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Former Member

Excise entry in Subcontracting.

Can you explain what are the excise entries made while doing subcontracting?

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  • author's profile photo Former Member
    Former Member
    Posted on Dec 04, 2007 at 04:18 AM

    Hi,

    There are two scenarios -

    1) Sub-Contracting without paymment of duty

    2) Sub-Contracting with payment of duty.

    For option 1, When you are sending excisable material to your sub-contractor, then there is no entry in excise registers for part 2. You create an excise challan & send the material to your sub-contractor alongwith the Challan & your delivery note. When you receive the processed material from the subcontractor, the challan is reconcilled with the goods receipt document & after fully reconcilling the challan you mark the same as Complete. The only rule is that you have to bring back the excisable material sent to the sub-contractor to your factory within 180 days from sending to sub-contractor (either after processing or without processing). If you don't follow this rule, you will have to pay the excise duty on the material sent for processing.

    For option 2, you create an outgoing excise invoice for the material you have sent to the sub-contractor. This updates the excise registers for part 1 & 2 for the materials sent. When the sub-contractor sends you the processed material, then you can follow the procedure of standard procurement of excisable material.

    Hope this helps you,

    Regards,

    Prashant

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  • author's profile photo Former Member
    Former Member
    Posted on Dec 04, 2007 at 04:22 AM

    1) Issue the child material by movement type 541.

    2) Prepare subcontracting challan using above material document.

    3) Before preparing challan declare the child item as subcontracting in J1id.

    4) Material moves with challan to subcontractor.

    5) Subcontractor processes n returns the final product

    6) Perform GR with reference to the Challan issued.

    7) Reconcile the challan

    8) Complete the challan within 180 days of issuing the challan otherwise laible to pay the duty for the balance amount of grace days.

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