAP?  Via KB order?  If so, at the time of creating KB order itself, your client are suppose to know the end customer without which, addressing through consignment process is not possible.

G. Lakshmipathi

[Former Member]

Hi Lakshmipathi,

We are not dealing with the end customer.

We will be sending the goods to our dealer like Consignment process.

He will be selling the goods and send us the report. Based on the quantity he consumed, we will bill him.

There is no connection with end customer.

Is this possble. Could you please confirm.

Regards,

Raja Durai

[Lakshmipathi]

We are not dealing with the end customer

In that case, you cannot handle this process via consignment fill-up.  In SAP, if you want to do consignment process, at the fill-up stage itself, you need to know the end customer.  That is when you create KB order, Sold To should be your end customer.

We will be sending the goods to our dealer

How your client has declared that dealer to statutory authorities.  Based on this, both excise and tax will vary. 

G. Lakshmipathi

[Former Member]

Hi Lakshmipathi,

Sorry. I missed out a point. We created our dealer as our Consignment Customer. So he will be like our end Customer.

According to his sale, we will issue the goods.

Is this process ok.

Regards,

Raja Durai

[Lakshmipathi]

I think, you have not gone through my post fully.  If the dealer is treated as end customer, as I already asked, who is Sold To and Ship To in consignment fill up order?  Sold To should be your end customer code and Ship To be your warehouse agent.  Otherwise, this process will not meet your requirement.

G. Lakshmipathi

[Former Member]

Hi Lakshmipathi,

Our Sold-to and Ship-to both are our dealer.

We planned to maintain at his place. Whenever he consumes the goods, we bill him.

So he will be our end customer. Our fill up and issue ends with him.

I  hope this process is allowed.

Please let me know if any deviation in the process.

Regards,

Raja Durai

[Lakshmipathi]

Our Sold-to and Ship-to both are our dealer

No in that case, consignment process wont suit your requirement.  You have to treat the dealer as either a plant or a Depot and stock transfer the material and from there, do normal SD process.  But Depot process is very cumbersome process in SAP. 

G. Lakshmipathi

[Former Member]

Hi Lakshmipathi,

Thanks for your suggestions.

As per our requirement, we have to move the stock from our plant to Customer (i.e. Dealer in our case).

Whenever he consumes the goods, we need to bill him from our plant.

If we treat him as our plant, during the stock transfer, stock will be moved from our plant to the plant that we createed for our customer.

Now we will not be able create bill from our plant. This is one problem which is stopping us to consider customer as plant.

Second major point is, say we have 100 distributors all over India, it will be difficult to create each distributor as plant.

Is there any viable solution for this.

I was assuming that, this is a straight forward consignment process.

Kindly clarify.

Regards,

Raja Durai

[Lakshmipathi]

If you know the end customer, as I already stated, you can very well go for consignment process.  But if you dont know, then, I am sorry, there is no other better standard way to achieve this, other than treating them as a depot and do stock transfer.

G. Lakshmipathi

[phanikumar_v3]

Dear Durai raja,

1. In India, we need to pay excise during Consignment fill up process itself. Does it mean that, we need to maintain pricing at Consignment fill up level itself for creating Excise Invoice?.

A.Yes-you need to maintain the pricing for KB order including Excise Condition types.But after your PGI you need to use Proforma invoice.Based On proforma you can Create Excise invoice.But this excise amount will be paid by Business to Excise authorities.

2. During Consignment issue, we need to avoid the sales tax since we are sending our goods to Consignee only. Is form F enough to cover sales tax? Please confirm?

A.Please Use The Exemption form H-For Consignments(Not F-this is for Inter company sales)

Normally we will pay sales tax once owner ship changes--so during consignment fill up--there will not be any sales tax as far as i know--But it is obvious that During consignment issue--sales Tax will be applicable.

3. During Consignment issue, consignee will issue the form F, similarly when the goods are returned or picked, do we need to give form F to the consignee?

A.During Consignment returns(Means the used stock at your dealer has been returned from his customer)will be treated as Normal returns Process.But Consignment Pickup(means Business collecting back the Stock kept at his Consignment Dealer) will not attract any sales Tax due to no-owner ship change.

4. Is it mandatory to create Consignment issue order with reference to the Proforma invoice that we created during Consignment fill up?

A. It is completely depends on Client--but in standard KE will be referred from KB.

I think there is So much of Discussion happening on KNOWING THE END CUSTOMER.

Let us Take a scenario suppose Today Volkwagen has introduced a new car named "Volkswagen-PUNTO PLUS"

This was a new model car introduced recently so the Dealers of Volkwagen will not have interest to keep this car in their show room.

So As a marketing initiative--volkswagen can dump some cars at his dealers location by consignment fill up(so this dealer will be called as consignment customer)

After seeing this New car in the Show room some X-Customer taken this car from your dealer.

Now Dealer will inform to Volkwagen about this sale-Now Volkwagen can initiate the billing to his dealer(NOT ON THE NAME OF END CUSTOMER-X)

(need less to mention that the price from Volks to Dealer differs with Dealer to end customer X)

Hope this helps.

Phanikumar