Multiple Subcontracting Process from Plant to Customer

[Former Member]

Hello Experts,

Kindly advise based on the below scenario so that appropriate solution can be given to the client.

Client wants to send a material from manufacturing unit to a subcontractor located at a different state for processing. That processed material again needs to be sent to another subcontractor located at another state for further processing to get the desired finished product. Then this finished product needs to be sent directly to the customer or can be sent to the nearby warehouse of the client.

Note: All the excise rules & taxes are applicable as per the Indian Law

Please need your opinion on how the process can be laid down in SAP.

Thanks & Regards,

Niladri

[jpfriends079]

Hi Niladri,

How are you planning to capture this goods movement, duties, documents in SAP?

Means,

Header 1	Goods Movement	Whether this captured on SAP, Yes/No?	SAP Process/Doc Involved?	With payment of Duty or without?
1.0	Goods moved out of Plant to Subcontractor
1.1	1st Subcontractor to 2nd Subcontractor
1.1.1	2nd Subcontractor to Directly to customer
1.1.2	2nd Subcontractor to Depot
1.1.3	2nd Subcontractor to Plant

You client IDT team should be in a position to answer the above queries.

For which industry you are seeking this information?

Thanks, JP

[Former Member]

Hello JP,

Yes, all the Goods Movement to be recorded in SAP. This is a new process to be introduced with payment of duty & applicable taxes

.

Need to know the possibilities SAP can provide to implement this process.

This is a steel/metal industry.

Regards

Niladri

[jpfriends079]

Hi

This is a new process to be introduced with payment of duty & applicable taxes

So, that means no Challan is involved. And that is straight forward.

Refer SAP Help link on Subcontracting: Subcontracting Under Full Payment of Duty - India - SAP Library

But, if it involves Challan, that means Subcontracting without payment of duty. Then things might be different. In this case, the material should return to base Plant after processing in subcontract process.

Subcontracting Without Payment of Excise Duty - India - SAP Library

And it will not help you in the following situations:

finished product needs to be sent directly to the customer or can be sent to the nearby warehouse of the client.

Thanks, JP

[Lakshmipathi]

Note: All the excise rules & taxes are applicable as per the Indian Law

You need to explain in detail how excise would be levied when it reaches the end customer.  Ideally, the manufacturer should raise the commercial sale invoice where the duty component should also be captured in which case, you need to account the material from 2nd vendor via 101 movement, capture the duty portion and subsequently, follow the normal SD process with an outgoing excise invoice.

G. Lakshmipathi