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Subcontracting

Former Member
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Scenario: For an exciseable plant; its subcontracting without excise-duty case

I send moulds(dye) to subcontractor,who uses this dye to manufacture new products by using the raw material provided to him.

How will I send (in SAP) the mould to the subcontractor?

Will I have to receive this mould within 180 days?

regards

VS

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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Dear VS,

In subcontracting process when you issue materials to a subcontractor, you need to keep track of what materials you have issued and when they have to be returned by subcontractor. The reason for this close monitoring has to do with Indian tax law. Under excise law 57AC , when you send materials to a subcontractor for processing, you are not required to pay any excise duty, even though the materials have left your premises. However, <b>if the materials have not been returned to you within 180 days specified by the law, you will have to reverse any excise credit that you posted when you have purchased the materials. When</b> you send material out of your factory premises you need to send with 57F4 Challan. In this process you are going to do the same.

In SAP the process will be as follows

Process Flow

Creating Subcontracting Purchase order

Message Output for Purchase Order

Transferring of Components to Subcontractor

Creating of subcontracting Challan

Goods Receipt for Purchase Order

Reconciling Subcontracting Challan

Completing/Reversal/Re-Credit Subcontracting Challan

Logistics Invoice Verification

Hope this is clear

Kedar Kulkarni

Former Member
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Hi Kedar,

Here the requirement is to send MOTOR not MATERIAL how it is mapped in SAP, as motor when initially purchased taken as asset if i'm not wrong.

thanks for your input.

Regards

Rang

Former Member
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Hi,

If you wish to send mould to your supplier, you send it on proper invoice (show sale of mould) you can avail excise benifits. So make proper invoive and send it to your supplier, since for such kind of item cost of mould is included in per piece rate.This is the normal procedure with toolings.

Kedar K

Answers (3)

Answers (3)

Former Member
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ans

Former Member
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Hi vs,

legally mould is your asset if i'm not wrong, exciseable goods are those which is used in manufacturing & output of product is sold in the market, mainly for raw materials which is used in converting from one shape to other & cenvat/modvat, credit is taken on these.

whereas mould is concerned this does not come under this purview, yes if it is 100% EOU if you have not paid duty on this you are not supposed to lift that material from your plant, if you want to do that you have to maintain a form, sory i'm not able to recall which form exactly.

Regards

Former Member
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pl guide