Subcontracting process of Finished material with RG1 Update

[Former Member]

Dear All,

Our client has a requirement. They sell Finished material Cement to customer & they also send this cement to subcontractor(vendor). subcontractor  create new material GMC after consuming Cement. client receive this material -GMC in owns plant.at the time of issuing cement to vendor user wants RG1 register & subcontracting challan both needs to create.

How this scenario be implement in SAP.

I have create a subcontracting PO where i define cement as a child material and GMC as a parent material. I define Cement as a subcontracting material & RG1 material. Subcontracting challan is created. Material document (mov type-541) line is showing in j1i5 at the time of Rg1 update & but at the time of update it is showing red signal.

Please suggest.

Regards,

Bubai.

[former_member192897]

Subcontracting is a non taxable transaction. If you are sending the Excisable material for job work purpose, the goods must be accompanied with Subcontracting Chalan and the same should be returned with in the specified period failing which the cenvat credit has to be reversed.

You will refer the Subcontracting Chalan during the Subcontracting GRN and Reconcile it and Complete it up on receiving the complete quantity.

You can follow the normal subcontracting process for this requirement and let us know if you have any challenges.